Lori BrocatoCoping with recovery audits is a nationwide concern for providers that grows more and more each year. And by all predictions, the number of auditors and the volume of those audits will continue to grow, affecting healthcare providers’ financial health and adding to an already burdened IT and staffing demand. These are the manifestations of audits that tend to reach the executive suite.

For Kim Wheeler, system director of HIM, St. Vincent’s Healthcare in Jacksonville, Fla., coping with the challenges of recovery audits is an everyday struggle.

A real world example

St. Vincent’s Riverside and St. Vincent’s Southside are both part of Ascension Health System. Riverside has an EHR and audit automation, while Southside is still paper based. Audit compliance and management in paper-based environments are much more labor intensive and expensive than those in electronic settings.

Both St. Vincent facilities have seen CMS Recovery Audit Contractor (RAC) activity double in size since 2011. “Riverside used to be limited to 175 records per every 45-day audit period. Now, the limit is up to 369 per 45 days for that facility alone – and they get 369 requests every 45 days,” says Wheeler.

Most of the auditor requests for medical records are for compliance with medical necessity reviews, which are more labor intensive than coding or diagnosis-related group (DRG) reviews. “We are expending more human and financial resources just to keep up,” adds Wheeler. Worse yet, the Medicare administrative contractor (MAC) prepayment reviews have significantly increased in volume. St. Vincent’s Riverside used to see two or three per week; now the hospital receives 10 per day.

Prepayment reviews represent latest challenge

Kim Wheeler

Kim Wheeler is system director of HIM, St. Vincent’s Healthcare.

Prepayment reviews have a huge financial impact on healthcare providers as issues must be resolved before the payer processes payment. As would be expected, the prepayment cash flow disruption adversely affects discharged not final billed (DNFB). The MAC prepayment reviews are a recent phenomenon, resulting in an influx of activity since June 1, 2012.

At St. Vincent’s, the slowdown in expected reimbursement has received attention from both finance and the billing office. The ripple effect has created a logjam in capital expenditures, workflow expansions and staffing for the organization.

Beyond Medicare

In addition to Medicare, there are many other payers requesting recovery audit reviews – Humana, Blue Cross, Aetna, Omnicare (for United Health) and Wellcare. At St. Vincent’s, nearly every chart is now being audited, creating a high-pressure environment with increased demands on limited staff.

Currently, the organization’s compliance and HIM departments are handling all audit requests. Collaboration and teamwork are more important than ever before. “They have become creative in communicating, coordinating and tracking the work,” affirms Wheeler. “The effort has required the reallocation of employees and help from the business office and other areas.”

New audit threats to watch

The first major new audit is coming from the Medicaid RACs. These were launched at the beginning of 2012, but are not expected to reach full swing until 2013. While some states are still selecting their contractors, others are already seeing increasing volumes in Medicaid RAC audits.

Many states were waiting to hear the final decision on the Affordable Care Act (ACA) before proceeding with their recovery audit programs. Now that the Supreme Court has held ACA to be constitutional, more states are picking up their Medicaid RAC activity.

Medicaid RACs are looking at many of the same targets as the Medicare RACs. Current activity indicates a large number of automated reviews for coding and billing errors versus complex reviews involving complete medical record requests.

Providers can also expect more prepayment reviews coming from CMS for Medicare. These are the RAC prepayment reviews designed to supplement – not replace – the MAC payment reviews. They were scheduled to start at the beginning of 2012, but the uproar forced a delay until early June, 2012. And due to further delay, these prepayment reviews were scheduled to go live on Aug. 27, 2012.

Medicare Prepayment Reviews are a CMS demonstration project, initially affecting only 11 states. Seven of those states (Florida, California, Michigan, Texas, New York, Louisiana and Illinois) are targeted as having high populations of fraud and error-prone providers. The other four states (Pennsylvania, Ohio, North Carolina and Missouri) are targeted as having high claims volumes of short inpatient hospital stays.

The initial round of audits will involve only eight DRGs. For organizations located in the designated states, preparation should include a pre-emptive internal audit of these DRGs to determine the status of clinical documentation regarding medical necessity justification, coding and billing.

By targeting the initial DRGs, case managers can ensure the appropriate level of care and test for billing errors. At St. Vincent’s, a probe audit was performed by CMS in the spring of 2012 in which five cases from each of the eight DRGs were audited. According to Wheeler, “The probe audit was a black hole, since we have received no feedback or follow-up communication.”

Practical workflow strategies to cope

Wheeler recommends proactive workflow strategies to cope with the heightened audit demand:

  • Prompt action. In a paper-based environment, it is especially difficult to assemble the entire record and respond promptly to auditor demands. Wheeler’s staff responds to auditor requests for medical record documents immediately upon receipt to ensure the organization meets the 45-day deadline and avoids technical denials.
  • Executive awareness. Payments will slow down. Cash flow will be impacted. Therefore, executives and management teams must be informed of audit activity on a regular basis. Education and awareness training serve this purpose while also justifying necessity for additional resources and staffing reallocations.
  • Staffing adjustments. St. Vincent’s now has a business office representative in their HIM department. This staff member works with a coding manager to assist with prepayment reviews. Any audit requests received by the business office are centralized in HIM.
  • Benefits of centralization. Centralized audit processing streamlines audit workflow and minimizes duplicative work/cost. A centralized database to capture and monitor every audit, regardless of type, is necessary to identify duplicate audits.

Though it seems obvious, providers should track all audit requests. Some auditing bodies have targeted the same revenue/encounter. Ideally, returning reimbursement already received is something to avoid altogether, and you certainly want to avoid duplicate payback. Returning money to a payer is something you should only have to do once.


Duplicate audits under investigation

Congress is looking into the overlap in healthcare recovery audits being conducted nationwide, and by multiple contractors. A bipartisan group of legislators has requested that the General Accounting Office (GAO) initiate a study of the various audits being conducted on behalf of Medicare. The goal is to effect change that requires a coordinated effort among auditors to eliminate duplicate and/or unnecessary requests.








Lori Brocato is audit product manager, HealthPort. For more on HealthPort: click here.