RAC Background

As of January 1, 2010, hospitals, clinics, hospices and medical practitioners who process Medicare claims will have been subjected to audits conducted by regional Recovery Audit Contractors (RACs) under the auspices of the Centers for Medicare and Medicaid Services (CMS).  During the past three years, a test program has proven immensely successful in recovering over a billion dollars of excess or underpaid Medicare claim payments, and Congress has now made RAC audits permanent law.  The program is expected to save Medicare as much as $10 billion by 2015. The reality for some hospitals will be a looming financial challenge, since Medicare reimbursements are immediately garnished once the auditor confirms overpayments.

Healthcare providers must deal with the reality of RAC audits. Providers can, however, successfully navigate the regulatory waters by establishing organizational processes and leveraging technology to help ensure accurate, day-to-day medical necessity and Medicare billing practices. These efforts can ease compliance with the rigors of a RAC audit and protect reimbursement. 

Hospitals can anticipate undergoing two types of audits:  Automated reviews are done via data mining programs to identify obvious coding errors, such as a claim for two colonoscopies in one day for the same patient.  Complex reviews involve the auditors reviewing medical records and other documentation.  These subjective reviews could lead to a denial of payment if organizations do not provide the proper documentation to prove that the course of action taken was medically necessary.  These reviews place considerable administrative burden on hospitals. Once records are requested by the RAC, hospitals have 45 days to provide them.  The RAC then has 60 days to review the records.  Once a RAC identifies an overpayment, it provides written notification requesting payment in full.  Providers have 15 days to file a rebuttal with the RAC. Hospitals can appeal the RAC’s final ruling through the standard appeal process with Medicare Administrative Contractors.  Up to 200 medical records, each usually consisting of several hundred paper documents, may be requested by the regional RAC for auditing every 45 to 60 days.  Requested records are required to be in a specific electronic format compatible with the auditing systems of the regional RAC.

How Logical Ink Can Help Prepare for RAC Audits

Improved Clinical Documentation
Legible, accurate and thorough documentation is more important to the continued financial health of your facility than ever before.  First, and foremost, Logical Ink is physician-friendly, therefore easily embraced by your staff.  Our solution was specifically designed to address the usability of adopting an electronic record.  The pen-based interface encourages thorough documentation by supporting both structured data for accurate billing and flexible marginal notes/annotations.  The handwriting recognition and validation at the point of care will improve legibility.

Centralized Electronic Medical Records Online
Easy access to critical data and stored documents is critical to responding to RAC requests in a timely fashion.  Logical Ink archives all of your electronic documentation in a centralized database and it delivers a permanent archive to your EMR or imaging system upon completion of the chart encounter.  Documents are storied in industry standard formats such as PDF or image so you've eliminated paper.  And with Logical Ink's web portal, documents can be easily accessed/reviewed online or exported and prepared for an auditor in minutes.

More Accurate Coding
The documentation should support the level of service provided to justify medical necessity (one of the top ten targets of audits).  With Logical Ink's intelligent document templates, your facility can prompt your staff to accurately capture the services provided and maximize billing efficiency.  Our active validation guides your staff on making sure that the necessary reviews are made for the respective chief complaint.  Physicians can review a coding summary with one click before generating a narrative Medical Records and sending a super bill export to the billing department.

More Information on RAC

More information on RAC can be found on the Centers for Medicare and Medicaid Service web site:  http://www.cms.hhs.gov/RAC/

American Hospital Association on the RAC Program:  http://www.aha.org/aha/issues/RAC/index.html

Healthcare Financial Management Association on the RAC Program:
www.hfma.org/library/reimbursement/medicare/RAC.htm