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The Centers for Medicaid and Medicare Services' (CMS) plan to expand the Recovery Audit Contractors (RAC) program to all 50 states by no later than 2010 has left many hospitals worried about the extra resources and finances that it will take to cope with the impending RAC program audits. When the 3-year RAC demonstration ended in June 2008, the RAC auditors had collected more than $930 million in overpayments and only returned $38 million in underpayments. With the rollout of the permanent program, hospitals are under more pressure than ever to prepare staff and infrastructure to deliver RAC record requests within the allocated timeframe of 45 days.
Boundaries to Overcome
Under the RAC program, RAC contractors will send out audit letters requesting medical records and other supporting documentation from the provider. After the record request has been made, the hospital has 45 days to provide copies of the requested records or they must formally request an extension. If the records are not sent within 45 days, then the associated claims will be considered overpayments by default, and the right to appeal will be lost.
Even with numerical boundaries of being allowed to request a maximum of 200 records per 45 days, the volume of paper and electronic documents involved in a RAC audit will still be overwhelming. For every requested claim there are clinical notes, completed forms, bills, lab results and other documents that need to be pulled and reviewed. Locating all of the required documentation and investigating what is wrong with the claim is challenging and may present a significant resource drain on the hospital's health information management (HIM) department.
According to CMS' RAC evaluation report in June 2008, approximately 8 percent of the total denials recovered by the CMS during the demonstration phase were due to technical denials, where medical records were not fulfilled on a timely basis. This figure is further proof that HIM departments were overburdened and unable to deal with the volume of requests and did not recognize the serious financial implications of RAC audits.
The permanent RAC program is rolling out during a difficult time for hospitals, characterized by the recession and the building concerns generated from health care reform. Due to the economic decline, CMS is taking a cautious approach to the rollout of complex reviews, indicating that the hardest part is yet to come.
Releasing copies of medical records is already a complex process, consisting of 32 specific steps. This process is further complicated by multiple databases, state and federal regulations and patient privacy laws that those handling the release of information (ROI) requests must address. RAC requests will add an extra burden to the ROI process and completely max out the already overburdened HIM department. The U.S. Department of Health & Human Services estimates that there are already approximately 55 million medical record requests made per year, which will significantly rise with the expansion of the RAC program in 2010.
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