RACs may be headed your way, so now's the time to seek out the services that could save you money and time.

By Lynn Jusinski

They're coming for money, and they could be coming to your hospital soon. The Recovery Audit Contractor (RAC) program's demonstration project wrapped up in March 2008, and the RACs are slated to pay

visits to all 50 states by next year. RACs are tasked with seeking out improper payments-both overpayments and underpayments-to Medicare, and the contractors are paid on a contingency basis, so the more errors they find, the more money they make. During the 3-year demonstration program, RACs picked out more than $1 billion in improper payments, and only 4 percent of those identified went into providers' coffers.

The potential exists for facilities to lose quite a bit of cash, and vendors are taking notice to the needs of providers when it comes to RAC audits. According to Lori Brocato, revenue cycle management project manager, HealthPort, Alpharetta, GA, when she started working on RAC products a year ago, only a dozen vendors were registered with the American Hospital Association's RACTrac program. Now, that number has nearly tripled. With the varied products and services on the market, which ones are right for your facility, and do you need outside help at all?

Take Your Pick

Services available to help out with RAC audits include data mining, appeals support, release of information (ROI) services, medical necessity risk assessments, tracking products, coding and utilization review, help with setting up or shoring up a clinical documentation improvement (CDI) program and staffing services. During the demonstration program, most facilities were armed with little more than Microsoft's Excel spreadsheets or the Access program. Now, facilities can get RAC help from the beginning to the end of the process, if they choose.

At Corydon, IN-based YPRO Corp., Terry Myers, president, notes many hospitals recognize 1-day stays as a prime target for RACs, and his company fields request for medical necessity assessments. Facilities want to know where they stand and what their vulnerabilities are, and an outside assessment offers an objective view of a facility's documentation weaknesses.

HealthPort offers up a three-pronged approach, with consulting, tracking and ROI. A major problem with the audits so far has been facilities finding themselves short on manpower. Provider organizations scrambled to make copies and struggled in a hybrid record state to deal with the number of ROI requests accompanying RAC audits, Brocato noted. Each RAC vendor puts its own spin on its services, she added, and facilities have to look at which vendor will provide the best solution for their needs.

Loretta Herfel, RN, CCS, CPHQ, utilization management consultant, Amphion Medical Solutions, Madison, WI, recommends facilities use some type of tracking software to help keep tabs on records requests and appeals outcomes, among other things. Amphion helps providers analyze data to pinpoint risk areas. Doing everything that goes along with RAC audits without outside help can be a challenge, Herfel explained. "It's good to have an outside person take a look at it, to give you an unbiased opinion as to what's happening," she said.

At Hirschl and Associates, Laguna Niguel, CA, Nancy Hirschl, BS, CCS, president, advocates for a strategic solution. If a facility stands to lose a pile of money due to errors, they can choose to self audit or hire a consultant, and during the audit, facilities can see what they stand to lose if the vulnerabilities are exposed and also identify strategies for dealing with appeals and preventing further issues in the future. "It's needs assessment, looking deep into coding and case management practices, understanding how your organizations work . and then being able to move forward and say that changes need to made," Hirschl explained.

Do You Need a Hand?

All of our sources agreed it's completely possible to do an audit on your own, with no outside help-but that really depends on the facility. Larger health systems may already have a compliance team on hand and can handle most of the audit prep alone. Smaller facilities may also be able to go it alone. It all comes down to preparation, according to Brocato. Facilities that have policies and procedures in place and are doing consistent internal audits will likely fare better. "If the RACs don't find anything, they're not going to be requesting records, so the more prepared a facility is for the audit, the less the chances they're going to need additional staffing," Brocato explained.

To determine if outside help is needed, look at your resources. Remember, it's difficult to objectively audit your own records, the ones you look at day in and day out. Does your staff have the technical knowledge necessary to get all the work done for RACs? Will your ROI staff be able to handle the records requests? Look at the structure of each department involved in the audit, and determine if you have enough manpower and know-how to get the job done on your own.

Myers feels the Centers for Medicare and Medicaid Services (CMS) is shifting the IRS model into health care. With everything as complex as it is, no one really gets away scot-free. Health care providers are dealing with decreased reimbursement and trouble finding qualified staff members. With RACs coming to possibly collect even more money, outside help might be the best way to go. Myers pointed out that while a facility may have enough staff, those staff members may be new. An outside service offers an independent perspective, and typically can boast experience with other facilities who've dealt with audits.

If you're considering looking to a vendor or consulting firm for help, our sources say now is the best time, although help can still be found after the RAC letter is received. In some cases, there's panic already, while other facilities have done data mining, auditing, altered the case management process and assigned those who will do internal audits, along with allocating back-up resources, according to Hirschl.

Take action early so you can identify your risk areas and lessen the impact of RACs on your facility. Once the RAC letters start rolling out, there's only a limited timeframe to prepare, Herfel noted. If you review the charts ahead of time, you'll be able to see if the records are complete, whether or not you'd have a chance at an appeal and if you need to self disclose any issues with the records. "I would strongly suggest hospitals take a look for some outside assistance right now, as far as doing data analysis, to determine where they are at risk, identify it early, take any action they can to correct it and hopefully minimize the records that will fall under the RACs' radar," Herfel said.

Myers compared RACs to predators seeking out revenue, explaining that the facilities that race to improve will fare the best. "The old joke applies," he said. "You don't need to outrun the bear, you just have to outrun the guy next to you, because [RACs are] going to concentrate their efforts on facilities with the highest potential for return. The better you do, the less likely they are to come after you."

Lynn Jusinski is an associate editor with ADVANCE.