Early days of RAC reviews are the easiest
Early days of RAC reviews are the easiest
Proactive approach helps hospitals succeed
Don't get a false sense of security if the Recovery Audit Contractor (RAC) process seems easy at first, warns Brian Flood, CHC, CIG, Esq., advisory managing director for KPMG LLP's health care practice in Austin, TX.
"The first month is the easiest. After that it gets hard. Everything will compound itself over time as more and more cases enter the RAC process," he says.
During the RAC demonstration project, Flood worked with hospital systems that were handling the RAC requests easily at first until the workload ballooned.
The RACs will use proprietary software to analyze Medicare claims data and send the hospital a list of files they have identified for review.
The RAC may ask for medical records for up to 200 cases every 45 days for every National Provider Identifier number a hospital system bills under, Flood points out.
Once the RACs start sending back denials, the hospitals will have to issue appeals at the same time they are getting another list of requests for cases from the RACs, he says.
"The original process the hospitals used for fiscal intermediary reviews won't have the capacity to handle all the cases the RACs are likely to request. After the first six months of the demonstration project, it wasn't unusual for hospitals to have 1,800 cases somewhere in the system," Flood explains.
Once the RACs make a determination of whether the claim was properly billed, the hospital has the opportunity to appeal within 30 days without having to pay back the denied claims.
Once 45 days have passed, the Centers for Medicare & Medicaid Services (CMS) takes the money and the hospital has to fight to get it back, an appeals process that can take as long as a year and involve a lot of expense.
"The challenge that hospitals face is putting together the information needed for the 30-day appeal with the right documentation in a short period of time in order to avoid paying back the money," he says.
Institute RAC committee
Flood suggests putting together a RAC committee to coordinate the system's and the hospital's response to the RAC requests. The committee should include the medical director, health information management, case management, the compliance officer, and the hospital counselor.
The team should develop a tool to track how many cases were asked for by the RACs, how many cases the hospital has answered, and where each case is in the audit system.
Hospital systems should take a coordinated response to the RAC, rather than leaving it to each individual hospital, he adds.
"Everybody who has tried to let each hospital handle its own response to the RACs has regretted that decision," he says.
Flood recommends that hospitals take a proactive approach to appeals by conducting a parallel review of the files requested by the RACs and preparing in advance to support its claims.
That way, the hospital can ask for a formal appeal within the 30-day window and it won't have to give back the money for the claims being challenged.
"If hospitals are prepared when the RAC reviews come back, they can keep the money and the RAC committee becomes a profit center, not a cost center. If they wait 45 days to respond, they get into the formal appeals process, and it could take a long time to recoup the money," he says.
Being prepared has another advantage — if your hospital is prepared for the appeals and can support its claim, the RAC is less likely to ask for the maximum number of files to review in the future, Flood says.
"RACs don't get paid unless they find an error. They are more likely to concentrate on hospitals that are not prepared because their likelihood of getting paid is better," he explains.
Hospitals will reap dividends if they aggressively appeal the cases in which they find an issue with the RAC's determination, Flood says.
"Based on the experiences of providers who were part of the RAC demonstration project, I believe that the likelihood of winning an appeal is very good," Flood says.
Although CMS reported that only 14% of RAC denials were successfully appealed during the demonstration project, Flood says providers report a 50% to 85% success rate on appeals.
Don't get a false sense of security if the Recovery Audit Contractor (RAC) process seems easy at first, warns Brian Flood, CHC, CIG, Esq., advisory managing director for KPMG LLP's health care practice in Austin, TX.Subscribe Now for Access
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