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Look for Underpayments on Internal RAC Audits

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Many hospitals are trembling in fear of what the nationwide rollout of CMS' Recovery Audit Contractor program will do to their finances. It's like driving a car across a bridge without knowing whether the bridge actually reaches the other side.

Despite that concern, many senior hospital leaders don't necessarily realize that while RACs are looking for upcoding, their clinicians are likely undercoding patient care as well, which could help offset some of the damage from an audit.

Drew Swiss, vice president of finance with Montefiore Medical Center, a four-hospital, 1,597-bed system in Bronx, NY, says because his hospital was in the RAC demonstration project that included three states, he got a head start on an internal audit of Montefiore's documentation program using PricewaterhouseCoopers software and found that underpayments outnumbered overpayments at the hospital by a count of seven to one.

"I didn't expect it to be that dramatic, but docs aren't really trained to document," he says. "Documentation is like a necessary evil for them, so they really need to be trained completely and accurately on documentation." Unfortunately, in general, hospitals were only allowed to go back 60 days to submit underpayment remediation, while under the demonstration project RACs were allowed to review patient charts up to three years back in search of overpayments.

"The government is on a mission to save money, but the truth is they're mostly looking at one side," he says.

With one of the busiest ERs in the nation at 290,000 annual visits, Montefiore needed to rectify the problem quickly. With a training program for coders and physicians to help rectify some of the language issues that result in undercoding patient care, the hospital was able to realize a $3 million annual benefit to the hospital.

"Hospital clinicians in the ED are likely to make mistakes, but it usually goes in both directions," he says. "And underpayments are at least equal to overpayments."

Stanley Padfield, director of health information management at five-hospital Lee Memorial Health System in Fort Myers, FL, which also was in one of the RAC demonstration states, says at least under the nationwide rollout, RACs have had some of their power curtailed. For example, in the demonstration, there was no restriction on the number of records the RACs could request.

"We were getting requests for 400 to 500 records at a time and there was no time frame on them getting back to us, although we had to get it to them in 45 days. That's where most of the complaints came from." The new rollout limits the number of charts based upon patient volume and tightens the time requirements on the RAC side to 180 days to adjudication.

"Now the RACs have to make a decision on whether they are overturning the hospital's billing or not. That's a real plus for hospitals that are going forward."

Padfield used a vendor called HealthPort to deal with the number of chart requests the hospital got in the initial stages, which, under the nationwide program can number up to 200 charts every 45 days.

"Think of that volume that has to be boxed and shipped and copied and monitored," he says. "I'm not looking forward to RACs starting up, but I'm not worried about it as much now that I have this project in place. It's not keeping me awake at night, let's put it that way."

Philip Betbeze

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