Audit Insights Blog

This blog provides tips, tools and information about all audits that affect the revenue of healthcare facilities, including Recovery Audit Contractor (RAC) audits. Authored by Lori Brocato, industry expert and HealthPort Audit Product Manager, Audit Insights gives healthcare professionals a comprehensive look at healthcare audits, the risks they present and ways to effectively manage and understand the entire process.

About Lori...
Lori Brocato is a long standing expert on audit management, including the RACs. She currently serves as a monthly contributor in Advance Magazine for Health Information Professional's e-newsletter and online audit advice column where she discusses case-specific audits experienced by HIM professionals.

Check this page often for the latest news, education and information on healthcare audits.

• Coping in the Age of the Audit

  May 08, 2012

  Governmental audits have ramped up and, with the recent addition of RAC prepayment reviews, providers will experience an increase in audit volume. Preparation and readiness are key to mitigating technical denials and financial risk, and management of the audit workload will require additional staff, and possibly technology, to track what’s going on.

  In the article, Coping in the Age of the Audit,  which appears in For the Record Magazine’s May 7th online edition, I explain what the new audit landscape will mean for providers and the personnel demands that should be considered. 

  Click here to read the article in its entirety.

• One Size Fits All... Record Reimbursement Changes

  April 11, 2012

  We’ve seen a lot of consternation around the reimbursement for RAC-requested record submissions. Many have expressed concern that they’re not receiving the full amount, particularly for pages they are required to submit (like a copy of the request letter).
   
  In response to this issue CMS just instituted a $25 cap on reimbursement for copying and first class postage. Note that I said a cap. If the cost per page process does not reach $25, you get less.
   
  CMS indicates that $25 is their average reimbursement for larger records, including first class postage. However, most providers do not use first class postage. Instead, they use Federal Express or some other, more expensive, carrier to ensure verification of receipt.
   
  In addition, CMS has upped the number of records RACs can request in any 45 day period. They’re also considering expanding the RAC look back period from the current 3 years to a full 10 years.
   
  

  The potential upside from this change is that providers should see expedited reimbursement. They will not have to reconcile the number of pages, except for those under the $25 cap. 

  The unanswered questions in this policy include:

  • Will it be $25 for pre-payment reviews?
  • What about Electronic Submission of Medical Documentation (esMD)? Will the $25 rule apply?

• Take The HCCA Survey-Auditing the Auditors

  April 09, 2012

  It’s no secret that the number of audits performed on health care providers has grown over the years. There are now literally dozens of different agencies performing them. The Health Care Compliance Association (HCCA) has recently launched a new (anonymous) survey for healthcare professionals to help determine which auditor(s) is the most aggressive, and how much time these audits are taking out of your day to prepare and respond.
  
  Click here to take the survey. HCCA will share the results so that we all can see how our audit activities compare.

• CMS Publishes Medicaid RAC Program FAQs

  January 23, 2012

  In September, I alerted you of the availability of the Medicaid RAC Program Final Rule. I also discussed similarities and differences between this new RAC program and the Medicare RAC Program, which has been in existence for some time.

  Those affected need to be aware that Medicaid RACs are required to identify overpayments and underpayments, and the deadline for States to implement their respective RAC programs was January 1, 2012. The recently published CMS FAQs outline operational guidance to states and general information regarding the Medicaid RAC Program such as:

  • Options that States have if they are unable to implement a Medicaid RAC program by January 1, 2012
  • CHIP is not included within the scope of the Medicaid RAC final rule
  • States may exclude Medicaid-managed care claims from review by Medicaid RACs, as currently, “CMS is only requiring State Medicaid RAC programs to review fee-for-service claims”
  • Medicaid RAC audits must not exceed three years from the date the claim was filed, unless the contractor receives approval from the state. However, CMS is granting a lot of exceptions to the three year look back rule, with several states being extended a five year look back period.

  Click here to access the entire FAQ document. 

• Medicaid RACs are on their way: Be prepared with the right questions to ensure your success

  January 20, 2012

  The final rule for the Medicaid RAC program was published in September with an effective date of January 1st (see previous blog post dated September 26th). There are significant differences between the current Medicare RAC program and the Medicaid RAC program, including the actual limit and frequency of requests being left up to individual states and no specific time frame for how long providers will have to respond to record requests.

  Being prepared is key and knowing the right questions to ask can help you get the most out of Rule-mandated Medicaid RAC education and outreach programs that you may attend. Below is a check list of questions you should ask to help you navigate the Medicaid RAC program and mitigate financial risk for your facility:

  • How often will we get requests?
  • What is the expected turnaround time?
  • What is the maximum number of records we can expect in a given timeframe?
  • What is the Medicaid RAC appeals process?
  • Will Medicaid RAC, like Medicare RAC, reimburse our facility for requests?
  • When will the ‘Provider Portal’ be made available so we can identify the contact point for mailing request letters?
  • How can we expect to be notified of the RAC’s findings (letter, remittance advice, remark code, etc.)?
  • What types of reviews will be conducted (automated, complex, semi-automated), how will these be specified?

  By taking a proactive stance, you will be a step ahead of the Medicaid RAC program and financial loss!

• Happy New Year!

  January 04, 2012

  HealthPort customer, Dawn Crump, network director of compliance for seven-hospital SSM Health Care - St. Louis, contributes to the health information technology regulatory to-do list in this month’s Health Data Management article, “Where to Start?” In the article, Dawn adds the focus on audits to the 2012 list and discusses how HealthPort’s comprehensive audit management tool, HealthPort AudaPro, which includes integrated HealthPort Release of Information services, assists her facility with responding to audit requests.

  Click here to read the article in its entirety.

• Re-Cap from Recent CMS Forum on Medicare FFS RAC Prepayment

  December 28, 2011

  On Wednesday, December 21, 2011, CMS held an Open Door Forum on the upcoming RAC Prepayment Demonstration Audits.

  Here are some of the key points I walked away with:

  • The following states will be affected: CA, FL, IL, LA, MI, NY, TX, MO, NC, OH & PA
  • The demonstration will run from 1/1/2012-12/31/2014, 3 years
  • Limits will not exceed the limits published for RAC Post-Payment Reviews (so if a hospital has a 500 record request limit for post-payment, they also have a 500 record request limit for prepayment, or a total of up to 1000 requests every 45 days)
  • There is a 30-day turnaround time for records, it’s under discussion to extend this to 45 days to match the existing RAC process
  • The requests will be made electronically by the Medicare Administrative Contractors (MAC) through the Medicare Direct Data Entry System - DDE (also known as the Common Working File - CWF or Florida Shared System – FISS), there will be no paper requests
  • The request could specify that the records go to either the RAC or the MAC, it depends on the arrangements the RAC has made with the given MAC. The RACs will be doing all of the reviews
  • It is likely that these requests will be billable to the RACs, CMS will confirm and post an update on this to the new website for this demonstration (http://go.cms.gov/cert-demos)
  • They are starting with a limited number of 8 DRG’s phased through July of 2012
  • These reviews will run parallel to MAC prepayment reviews, for which there are no limits, and they are supposed to coordinate to ensure they do not review for the same issues
  • Providers can dispute duplicate requests they may receive if for some reason the aforementioned coordination does not take place or does not work 100% of the time
  • These records can be sent to the participating MACs & RACs electronically using esMD

• RAC News - MAC Sending RAC Demand Letters

  December 23, 2011

  As we discussed in a previous post, Providers should be preparing for the shift of Demand Letter issuance from the RACs to the MACs at the beginning of 2012. We previously pointed out that one of the main concerns in this shift was that the MACs do not have a process to be able to send Demand Letters specific to Recovery Audits to a specific individual in a given provider organization. This still holds true but, based on a recent RAC News Alert published by the American Hospital Association, the letters are going to contain some changes that will make Demand Letters that are specific to Recovery Audits more easily identifiable.
   
  Based on a sample letter provided by CMS, there will be a letter “R” before the letter number that will indicate the Demand Letter was due to a RAC audit. The letter number containing the “R” will be present on each page of the Demand Letter. In addition, the body of the letter will specifically spell out that the finding was due to a Recovery Audit review. It’s important to put processes in place within your organization to be on the lookout for these identifiers in the Demand Letters so that they can be routed to the appropriate individuals who are responsible for managing & tracking RAC audits within your organization.
   
  

  The ultimate goal of this change in process should give more accurate and timely information to providers.

  Click here to view a sample letter provided by CMS.

• Highlights of the RAC Update Report

  October 17, 2011

  Recently, CMS issued its FY 2010 Report to Congress detailing the activities of its RACs in the first year of the national RAC program. Mandated by the Affordable Care Act, the Centers for Medicare and Medicaid Services (CMS) must provide Congress with an annual update on the effectiveness of the recovery audit contractor (RAC) program as well as recommendations for expanding or improving the program.

  Below are some highlights of the report I’ve outlined for Audit Insights blog readers:

  • A Medicare Part D RAC has been selected, ACLR Strategic Business Solutions, but no initiation date for the Part D recovery audits has been established.
  • Comments from the Medicare Part C & D RFI Comment Period, which ended on February 25, 2011, are still being analyzed. No initiation date for the audits has been identified.
  • The report reiterates the delay in the start of the Medicaid RAC Program.
  • The numbers provided in the report do not take the number of RAC discussions into account. The Discussion Process can be just as burdensome to Providers as the appeals process. This could also provide better feedback as to the accuracy of the RAC's audits.
  • When referencing Appeals, they indicated that a total number of 8,449 were filed in 2010. Of this total, 3902 were overturned in the Provider’s favor. Information was not provided regarding how many of the 8449 were still pending. This information could provide a better idea of the total number that could potentially be overturned in the Provider’s favor.

  -The majority of the findings have been related to incorrect coding and billing errors; this is probably due to the delay in the start of Medical Necessity audits.

  -Health Data Insights (HDI) has a higher number of claims reviewed and corrected compared to other RACs. Of the $92.3 Million in claims corrected for all RACs, $43.4 Million were from HDI.

• Final Rule for the Medicaid RAC program

  September 26, 2011

  The final rule for the Medicaid RAC program was published on Friday, September 16th; with an effective date of January 1, 2012. The rule answered several outstanding questions, but there are still lots of unanswered questions that will be addressed by the individual state Medicaid agencies.

  Several initiatives under the final rule for the Medicaid RAC program fall in line with the Medicare RAC program and among them, clarification was provided on the following:

  • A 3-year look-back period
  • Notification of findings within 60 calendar days
  • The Medicaid RACs must employ certified coders
  • There must be an education & outreach program to notify providers of audit policies & protocols
  • Mandatory customer service measures (toll free help line, provider contact and approved address reporting, etc.)
  • The states must coordinate their auditing efforts with other initiatives (like the Medicare RAC program)

  With all of the similarities, there are some glaring differences between the current Medicare RAC program and the Medicaid RAC program:

  • Even though the final Medicaid RAC program rule calls for limits on the number of records that can be requested, the actual limit and frequency of requests will be left up to each state. 
  • No specified time frame is given in the Medicaid RAC program final rule for how long providers will have to respond to record requests.
  • Although the final rule calls for a defined appeals process including a Discussion Period, it’s up to each state to either use existing appeals infrastructure or establish a RAC appeals process and associated timelines.
  • The final rule does not prohibit a state from contracting with multiple entities to perform RAC audits.

  Just to recap, the Patient Protection and Affordable Care Act outlined a provision to expand the RAC program to Medicaid and Medicare Parts C & D. The plan originally outlined for the states to have their Medicaid RAC selected by the end of 2010 and for reviews to start no later than April 1, 2011. In a letter dated February 1, 2011, CMS delayed the start of the program pending the publishing of the final rule later this year.

  It should also be noted that there is nothing preventing states from going live with a Medicaid RAC program prior to 1/1/2012, in fact several states have already gone live or are prepared to do so by the end of the year. Also, states can seek an exception to the final rule and so far at least three states have chosen to do so.

  Click here to access a copy of the Final Rule.

  Click here to view the Statement of Work.

• Demand Letters Issued By The RACs

  September 22, 2011

  Since the inception of the permanent RAC program, there have been many reported issues with the issuance of Demand Letters by the RACs. Although the situation has improved, there still seems to be a disconnect. As a result, CMS has made it official and determined that the MACs should own this responsibility and, effective January 3, 2012, the MACS will begin issuing Demand Letters.

  Some of the issues that we hope to see resolved by this shift in responsibility are:

  • Recoupment taking place prior to receipt of the Demand Letter
  • Delayed or missing Demand Letters
  • Differences between the amounts stated on Demand Letters and the amounts actually recouped 
  • Timing of recoupment for facilities filing appeals early to avoid recoupment

  Of course, there may also be some issues with this transition, namely where the Demand Letters will end up since the MACs do not currently allow for facilities to specify where correspondence should be sent like the RACs do. We should also expect a period of adjustment until this process is up and running as expected.

  CMS has published a MLN Matters bulletin on this issue and it can be accessed by clicking here.

• Real Life Experience of Centralized Audit Management

  May 03, 2011

  HealthPort Resident Audit Expert, Lori Brocato, discusses HealthPort customer OhioHealth’s real life experience with RAC Appeals in the most recent edition of Advance for Health Information Professional’s monthly audit advice column, “OhioHealth's Hub and Spoke Approach to RAC Appeals.”

  Click here to read the article in its entirety and learn how OhioHealth's hub and spoke methodology for centralized audit management with HealthPort AudaPro is helping them to monitor and track RAC activity, and respond on a timely and relevant basis.

• RAC Audits Trending Up

  April 04, 2011

  The American Hospital Association (AHA) RACTrac survey, released February 24, 2011, confirmed what we’ve been observing: RAC activity is picking up. The survey found that four out of every five hospitals nationwide have experienced a RAC audit.  Furthermore, the RACs audited $1.7 billion worth of Medicare claims and denied $86 million or 5.5% in 2010.

  On the upside, if providers believe there is medical justification for treatment and proceed through the appeal process, there is a good chance the denial will be overturned. In fact, 85% were overturned in favor of the provider. Not surprisingly, urban teaching hospitals over 400 beds are statistically more likely to be targeted than smaller rural hospitals.

  At all hospitals, the number of complex reviews is creeping up as well. Hence, the costs borne by the providers are increasing. These results hold consistently across all four RAC regions. As you might have guessed, 90% of the denials came from the complex review process. Outpatient services had the largest financial impact through automated denials.   

  What is not identified in their report is some of the best practice methodologies being used to manage RAC audits. We’ve observed that most hospitals now have a centralized audit process and team of experts assigned to manage requests, process appeals and prevent future denials. Best practice is to designate a single coordinator across all facilities and all audit types, not just RAC. Electronic audit management and tracking software is used my most organizations and for bigger facilities, or those with multiple locations, it’s a necessity.

  2011 is a new year and we look forward to the next round of AHA data. Your input is important. AHA is one of your best advocates to help address issues that arise from the audit process. But, if they do not hear from you- they may not be able to help you. HealthPort encourages all AHA member organizations to participate in the next reporting period which opens up April 1, 2011. In the interim, stay tuned to this blog for continuing information on RAC, MIC, MAC and all other types of audits.
  

  
  

• Medicaid RAC Delay

  March 16, 2011

  In February, it was announced that CMS had postponed the planned April 1st launch of the national Recovery Audit Contractor (RAC) Program for State Medicaid Claims. For various reasons including budgetary and operational issues, most states are unable to have an appeals process in place for providers to dispute the Medicaid RAC auditors’ findings, as well as other requirements of the program, in advance of the April 1st timeframe. No word yet on the new implementation deadline. However, HealthPort will keep you posted of any new developments.
 


  Need assistance with getting ready for Medicaid audits? Click here to learn about how HealthPort AudaPro, our powerful and comprehensive audit management tool designed to mitigate the stress related to managing the many audits that can negatively affect your revenue, can assist you with managing your audits.