1. What we do (RAC Risk Mitigation)

[M. Sean Smith]

What is RAC (pronounced "Rack")?
• The Recovery Audit Contractor (RAC) is a CMS (Center for Medicare and Medicaid Services) program designed to detect and correct improper past payments made on claims of health care services provided to Medicare beneficiaries.
• Since the start of the program in three states in 2003 $1.03 billion of improper Medicare payments have been identified, with 96% of these representing overpayments due to coding issues. This program can result in fines in addition to a requirement to pay back overpayments.

What is CMS looking for?
RAC Auditors working for CMS examine patient charts and attempt to identify improper payments going back as far as three years that result from any of the following:
• Incorrect payment amounts - based on lack of proper documentation of the chart note.
• Non-covered services
• Incorrectly coded services - (including Hospital visits, consults and observation miscoding.)
• Duplicate services.

There's the exciting background so you know what it is, but really most doctors are going to know what you are talking about with the word RAC. There may be a few that don't but CMS is working on outreach programs to get the word out and they are scheduled to start to Kentucky in August, so now is the time for them to start their self audits (us) to make sure they are ready.

Okay, if you are still awake:

What do we do?
• We will perform a random 50 chart base-line audit per physician looking for the same issues CMS is going to be looking for.
• We provide a detailed compliance summary on our findings with recommendations to bring documentation into Medicare compliance.
• We identify areas of the areas of underpayments so proper coding can be utilized to increase reimbursement rate.
• We review for correct diagnosis coding and improper documentation of the chart note, to find these things before CMS does. This can often result in avoidance of fines, rather than if CMS finds the errors.

How does this help?
First of all CMS is recommending that every office do a self audit before they come. If the doctor's office finds the problems through self auditing and presents an action plan (which we provide in great detail) it can greatly reduce or avoid entirely per incident fines that could be levied against the practice.

How can you bring it up? The easiest way is just to ask the doctor if he is doing anything to prepare for the RAC audits, someone in your BNI group presented some information and you thought it was interesting. Be prepared to hear some grumbling because the docs are not happy about the program. There is a lot of sentiment that this is a government program to screw them over and that it is unfair to go back three years looking for errors, and they have a point in my opinion, but we are here to help them.

Who does this affect? This audit affects any healthcare provider that bills Medicare. So a good referral is anyone of them that have not began preparations.

Thanks,
M. Sean Smith
ERS Consulting