Recovery Audit Contractors - Are RAC Audits A Permanent Feature Of The Helathccare Landscape?
Jul 28, 2010After a successful three-year test ride in 2005 in three states with the highest Medicare expenditures – California, Florida, and New York, and which in 2007 was expanded to also include Arizona, Massachusetts, and South Carolina – the Centers for Medicare and Medicaid Services (CMS) has made the RAC audit program a permanent feature of the healthcare landscape. The purpose of the RAC demonstration program was to determine if the use of RACs would be a cost-effective method to identify and correct improper payments by the Medicare fee-for-service program. The RACs are paid on a percentage recovered contingency fee or “eat what you kill” basis. They “data mine” the Medicare claims archive to identify potential up-coders and can audit your claims going back 3 years. Penalties and recoupments will be extrapolated by including the providers’ entire patient population.
The RACs don’t replace the other “medical police.” The anti-fraud efforts of the carriers, intermediaries, program safeguard contractors, the OIG, the Department of Justice, the FBI, the states’ Medicaid law enforcement personnel, and the insurance companies’ private investigators remain ever-busy.
To call the RAC program “successful” is an understatement. During the 3-year 3-state demonstration phase, CMS clawed-back more than $1.03 billion in inappropriate payments to providers. The RACs made a tidy profit and the program cost the government just 20¢ for every dollar recovered from providers.
RACs are required to identify both underpayments as well as overpayments. In FY 2007, while still in the demonstration mode, they collected $357.2 million in overpayments vs. just $14.3 million in underpayments. Of all the claims reviewed, 96% were determined to be overpaid. Now the program is nationwide.
Our Interpretation
Our interpretation, which is wholly subjective, is that the entire RAC program is based on the underlying assumption that providers are taking advantage of the public and they must be punished.
We are not going to expend any ink or effort to defend the “bad apples” or to expound upon the complexity of the CPT, ICD-9, RBRVU, DRG, APC, ASA, POA, LCD, ALJ, MAC, MCPM, and the rest of the letter-salad of systems that overlays the practice of medicine. What is clear is the government is using “bounty hunters” to cast a wide net, so every practicing physician will need to pay much greater attention to:
- Detailed medical records documentation,
- CPT code selection to make sure they are supported by the medical records, and
- Diagnostic code selection to justify medical necessity.
Medical Record Documentation
Your medical records can be dangerous. You may have a photographic memory and are able to recite the entire PDR from memory. You could have bloodlines to the Mayflower, be summa cum everything from the finest medical school and chief resident at the Vatican, or a Nobel winning full professor of medicine. Your patients may all have multiple stage-4 life threatening morbidities and require level 5 visits. None of this matters if your medical records don’t support the codes on your claims. Each note must stand on its own. The RACs live by the rule “if not documented, not done.”
How do you know if your charts are adequate or not? A coding accuracy audit will identify any disconnects between the contents of your medical records and the contents of your claims. Without an audit, your coding is a “black box.” How do you know if it is accurate or not? If you are not aware that it is broken, how do you know if fixing is needed? If repairs are needed, which ones?
A baseline audit of your coding accuracy does not need to be monumentally expensive or an elaborate Olympic event. Even a relatively small audit should give you answers to:
- Which physician or coder is upcoding and why it is considered upcoding?
- Which physician or coder is undervaluing his/her services and leaving “money on the table”?
- Which physicians’ medical records contain documentation deficiencies?
- Which physician or coder is not documenting or coding the medical necessity for the services on the claim?
With these answers you can develop a treatment plan based upon your specific audit findings. It may include, among others, the following options:
- Do nothing because the coding is accurate and the medical records are pristine.
- Do supplemental focused audits on a particular provider or coder to confirm-or-refute the results from first sample.
- Arrange for basic coding and chart documentation training for some-or-all of the providers and/or coders in the practice.
- Arrange for specific training for some-or-all of the providers and/or coders in the practice, i.e. advanced modifier training.
- Re-audit those providers and/or coders a couple of months after any training to make sure they haven’t gone back to their old ways.
- Hire a coder.
- Fire a coder.
- Take a doctor’s pencil away and outsource his/her coding. (Please see the description of our “outlier” program.)
CPT Code Selection
The CPT codes that you select for your claim form must be supported by the contents of your medical records. This does not mean that you have to write War and Peace for each office visit. Instead, it means that you either have to learn the coding and documentation rules and how to apply them or find someone who can do that for you. Learn and apply or hire or contract. When you do it is also up to you, but the longer you wait, the deeper the hole you might be digging for yourself, i.e. higher fines and recoupments and other penalties.
Again, the coding accuracy audit is the first logical step in developing an action plan.
Diagnostic Code Selection
The issue of medical necessity for the providers’ services remains a recurring theme for all of the government’s enforcement efforts. Medical necessity will be one of the main variables in their data-mining hunt looking for irregularities and mismatches. Diagnostic codes are the only vehicle for communicating medical necessity. Using “not otherwise specified” or other nonspecific ICD-9 codes is an invitation for a visit by a RAC. So is using an office charge-ticket or “superbill” that hasn’t been updated every year. Some billing systems have the ability to attach a standing diagnosis such as diabetes to individual patients, but diabetes is not a valid primary diagnosis for all the services you might provide (i.e. pulmonary function tests, arm splints, colonoscopies, etc.)
A coding accuracy audit will help you determine if there are any weaknesses in your practice’s diagnostic coding.
If You Are RAC Audited
If you get the dreaded letter from a RAC auditor, you have to act quickly. The enabling law stipulates a very specific and somewhat complicated timeline for responses and appeals. Do not ignore that letter. We suggest that you immediately contact an attorney specializing in healthcare law for advice. Keep copies and meticulous records of everything sent or said to the RAC staff.
A number of attorneys retain The Coding Network to provide them with specialty-specific audits as a component of their defense. Coding is not always black-and-white and sometimes there is more than one correct way to correctly code a service. Having an independent and credible review of the same cases sampled by the RAC may support your defense and reduce or even eliminate any recoupments or penalties.
Be Prepared
The benefits of preparation are substantial.
- Your practice will know proactively if there are any pervasive coding problems.
- Your will be able to show the RAC that an active compliance program is in-place.
- With a meaningful compliance program using an independent auditor, your will be better able to refute charges of fraudulent intent and reduce potential penalties.
- All the commercial insurance carriers – Aetna, the Blues, United, Humana, etc. – have seen Medicare’s huge return from the RAC program, so they’ve beefed-up their internal enforcement efforts.
- Accuracy pays. We very often find providers who inadvertently undervalue (down-code) their services.
Disclaimer
There are serious legal and financial repercussions to inaccurate coding. The Coding Network, LLC is not a law firm and does not practice law nor give legal advice. A coding accuracy audit is not a substitute for a comprehensive compliance plan.
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