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. 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.

DawnCrump120Dawn Crump, MA, SSBB, CHC, has been in the healthcare compliance industry for more than 18 years and joined HealthPort in 2013 as Vice President of Audit Management Solutions. Prior to joining HealthPort, Ms. Crump was the Network Director of Compliance for SSM. She has healthcare experience in education, organization development, quality improvement and corporate compliance. Trained as a six sigma black belt, Ms. Crump used this holistic, fact-based approach to establish audit tracking (RAC) programs. Her expertise includes coding and billing compliance as well as HIPAA compliance and government audit programs for acute care facilities. She is on the board of the Greater St. Louis Healthcare Finance Management Association chapter and is a member of the Health Care.

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  • RAC changes offer glimpse into the future

    Aug 31, 2015

    Organizations that have been playing the audit game for a while are keenly aware of the correlation between the volume of denials and the number of future audit requests. Recent events serve to corroborate this relationship and underscore its increasing importance in successfully minimizing audit take-backs.  

    Back in the late 1890s, the Klondike Gold Rush propelled thousands of would-be miners, many with no experience, to set forth on a dangerously arduous arctic trek to find gold, based upon the simple fact that the precious metal had repeatedly been found there before. Similarly, auditors will likely focus future audits on areas where providers have shown a proclivity for past violations, as this increases the chances that transgressions will be discovered there again. Unless, of course, the organization proactively mitigates risk by addressing denial issues before they become chronic problems.

    CMS to increasingly target repeat violators

    In a May hearing before the Senate Special Committee on Aging explored the relationship between RAC audits and an increase in claims for hospital observation stays.  CMS officials stated they have already shifted the focus of RAC audits to providers with high levels of claims denials. They also stated that future RAC audits will increasingly target providers with higher claims denial rates.

    For providers, this means improving their existing audit systems helps the bottom line in the near term, while also reducing chances the provider will be singled out via future audits related to past transgressions.

    According to the American Hospital Association’s (AHA’s) most recent RAC Trac survey, hospitals continue to report widespread RAC process-related issues, including multiple problems with Medicare administrative contractors (MACs), delays and demand letters. Shifting even more of the focus of RAC audits to frequent violators could go a long way toward reducing the massive backlog of audit appeals CMS has accumulated. And the AHA approves of the shift.

    RACs make changes to reduce provider burden

    Meanwhile, in other recent RAC news:

    Effective June 4, 2015, CMS has withdrawn the requests for quotes (RFQs) for the next round of recovery auditor contracts. CMS plans to update the statement of work (SOW) and release new requests for proposals (RFPs) shortly. In the meantime, current recovery auditors will continue active recovery auditing through at least December 31, 2015.

    In mid-January 2015, CMS approved recovery auditors to begin reviewing outpatient therapy threshold claims (those over the $3,700 threshold) that were paid March 1, 2014 through December 31, 2014. In an effort to minimize provider burden, CMS set restrictions on the number of additional documentation requests (ADRs) that could be sent related to these claims, as shown here:

    • First ADR: can only request documentation for one claim
    • Second ADR: can request up to 10 percent of total eligible claims (total number of claims over the $3,700 threshold that were paid March 1, 2014 through Dec. 31, 2014)
    • Third ADR: up to 25 percent of remaining eligible claims
    • Fourth ADR: up to 50 percent of remaining eligible claims
    • Fifth ADR: up to 100 percent of remaining eligible claims

    At the previously referenced Senate hearing from May of this year, CMS deputy administrator and director Sean Cavanaugh said, “CMS believes that the improvements made to the next phase of the recovery auditor program will reduce provider burden and diversify the kinds of compliance issues recovery auditors investigate—improvements that will help ease the implementation of new payment policies. CMS looks forward to working with the Congress and others to find a path forward that achieves our shared goals.”

    These recent changes show the renewed willingness of CMS to work with providers on smoothing the RAC process. Here’s hoping we continue down this path of improved communication and cooperation for the benefit of providers and patients alike.

  • The Ugly Reality of Audits

    Jun 12, 2015

    When it comes to RAC and commercial audits, hospitals spend significant time and resources to monitor audit requests, respond to audits, and analyze audit results. Thirty-nine percent of hospitals report increased administrative costs associated with audits, according to the AHA RACTrac survey, fourth quarter 2014. These costs include having to hire additional employees, create an internal task force, and add administrative tasks to clinical staff members’ already overburdened workload.

    Yet, the same survey found that 55 percent of medical records reviewed don’t include an overpayment. In addition, hospitals are appealing denials only to find out that they are correct the majority of the time. This infographic says it all:

    realityofaudit

    Wasting Dollars

    The fourth quarter AHA data indicates that 69 percent of denials were overturned in favor of the provider. Even worse, 72 percent of appealed hospital Medicare Part A denials are fully overturned at the third level of appeal, according to AHA’s September 2014 RAC Administrative Burden Survey.

    Money tied up in RAC-related efforts continues to take its toll on organizations. Fifty-five percent of hospitals report that RAC audits and delays in the appeals process have created significant issues with the availability of capital resources, according to the September 2014 AHA survey. Forty-two percent say that RAC-related expenses have delayed other key priorities for the hospital.

    This means hospitals spend limited and valuable resources on auditing efforts rather than on critical patient care only to find out that their billing practices are compliant. Hospitals are never reimbursed for costs associated with staff time spent fulfilling an audit request. That’s why it’s important to stretch every audit management dollar as much as possible. But audit cost expenditures don’t stop with RAC. Other government and commercial payers have also jumped on the audit bandwagon leading to more cost and complexity for hospitals.

    Beyond RAC

    Providers have also experienced a deluge of audit requests as payers continue to measure the acuity of new patients entering the healthcare system thanks to the Affordable Care Act.

    Commercial payer audits, in particular, are on the rise. To complicate matters, these audits are typically fraught with communication problems that often result in duplicate audits and other issues, such as:

    • Inpatient requests sent to the clinic (indicating the difficulty plans may have in confirming the right setting of care)
    • Wrong date of birth or wrong demographic information for patient
    • Billing address versus place of service for provider
    • Missing provider names
    • Duplicates
    • Date ranges too limited for HEDIS reviews

    In general, providers must understand six specific audits to which they could be subject at any time. They are each summarized in my recent Healthcare Finance News article, available here and include Risk Adjustment and Medical Record Reviews (MRRs), Medicare Advantage Risk Adjustment Data Validation (RADV) ,Health Effectiveness Data & Information Set (HEDIS), DRG Payment Integrity Reviews ,Care and Quality Improvement Audits and the Five-Star Program.

    Visit HealthPort at HFMA ANI

    How can the revenue cycle ensure an audit response process that maximizes efficiency and minimizes financial impact to the organization as well as administrative impact to HIM and clinical staff?

    This question is the topic of HealthPort’s upcoming presentation at the HFMA National Institute, June 22-25, 2015. Visit us at Booth #719.

  • Improving communication with payers streamlines audits

    May 29, 2015

    Better communication between healthcare providers and payers helps to streamline the auditing process, while simultaneously reducing frustration, saving time and reducing costs. But there are a number of storms that must be bolstered against as we navigate toward clearer waters.

    Any communication problems that already existed between providers and payers have been exacerbated of late by a steady rise in the number of audits and record requests. Part of the difficulty for providers stems from the fact that they must field requests for many disparate types of information from myriad third-party payers, including national health plans and governmental agencies.

    Moreover, this information is often due at different times and requested under a wide variety of terms. These issues underscore the need for providers to educate themselves about the different types of audits.

    Three Tips for Providers

    Here are three best practices for providers to implement during the audit process to facilitate smoother payer-provider communications. These tips are part of a longer article that I recently co-authored with Jeannie Hennum, Senior Vice President of Sales and Account Management, ChartSecure at HealthPort, as published in HFM magazine

    1. Know which auditor is requesting information and exactly what documents should be provided to avoid revenue recoupment.
    2. Define where each piece of information is located (some may be in electronic systems while other documents will be paper-based), when information is due, and under what terms.
    3. All data from each request and submission should be entered into a centralized audit management software application, which helps providers manage requests, track audit activity, maintain a record of all documents sent and keep up with audit trends.

    Advice for Payers Too!

    From the payer perspective, when providers respond with inaccurate data regarding patient, procedure and/or place of service, the payer must dedicate additional man hours to track down the correct information. Frustration, phone calls and telephone tag are the result.

    Payers could smooth the process by making sure their request letters are as clear and succinct as possible. They should also recognize that payer audits aren’t the only medical record requests that hospital ROI staffs must process.

    A shift in perspective on both sides makes all the difference. Instead of viewing audits as a necessary evil, both parties should consider them a gateway for improving communication and long-term relations. 

    For more information, check out the full HFMA article on this topic here: https://www.hfma.org/Content.aspx?id=29182

  • What the CGI lawsuit means for RACs

    Mar 25, 2015
    The U.S. Court of Appeals recently announced its decision in favor of CGI Federal Inc. in its ongoing lawsuit against the Centers for Medicare and Medicaid Services (CMS).

    In this pre-award bid protest appeal, CGI challenged CMS’ terms of payment regarding requests for quotes (RFQs). CGI is one of four contractors, originally engaged by CMS to oversee its RAC program.

    According to the original 2008 contract terms, the contractors invoiced CMS for the contingency fee when the provider submitted its payment, usually 41 days after the demand letter. In 2014, CMS issued new RFQs prohibiting contractors from invoicing CMS until a provider’s rebuttal to the repayment request passed the second level of a five-level appeals process, which occurs 120-420 days after the demand letter. CGI’s position is that CMS’ new 2014 terms violate other federal statutes on payment of contractors for services rendered.

    The CGI challenge
    Instead of bidding on the 2014 RFQs as written, CGI filed a protest. One year and several legal battles later, a full blown return of the RACS is still on hold.

    According to the U.S. Court of Appeal’s March 10 decision, “Because the Court of Federal Claims correctly held that CGI qualified as an interested party at the time it filed its bid protest, but erred in holding that the payment terms do not violate the applicable regulations, we reverse and remand.”

    Because CMS’ revised payment terms “violate the prohibition against including contract terms inconsistent with customary commercial practice,” the decision reads, “we reverse the Court of Federal Claims grant of judgment on the administrative record to the government. We remand to the Court of Federal Claims for proceedings consistent with this decision.”

    Next moves: three possibilities
    What exactly does this decision mean? Keep in mind I am not an attorney. But I have been involved with RACs for more than six years, and understand the ebb and flow of revenue cycle regulation in healthcare. Here are three two possible next steps for CMS.

    Option 1: CMS will likely have to open the RFQs with the newly defined payment terms and allow CGI to bid with the other contractors, since CGI did not initially have its bid reviewed.

    Option 2: It also appears that CMS may be prohibited from delaying payment for any of the RAC contractors as defined in the proposed 2015 program improvements—to the dismay of healthcare providers. (I do not think that any of the contractors are going to mind if payment terms revert to 2008 standards.)

    How this impacts the RAC program
    I think current RACs will continue to audit on a limited scope until all new contracts are awarded. A new complete RFQs process could take us through the end of the year; however, perhaps CMS will limit the amount of challenges and make a clean start with RACs in 2016.

    So what’s the bottom line? RACs are not going away; but the CGI lawsuit means yet another delay in program improvements until the awarding of new contracts can be finalized.
  • Health Plan Audits Grab 2015 Spotlight

    Mar 06, 2015

    Six Important Audits for Providers to Know

    As I mentioned in my last blog post, knowledge is power when it comes to health plan and commercial payer audits. Providers are predicted to experience a deluge of audit requests in 2015 as plans and payers attempt to measure the acuity of their new patients.

    There are six specific audits to know and understand. They are each summarized in my recent Healthcare Finance News article, available here and include: 

    • Risk Adjustment and Medical Record Reviews (MRRs)
    • Medicare Advantage Risk Adjustment Data Validation (RADV)
    • Health Effectiveness Data & Information Set (HEDIS)
    • DRG Payment Integrity Reviews
    • DRG Payment Integrity Reviews
    • Care and Quality Improvement Audits
    • Five-Star Program
    Three Ways to Prepare

    As these health plan audits consume valuable HIM and audit team resources, there are three steps that providers can take to minimize the workload and operational impact.

    • Ramp-up resources in medical record/information release areas.
    • Educate your HIM and audit teams on all the various audits.
    • Conduct lunch-and-learn sessions with commercial audits to open the lines of communication and expand knowledge.

    Check back next month when I’ll turn my attention back to RAC audits and what’s ahead with governmental audits in 2015.

  • Building audit awareness

    Feb 25, 2015

    When it comes to commercial audits, a little education goes a long way.

    A recent HealthPort summit meeting between providers and payers opened the proverbial Pandora’s box of audit management. What did we find out? 

    We discovered that providers and payers speak different languages. And that a little education on both sides would go a long way towards improving audit communication, streamlining audit processes, and relieving paper pushing, telephone tag and email escapades. Here’s why.

    Lost in translation
    It’s no secret that relations are often strained between payers and providers. And it’s no surprise that this communication breakdown worsens as the number of audit requests increase. The solution is to use this most contentious of issues as a starting place for payers and providers to arrive at common terms. 

    Rationale for audit education
    Providers struggle with fielding myriad payer requests for information, while payers must regularly deal with incorrect data from providers. Efforts must be made on both sides to better understand the audit process, why these audits are conducted and how to provide correct information in a timely fashion. 

    Moreover, commercial plan audits often parallel provider-conducted audits. So the more educated the provider is about what data needs to be retrieved, the greater the possibility that information can be gathered once and used many times for several different purposes.

    The more payers and providers understand about audits, the easier it becomes to eliminate redundancies and lean the process. In this instance, knowledge really is power.

    What’s next?
    Visit my blog next month to begin decoding the most common types of payer audits and generating greater audit awareness among your team. 
     
  • RACs are Back: Latest News to Know

    Sep 30, 2014

    During my recent (and rare) vacation in early August, an update to the RAC program was released by CMS. Then again in early September came more RAC news. In my recent guest post on EMR & HIPAA, I outline the two key points to know about the recent RAC updates: 

    • A limited restart of the RAC program is underway. These will mostly be automated reviews, but there will be some requesting of records and a limited number of complex reviews conducted in defined target areas (spinal fusions, outpatient therapy services, durable medical equipment, prosthetics, orthotics and supplies, and Medicare-approved cosmetic procedures). 

    • CMS has opened a window for some hospitals to request partial payment settlements on claims currently pending appeals. But there are several key stipulations! Read more here. 

    While CMS remains hopeful that the new round of RACs will be awarded this fall, there are three ways that providers can ramp up their audit programs based on these two news announcements. Check out the full guest post on EMR & HIPAA to learn more. 

  • CMS Restarts Parts of the RAC Program

    Aug 06, 2014
    HealthPort always maintains a keen eye on the changes related to RACs. Yesterday’s news of a partial RAC restart comes as no surprise. Although there is progress, it is limited to certain claims and does not include any inpatient hospital patient status reviews during the restart period. The announcement is a clear reminder that RACs are not going away. Documentation improvement and audit program preparation is still key. Stay tuned for my in-depth blog post next week on this latest CMS announcement.
  • Reconciling RACs return

    Apr 25, 2014

    Making the most of your RAC break

    Are you having RAC withdrawal? Me neither!

    Per a Feb. 18, 2014 announcement, recovery audit contractors (RACs) are sending hospitals no new record requests. Post-payment requests stopped on Feb. 21 and pre-payment requests stopped on Feb. 28. What’s going on? 

    Well, the RACs are not going away. But forward-thinking providers can use this brief respite to improve their own audit practices.

    Why the hiatus?

    The goal of this pause is to allow for RAC region restructuring changes and give time for appeals to catch up, according to the Centers for Medicare and Medicaid Services (CMS).

    Right now, CMS’ tentative plans call for RACs to begin requesting records again in June 2014. However, there is no evidence that there won’t be additional delays and/or last minute changes.

    In the meantime, CMS teams will spend the next three months analyzing data and looking for new RAC audit targets. As soon as CMS gives RACs the green light to re-issue ADRs, expect the floodgates to open. Expectation for providers: It will be sometime in 2014, but later than June when ADR volumes actually ramp back up.

    Questions for providers

    Proactive providers will use this time to revisit their audit data and fine-tune their processes. Here are eight questions to consider while reviewing your processes:

    1. How many dollars and cases are still in appeals?
    2. Where are these cases in the appeals process? 
    3. Can you rebill any of these cases?
    4. What were your most common denials? 
    5. How can you improve internal processes (documentation/coding/billing) to reduce future audits, especially if you didn’t seek appeals?
    6. Can you re-engineer your tracking software tools/reports to dig deeper and drill down into your historical audit data?
    7. How are you tracking all this data? It’s time to evaluate your tracking and monitoring mechanisms – and get rid of your spreadsheets! 
    8. How much is your RAC program costing you? 

    New changes expected

    There will be changes once the RAC program re-launches. We expect these three areas to see change. 
    • More outpatient record requests: expect more requests for outpatient/physician/clinic records. NOTE: RACs are not required to reimburse for anything but inpatient medical records. 
    • New calculations for denial rate: It is unclear how, when and under what guidelines new denial rates will be calculated. 
    • The discussion period will be more formal with receipt confirmations from the RAC’s and delays in demand notifications. 

    Five steps to take

    Here are five items to consider during the RAC reprieve help fine tune your audit program and be well-prepared for the journey ahead. 
    1. Track all time frames and monitor ADR limits across claim types.
    2. Clean up some of the denial risk and reorganize audit areas to be more efficient. 
    3. Make sure your audit management process is efficient, standardized and lean.
    4. Connect with your AHA local and state associations to keep abreast of announcement and push for improvement in the RAC program. 
    5. Compare commercial and managed care plans with other auditors.

    Use this time to be proactive and get ready for RACs’ inevitable return.

  • OMHA should rectify its two-year audit appeal delay

    Feb 20, 2014

    The recent announcement by the Office of Medicare Hearings and Appeals (OMHA) that it will delay assigning an administrative law judge (ALJ) to any new audit appeals for two years has significant impact for providers. The December 30, 2013, OMHA memo to Medicare appellants states, “We do not expect general assignments to resume for at least 24 months and we expect post-assignment hearing wait times to continue to exceed six months.”  Adding that kind of delay to a system already woefully behind in audit appeals has complicating results.  

    Likewise, the ALJ has cause for complaint as they never anticipated receiving so many cases. As of AHA’s 3rd Quarter 2013 Survey Results, there are over 150,000 active ALJ cases with over 500,000 cases processed in total since RACTrac reporting began. Needless to say, both sides are equally frustrated.

    Here are five key points for providers to consider. 

    Fairness of deadlines
    As part of the Centers for Medicare & Medicaid Services (CMS), OMHA is charged with providing a forum for the fair and timely adjudication of Medicare claim and entitlement appeals. With this announcement, CMS can be more than two years late and not suffer any ramifications. According to OMHA’s website, “Based on our current workload and volume of new requests, we anticipate that assignment of your request for hearing to an Administrative Law Judge may be delayed for up to 28 months.”

    Providers certainly want to be able to continue to work nicely together with the government; however, CMS is complying with appeals guidelines initially set forth. The initial rule stated ALJ appeals would be heard in 60-90 days, not 28 months. Conversely, the ALJ infrastructure was never built to withstand the volume of cases they have processed over the years. 

    Dramatic changes to the process were inevitable. Now they are here. 

    AHA’s stand
    The announcement raises four questions for providers. Is the delay denying due process? How can providers appeal in a timely fashion? What rights do providers have? What improvements in ALJ infrastructure can be made to expand their bandwidth? The American Hospital Association (AHA) is taking a stand.

    On behalf of its nearly 5,000 member hospitals, health systems and other healthcare organizations, and its 43,000 individual members, AHA urged CMS to work with OMHA to remedy this situation immediately. In the memo, AHA suggested to CMS solutions to help mitigate the detrimental impact of hearing requests on hospitals, including postponing recoupment for appealed claims until after the hospital receives an ALJ determination, and enforcing the statutory timeframes to issue appeals decisions.

    The AHA memo goes on to state, “It is clear that the RAC program and the resulting volume of inappropriate claim denials are putting significant strain on the appeals process. And hospitals are bearing the financial burden with over a billion dollars caught in a broken appeals process that takes several years to issue a final determination…Action must be taken to address this problem now.”

    What you can do
    So what can hospitals do to encourage change? Here are some steps to take: 

    • Discuss with internal appeals department/staff and legal counsel;
    • Work with AHA at the state level to lobby for reform.

    According to the OMHA’s website, “Although OMHA is processing a record number of Medicare appeals, we continue to receive more requests for hearing than our Administrative Law Judges can adjudicate in a timely manner.” By its own admission, OMHA cannot keep up with the current level of appeals. Delaying the process by more than two years will only make the problem worse.Now’s the time for providers to take a serious look at all appeals currently in process and those cases planned for appeal. Measure your financial risk, consider your options and stay tuned!

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