Seven Ways to Minimize Your RAC Financial Risk
The Recovery Audit Contractor (RAC) demonstration project found over $1,000,000,000 of improper payments from just a handful of states.
The permanent program will likely generate several times that amount.
Even though your organization may not be receiving many complex review letters yet, you should be preparing to minimize your financial exposure as much as possible.
Here are seven ways to accomplish just that: 1) Mail Yourself a Mock RAC Letter Many providers are concerned about how the RAC letters will be handled in their facilities.
Some popular questions are: Who will the RAC letter be routed to within our hospital? How long will it take for that letter to get to the right person after we receive it from the RAC? Will there be any consistency to how our internal team treats this process? One quick and inexpensive way to address these questions is to mail yourself a letter as if it was from your RAC.
Go ahead and make it look official, address it to the person who is responsible for RAC letters and document exactly what day you put it in the mail.
Then, wait to see what happens.
Even if you are already receiving letters from the RAC and they appear to be handled correctly, I would suggest that you mail a sample letter every month to ensure that your process is still running smoothly.
(If it is not, wouldn't you want to learn that from a practice letter before you miss a deadline with your RAC because the right person did not receive their mail in time?) 2) Review All Four RAC Websites All issues need to be formally approved and posted on the RAC websites before they can pursue those with providers.
Given that, review your regional RAC website on a weekly basis to see if there are any updates.
However, do not stop there.
Take a few minutes every couple weeks and review the other three RAC sites as well.
If a different region has had success with a series of DRG's, it only is a matter of time before your RAC will add that to their approved list as well.
Be pro-active and see what is going on from a national basis and get your team prepared.
3) Increase Your Billing & Coding Resources While medical necessity was the category that produced the most improper payments during the demonstration project, the permanent program has only approved DRG related issues as of the first quarter of 2010.
Many hospitals have built up their RAC team largely focused on clinical resources, but they do not seem to have added certified billers and coders to meet the increased demand that is soon to be coming.
If your facility gets inundated with RAC letters, your existing team members will likely not be able to handle all of that additional work.
I would encourage you to add another FTE if possible or partner with a company who could provide this as a service to you.
Doing nothing will probably result in adding to your financial exposure from the RAC's.
4) Plan for an Audit Revolution Given the overwhelming financial success of the RAC demonstration project, all other payers must be salivating over the opportunity to perform similar audits on you in the future.
While this is painful to think about, your audit concerns need to focus on more than just the RAC's.
Plan for Medicaid, Blue Cross, United, Aetna, etc.
to quickly piggy-back off of the wild success that the RAC's have had.
Accordingly, your internal committee should probably not be called your "RAC Team" but rather your "Audit Response Team.
" Think more globally about how auditing will change in the near future.
It would be helpful to have a plan in place to handle audits that come from any payer, not just RAC.
5) Focus on Getting it Right from the Start While responding to the RAC's is a necessary endeavor, your real goal should be much broader than that.
In an ideal world, you would like the auditors to never find any reason to come calling.
In order for that to happen, you must be focused on revenue integrity and data correctness right from the start.
How do you do that? Get more committed to your denials management process! Regardless of how good you think it is now, there is always room for improvement.
You probably need to have parallel task forces to accomplish this.
One would be for your newly named "Revenue Integrity Team" and the other would be your "Audit Response Team.
" The combination of both of those efforts will produce short and long term results which will pay dividends to your organization.
6) Be Prepared for the Long Haul or Partner with Someone Who Is Even though a defined appeals process has been established for the RAC's, that timeframe has turned out to be much longer than anyone expected.
For example, there are many providers from the demonstration project that are still waiting to have resolution on their appeals.
Given that the permanent program will grow to 50 states, what will the appeal timeline look like for you? Common sense would suggest that many appeals in the future will take years to finalize.
Given that, do you have the time, resources and patience to work through this process over the course of several years? If you are not sure, I would encourage you to partner with a company who can help you do just that.
And, make sure they charge you a flat fee for the appeals; otherwise you may end up winning the RAC appeal but giving all of your proceeds to your vendor.
7) Build Your External Team and Plan for Implementation Many providers THINK they have everything in place to manage all of the audits coming their way.
However, so did most of the hospitals during the demonstration project.
The unfortunate reality is that many of you need help.
If you cannot pull together funds to add FTE's, then partner up with external resources who can help.
You should have a RAC attorney who you can call when you need their services.
Additionally, do you have a company that can provide both DRG and medical necessity claims review and support in the event your existing team cannot manage the increased volume? Hopefully you will not need to utilize all of these services, but since you cannot really tell what your workload is going to be it is wise to set some partnerships up now.
If you agree that you may need some external help, please remember that most partners need some time to implement.
You need to sign an agreement and then given the nature of the RAC reviews, you may also need to set up electronic access to your system.
This can take two or three months.
Don't wait for the RAC's to create a problem for you, proactively plan for success in this area.
Hopefully these ideas will help minimize your current and future financial risk related to the pending audits.
While it can sometimes be difficult to plan for the unknown, there is simply too much at risk not to be prepared.
Do yourself a favor and implement the steps above.
It would be great to have all of them in place and not need them than the other way around!
The permanent program will likely generate several times that amount.
Even though your organization may not be receiving many complex review letters yet, you should be preparing to minimize your financial exposure as much as possible.
Here are seven ways to accomplish just that: 1) Mail Yourself a Mock RAC Letter Many providers are concerned about how the RAC letters will be handled in their facilities.
Some popular questions are: Who will the RAC letter be routed to within our hospital? How long will it take for that letter to get to the right person after we receive it from the RAC? Will there be any consistency to how our internal team treats this process? One quick and inexpensive way to address these questions is to mail yourself a letter as if it was from your RAC.
Go ahead and make it look official, address it to the person who is responsible for RAC letters and document exactly what day you put it in the mail.
Then, wait to see what happens.
Even if you are already receiving letters from the RAC and they appear to be handled correctly, I would suggest that you mail a sample letter every month to ensure that your process is still running smoothly.
(If it is not, wouldn't you want to learn that from a practice letter before you miss a deadline with your RAC because the right person did not receive their mail in time?) 2) Review All Four RAC Websites All issues need to be formally approved and posted on the RAC websites before they can pursue those with providers.
Given that, review your regional RAC website on a weekly basis to see if there are any updates.
However, do not stop there.
Take a few minutes every couple weeks and review the other three RAC sites as well.
If a different region has had success with a series of DRG's, it only is a matter of time before your RAC will add that to their approved list as well.
Be pro-active and see what is going on from a national basis and get your team prepared.
3) Increase Your Billing & Coding Resources While medical necessity was the category that produced the most improper payments during the demonstration project, the permanent program has only approved DRG related issues as of the first quarter of 2010.
Many hospitals have built up their RAC team largely focused on clinical resources, but they do not seem to have added certified billers and coders to meet the increased demand that is soon to be coming.
If your facility gets inundated with RAC letters, your existing team members will likely not be able to handle all of that additional work.
I would encourage you to add another FTE if possible or partner with a company who could provide this as a service to you.
Doing nothing will probably result in adding to your financial exposure from the RAC's.
4) Plan for an Audit Revolution Given the overwhelming financial success of the RAC demonstration project, all other payers must be salivating over the opportunity to perform similar audits on you in the future.
While this is painful to think about, your audit concerns need to focus on more than just the RAC's.
Plan for Medicaid, Blue Cross, United, Aetna, etc.
to quickly piggy-back off of the wild success that the RAC's have had.
Accordingly, your internal committee should probably not be called your "RAC Team" but rather your "Audit Response Team.
" Think more globally about how auditing will change in the near future.
It would be helpful to have a plan in place to handle audits that come from any payer, not just RAC.
5) Focus on Getting it Right from the Start While responding to the RAC's is a necessary endeavor, your real goal should be much broader than that.
In an ideal world, you would like the auditors to never find any reason to come calling.
In order for that to happen, you must be focused on revenue integrity and data correctness right from the start.
How do you do that? Get more committed to your denials management process! Regardless of how good you think it is now, there is always room for improvement.
You probably need to have parallel task forces to accomplish this.
One would be for your newly named "Revenue Integrity Team" and the other would be your "Audit Response Team.
" The combination of both of those efforts will produce short and long term results which will pay dividends to your organization.
6) Be Prepared for the Long Haul or Partner with Someone Who Is Even though a defined appeals process has been established for the RAC's, that timeframe has turned out to be much longer than anyone expected.
For example, there are many providers from the demonstration project that are still waiting to have resolution on their appeals.
Given that the permanent program will grow to 50 states, what will the appeal timeline look like for you? Common sense would suggest that many appeals in the future will take years to finalize.
Given that, do you have the time, resources and patience to work through this process over the course of several years? If you are not sure, I would encourage you to partner with a company who can help you do just that.
And, make sure they charge you a flat fee for the appeals; otherwise you may end up winning the RAC appeal but giving all of your proceeds to your vendor.
7) Build Your External Team and Plan for Implementation Many providers THINK they have everything in place to manage all of the audits coming their way.
However, so did most of the hospitals during the demonstration project.
The unfortunate reality is that many of you need help.
If you cannot pull together funds to add FTE's, then partner up with external resources who can help.
You should have a RAC attorney who you can call when you need their services.
Additionally, do you have a company that can provide both DRG and medical necessity claims review and support in the event your existing team cannot manage the increased volume? Hopefully you will not need to utilize all of these services, but since you cannot really tell what your workload is going to be it is wise to set some partnerships up now.
If you agree that you may need some external help, please remember that most partners need some time to implement.
You need to sign an agreement and then given the nature of the RAC reviews, you may also need to set up electronic access to your system.
This can take two or three months.
Don't wait for the RAC's to create a problem for you, proactively plan for success in this area.
Hopefully these ideas will help minimize your current and future financial risk related to the pending audits.
While it can sometimes be difficult to plan for the unknown, there is simply too much at risk not to be prepared.
Do yourself a favor and implement the steps above.
It would be great to have all of them in place and not need them than the other way around!
