Recovery Auditor Contractor (RAC) Part 4: How To Conduct a RAC Audit Risk Assessment

Welcome back to our RAC blog post series. In this installment we’ll cover how to conduct a RAC Audit Risk Assessment. If you're just now jumping into this series, you might be interested in reading Part 1: The History of the RAC Program, Part 2: Expectations And Enhancements For 2016, and Part 3: Ramifications Of CMS Enhancement And Expansion.

For this installment of the RAC blog we will discuss how to conduct a RAC Audit Risk Assessment to help minimize revenue risk and avoid exposure to RAC and other audit entities.

The Medicare Carriers, Durable Medical Equipment Regional Carrier (DMERC), and the Fiscal Intermediaries (FIs) all perform Comprehensive Error Rate Testing (CERT) audits. These audits performed by Medicare Administrative Contractors (MACs) allow CMS to calculate the Medicare Fee-for-Service (FFS) improper payment rate. And so CMS maintains the CERT program for Carriers/MACs, FIs/MACs, and DME MACs. On an annual basis the CERT evaluates a statistically valid random sample of claims to determine if they were paid properly under:

• Medicare coverage,
• Coding, and
• Billing rules.

For example, the fiscal year (FY) 2015 Medicare FFS program improper payment rate is 12.1 percent, representing $43.3 billion in improper payments, compared to the FY 2014 improper payment rate of 12.7 percent or $45.8 billion in improper payments (1). The table below outlines the improper payment rate and projected improper payment amount by claim type for FY 2015. The reporting period for this improper payment rate is July 1, 2013 -June 30, 2014.

Reviewed over time there are continuous patterns of errors around the country which are commonly reported:

• Missing, illegible physician signature
• Missing, illegible documentation
• Insufficient documentation to support medical necessity for multiple service lines
• Missing drug administration records and time for product delivery
• Missing treatment plans for PT, OT, or Speech
• Medical necessity of services not supported by documentation in the record
• Requested documentation for initial, secondary review was not provided, was illegible, or did not substantiate service coded
• Missing orders, progress notes, and/or intent of physician treatment
• Chiropractic care was always listed by every MAC with errors for:
  • Medical necessity
  • Documentation
  • Plan of care
  • Legible signatures
• Very high spans of Evaluation & Management (E/M) coding errors: 30% - 69%
• E/M error rate spans the list of CPT-4 code set: office visits, subsequent visits, emergency department, clinic visits
• Requested information related to E/M service was often not provided to the MAC

From the wide range of error types you can see problems which cover many areas in the healthcare organization such as:

• Culture of the organization
• Internal processes
• EMR/Paperwork
• Billing
• Coding

In both hospital and physician services being provided, documentation of these services often lacks “professional” data collection and recording methods. A systematic process improvement plan is necessary to effect real change within an organization related to documentation and coding needs by physicians.

The Fisher Consulting Group has conducted numerous studies regarding the organizational culture of many companies and has scientific conclusions which suggest that regardless of the size, sector, industry, or age of the business, organizational culture affects performance. This would include financial performance, customer and employee satisfaction, as well as innovation. This ultimately means that organization culture impacts the quality of healthcare being provided as well.

Source:

http://www.fisherconsultinggroup.com/uploads/articles/Article-Why%20Mission%20Matters.pdf

http://www.fisherconsultinggroup.com/uploads/articles/Article-Culture%20Matters.pdf

The Association for Healthcare Documentation Integrity (AHDI), Medical Transcription Industry Association (MTIA), and American Health Information Management Association (AHIMA) documented a thorough set of “best practice” methods known as the PDCA in a 2010 Adoption guide.

• This guide helps organizations analyze and establish objectives or the expected results and creates a plan of action. By starting from the end result and working backward, each step of the process can be included in the analysis and in the solution.
• Measurement of the objectives to see how closely they meet expectations. This is an important step, as it allows for the adjustment of the plan where necessary. It also allows for incremental changes instead of a one-shot approach to attaining perfection and the analysis paralysis that can ensue with that approach.

Source: http://c.ymcdn.com/sites/www.ahdionline.org/resource/resmgr/ToolKits/AdoptionGuide.pdf?hhSearchTerms=%22PDCA%22

While the advent of the Electronic Medical Record (EMR) is not new, auditing for the EMR is just beginning. Few of the MACs have touched on EMR in their CERT audit. One which did said that there was a missing protocol which describes that the EMR was entered by physician with an ID and password. Other Medicare entity guidelines have come out related to “cloning” of documentation, problems with templates, and “cut & paste” functionality within the EMR.

• When an audit occurs, it is vital that the necessary information to support the information in the medical record for the patient’s visit is provided to the auditing agency.
• Policies and procedures related to document gathering and provision should be viewed as key to keeping reimbursement.

Two areas of concern exist in relation to coding:

• Professional Expertise in relation to coding E/M services
• Understanding and collaboration to communicate medical necessity in documentation and to coding for reimbursement

Coding and auditing expertise for E/M services across the nation does seem to be lacking as can be concluded from the high error rates in the entire spectrum of E/M CPT-4 codes for multiple years. Hospital and physician organizations should insist on hiring professionally trained and certified coding and auditing staff to provide the translation from clinical to reimbursement to maintain proper reimbursement.

Stay tuned for our next (and final) RAC blog post where we'll continue discussing additional ideas for conducting a RAC Audit Risk Assessment to help minimize revenue risk and avoid exposure to RAC and other audit entities.

You can also receive an in-depth guide to the 2016 RAC Update by watching our on-demand webinar. Click the button below to see it on-demand: