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Minimize RAC Takeback

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Both teamwork and technology can minimize RAC takebacks.

Until she got a letter requesting 59 hospital charts, Constance Hoops, the director of care management at Hilton Head Hospital in South Carolina, wasn't all that aware of the Recovery Audit Contractor (RAC) Medicare program. However, the 2007 request she received was part of the RAC demonstration project, and she and her colleagues were about to get a crash course in just how potentially costly this Medicare program can be to a facility.

"We looked over the files and sent them in. When we got our reply back from RAC, they told us they were taking money back on 31 of those of the 59 files—it was over $140,000," she says.

So rather than watch money go to Medicare, the hospital took a strategic approach to get its money back and began appealing all but four of the files.

"We agreed with them [RAC] on three of the records, and one was appealed by one of the physicians, but the rest we appealed," Hoops says.

The process required them to take their records through the various stages of appeals (there are five levels of appeal, and the final ones may call for legal counsel as they are filed with U.S. District Court), but they were steadfast in their pursuit. "We recovered $100K of the money," she notes, "and we haven't been audited since."

Hilton Head Hospital's experience with the RAC is likely to be repeated throughout the country this year. The best defense against RAC is effective auditing and monitoring—be it through an in-house team and a spreadsheet or advanced RAC auditing software. The question isn't whether a facility should be prepared, but what approach to take and how much money to invest in staff, technology, training, and possibly financial reserves to protect against potential losses. Although auditing programs are in place at most hospitals, it's essential that existing technology be adjusted to track RAC.

When to use the tech you have
For smaller facilities or those with lower Medicare numbers, modifying and utilizing existing auditing and monitoring programs in conjunction with an all-purpose spreadsheet and one or two team members may be enough to keep a hospital out of trouble, and it certainly is a very cost-effective approach, says 10-year hospital compliance veteran Bret S. Bissey, FACHE, director of regulatory compliance for the Pennsylvania-based IMA Consulting and author of The Compliance Officer's Handbook. Given the difficult financial situations many hospitals faced over the past two years, some have held off purchasing additional technologies until they see how RAC affects them.

For the 94-bed acute care Hilton Head Hospital, which is part of Tenet Healthcare Corp., a team of two and a spreadsheet was exactly how it started out. When the audit began, Hoops could call on her 11 years of experience having worked with an HMO.

"We didn't spend a lot of money, or do anything fancy," says Hoops, who worked alongside the physician adviser at the hospital, Bruce H. Redler, MD. "I did a spreadsheet, and whenever I had any records that were being worked I'd fill in an area and circulate it. In the beginning, we stayed in communication using that one spreadsheet."

Redler works with the physicians and the admission coordinator to ensure the files are documented correctly from the first day the patient enters the facility.

"We use some of our existing technology, InterQual, to verify that the record meets certain criteria," Redler says. "But we've also stepped up our efforts. In the past we reviewed our files the next day, but we found we lost a lot of really good time. Now our admissions coordinator is in contact with bed control. She's notified when an admission is coming in, so they can start looking for the right bed status. So we moved a lot of this [process] to the front end of the workflow."

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