10 Lessons From the RAC Demonstration Program

The Medicare Recovery Audit Contractor demonstration project has come and gone, but many providers learned valuable lessons during the process. Consider the following advice from providers and other experts who have experienced RACs first-hand, and lived to tell about it.

1. One of the most important lessons Tanja Twist, MBA/HCM, director of patient financial services for Methodist Hospital in Arcadia, CA, learned from the demonstration project was the need to diligently track and monitor all correspondence to and from the RAC. "This goes beyond tracking the date you send or receive the actual documents (e.g., determination letters, medical record requests, and appeals) or send the medical records, but should include tracking the receipt of the documents by the RAC to ensure you are responding timely." Send everything via certified mail with a return receipt, she suggests. And make sure you are educating your entire facility—not just the mailroom—on what the RAC documents will look like so that correspondence will get to the right person or department. "Don't assume that because you are able to identify a recipient for correspondence that the RAC will get it right every time," she says.


2. Tracking appeals was the single most important way to survive a RAC audit because it allows you to prioritize your appeals, says Stacey Levitt, RN, MSN, CPC, director of patient care management at Lenox Hill Hospital in New York City. "This way you can spend your available time where you get the biggest bang for your appeal effort."


3. Having a strong physician advisor program—not just having the concept on paper, but an available and active physician participant reviewing and interceding when appropriate—is critical for surviving RACs, according to Yvonne Focke, RN, BSN, MBA, revenue cycle director at St. Elizabeth and St. Luke Hospitals in Covington, KY. "Having such an advisor strengthens your compliance program which is more defensible when appealing cases, especially once they reach the Administrative Law Judge," she says.


4. It's important for hospitals to regularly assess the effectiveness of their concurrent Medicare admission review processes, according to Joe Zebrowitz, MD, executive vice president for Executive Health Resources. Hospitals have to get the Medicare patient's status correct every time. Establish a strong utilization review plan that follows Medicare's Conditions of Participation. But a good plan does not solely ensure good results. You must make sure that the plan is being followed every day and that your case managers are using criteria to review all Medicare admissions and that every case that does not meet the criteria is undergoing a second-level review by a physician advisor, according to Zebrowitz. This physician advisor must be well versed in medical necessity regulatory guidance and use evidence-based medicine and risk stratification protocols to establish correct patient status. Your organization should also conduct retrospective audits on an ongoing basis to identify incorrect certifications from the past and self-disclose these errors, he says.


5. Remember that RAC contractors are authorized to refer cases for investigation to the OIG when fraud or abuse is suspected, says Nancy Beckley, MS, MBA, CHC, of Bloomingdale Consulting Group, Inc.


6. Take advantage of the 15-day rebuttal period prior to the actual appeals process, says Focke. "Even if only 10% of our cases were spared from this process, it was worth pursuing," she says.


7. Fran LaPrad, RHIT, CPHQ, director of health information at AdCare Hospital in Worcester, MA, had difficulty communicating with her RAC during the demo. LaPrad hopes communication will improve during the permanent program, but suggests you should follow up voice mail messages with official letters if you don't receive a phone call back within the allotted time.


8. Zebrowitz also calls out the importance of physician education and collaboration. Many physicians working in hospitals do not have a firm understanding of the regulatory guidance on inpatient versus observation status certification and, more importantly, the ramifications of getting the status wrong, he says. It is your hospital's responsibility to educate your physicians on the importance of documenting all of their concerns and findings in order to demonstrate medical necessity for all inpatient admissions. You also need to encourage strong collaboration between treating physicians, case management, and physician advisors as they work to correctly certify each Medicare admission, ensuring that your hospital will be in compliance with the law and reimbursed appropriately, says Zebrowitz.


9. The care management department at is becoming more and more important as the RAC program moves forward, says Focke. "Historically, care management departments have had a difficult time in justifying their existence because they were seen as a cost center that did not generate revenues," she says. "But the value of having a compliant program has escalated with the advent of RACs and other regulatory agencies."


10. If you have the capability, scan all documentation to and from your RAC (including your medical records), says Twist. As you move through the appeals process, you will find that having the documents stored electronically will ease the process, she says.