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 Revenue Cycle Management

Data in, audit insight out

Analytics improve RAC experience.

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   By Dawn Crump, September 2013

The first recovery audit contractor (RAC) pilot programs began in 2008. More than 1 million medical records have been requested, and hundreds of thousands of appeals have been conducted. HealthPort alone averages 39,000 RAC medical record requests per month. Furthermore, nearly $2 billion has been recouped by Medicare in complex medical record denials over the past five years, representing 96 percent of all complex audit RAC activity.

By all predictions, the number of auditors and the volume of audits will continue to grow, which will further burden health information management (HIM), information technology (IT), compliance and revenue cycle staff.

Auditors have developed sophisticated tools and algorithms to find “suspected” improper payments. Now is the time for hospitals and physician practices to do the same.

The American Hospital Association (AHA) states that 43 percent of hospitals responding to RACTrac questions regarding the administrative burden of audits use some type of audit management software. For Cathy Watts, RHIA, administrative director of HIM, Cape Fear Valley Health in Fayetteville, N.C., software for tracking and reporting audit activity is one of the top five requirements for success; it is critically important to ensure the accuracy and timeliness of the data entered – both electronically and manually.

Data input should be restricted to only a few, well-educated staff, as multiple data entry points confuse results and derail data analysis. According to the results of the AHA RACTrac survey (first quarter, 2013), commonly used data fields for RAC analytics are audit determination, record requested, original payment, status, audit type, audit outcome, appeal level and key dates.

Once analyzed by the audit management team, results should be disseminated to executives, physician advisors, case management, coders, compliance, revenue cycle and finance. Every hospital should be able to answer three basic audit questions:

  • How much money is at risk?
  • How many audits are held in appeals?
  • How are audits impacting cash flow?

Beyond these three questions, a deeper dive into RAC data helps hospitals further control risk.

Another multispecialty, multi-location organization uses data analytics within HealthPort’s AudaPro application to run reports, create graphs and communicate audit activity to the organization’s CEO and financial leadership. AudaPro is compatible with the organization’s EHR systems, release of information (ROI) electronic delivery application and AHA’s RACTrac survey data entry system. Record requests, RAC correspondence and all appeals are managed electronically through the audit management system and EHR software. The software provides a consistent way to manage the audit workflow and ability to track and trend results for improved outcomes.

Denial data analysis helps hospitals understand denial rates per volume of records requested from the RAC and compares reasons for denials to focus coding, education and clinical documentation improvement efforts. Deeper analysis uncovers how many dollars are at risk within each step of the review/appeal process (pending, dispute, RAC discussion, rebuttal, levels 1 through 5, etc.). Armed with this information, organizations are able to demonstrate the value of their audit management efforts and identify any bottlenecks or workflow logjams throughout the appeals process.

Appeals data becomes increasingly important as cases remain stuck within the appeals process. According to the AHA, hospitals appeal only 44 percent of all Medicare claims denied by RACs. However, 72 percent are overturned, totaling $157.2 million nationwide. The entire process typically takes 18 months to two years, and interest may accumulate on these dollars.

Here are four questions to consider on appeals:

  • Do you separate out automated appeals versus complex appeals?
  • What is the cost of appeal versus dollars at risk?
  • Should you use an internal versus external appeal partner?
  • What is your overturn rate?

Finally, data analysis helps hospitals determine if there are any potential opportunities for Part B rebilling. The final rule on Part B was released by CMS on Aug. 2, 2013, and becomes effective on Oct. 1. The rule opens the door for hospitals to rebill denied inpatient admissions under Part B payment. However, it is a very narrow opening, due to a one-year time limit from the date of service. There may only be a few eligible Part A claims, but RAC data analytics will help hospitals find them.

About the author

Dawn Crump, M.A., SSBB, CHC, is VP, audit management solutions, HealthPort. For more on HealthPort, click here.


Tags:  Revenue Cycle Management