Recovery Audit Contractors (RAC)

By establishing strong internal controls, hospitals can use these findings to train coders, physicians, medical record staff and others to help minimize future improper payments. - CMS in the 2008 RAC Demonstration Report-

RAC Preparedness Education PCS will work with the Hospital to develop the most efficient approach needed to cover the RAC-related education of the Hospitals management, medical staff and others. The initial focus of the RAC preparedness education will include the following:

• Background on RAC
• Regulatory requirements and timelines
• Focus of RAC
• Areas of exposure based on the RAC demonstration experience
• Reiteration of the Hospitals commitment to compliance
• The Hospitals plan to prepare for and respond to the RAC activities
• Individual roles in the RAC process

RAC Team Development and Support During the RAC demonstration, over 7% of recoveries involved the failure by providers to provide adequate documentation in response to a medical record request. These findings demonstrate clearly that managing RAC audit activities can be very challenging. PCS can help with all phases of RAC team development and support, including:

• Assist setting up the RAC Response Team, with descriptions of duties and responsibilities
•  Establish effective workflows, checklists and communication processes to ensure complete and timely response to all RAC requests
• Develop criteria to help providers decide when an appeal should be pursued, and to make sure all necessary information is submitted with an appeal
• Test processes and protocols to ensure that they are working effectively prior to the RAC rollout

RAC Risk Assessment To respond effectively to RAC, providers need to understand the nature and magnitude of their RAC risk. The cornerstone of PCS assessment is an analysis of the Hospitals inpatient and outpatient claims for appropriate payment. Our focus is on both overpayments (risk) and underpayments (opportunity). The claims analysis includes both known RAC targets, as well as potential future targets. PCS utilizes our proprietary screening software, Sentinel, to analyze claims data, identify potential risk and opportunity areas, and quantify financial exposure.

Assistance with RAC Appeals - Although 34% of appeals filed during the demonstration were successful, only 22% of denied claims were appealed. Many providers in demonstration states reported they did not have the time or expertise to pursue appeals. Not every denial should be appealed, but when an appeal is warranted, every effort should be made to file well researched and documented appeals. The success of RAC appeals is determined by a variety of factors, including the quality and availability of supporting documentation, merits of the denial (i.e., the strength of the RACs rationale), and mitigating circumstances, such as age of the claim and specific clinical factors. Through our experience assisting New York client hospitals with RAC appeals during the demonstration project, we learned the critical importance of deciding which claims were worth appealing, and providing well-researched regulatory and claim-specific analysis to support the hospitals positions.

Implementing RAC Lessons RACs will identify areas where hospitals submit inaccurate or inappropriate claims. Denials are often the result of an ineffective process or deficiency with documentation, utilization review/case management or coding. PCS operational experts can assist hospitals to develop and implement action plans to correct deficiencies and avoid future denials.

PCS and RAC

After a successful demonstration project which started in New York, California and Florida, Medicare's Recovery Audit Contractor program is now being implemented on a nationwide roll out schedule. With $992 million in identified overpayments during the demonstration project in predominately 3 states, it is obvious that contending with this new regulatory entity requires renewed attention on the part of the hospital community to monitor coding and billing processes. Not knowing will not stop recoupment.

Advocating - PCS served as a leading advocate for the NYS provider community, actively collaborating with the Healthcare Association of NYS in communicating potential errors with RAC edits, and raising awareness regarding the volume of claims being associated with an edit.  PCS has subsequently worked with state associations across the US in sharing the NY RAC experience and lessons learned. 

In addition to supporting the NYS associations, PCS has recently been chosen to support the American Hospital Association's (AHA) RACTrac advocacy effort.  To learn more about RACTrac, visit AHA's site. 

Educating - PCS has provided education curriculum related to RAC preparedness, offering a practical approach to operationalizing the RAC response team and instilling a methodology to quantify RAC exposure through self-audit techniques.

Partnering - PCS worked with numerous hospitals across the New York State who chose to outsource their appeal process. 

Leverage our experience working with New York State hospitals during the demonstration project. And, utilize our extensive knowledge of Medicare reimbursement and coverage policies to appeal inappropriate denials and override invalid RAC edits.

• Credentialed coders and compliance professionals who will work closely with your RAC team
• First hand experience helping many healthcare providers with RAC during the demonstration project
• Success built on delivering measurable solutions to todays healthcare challenges
• The American Hospital Association's choice to support the RACTrac initiative