RAC Changes Could Leave Providers Susceptible

James Carroll, January 20, 2010

HealthDataInsights (HDI) has recently added dozens of new issues to its CMS-approved list for review. Among the many topics that were approved, and perhaps most interesting, is the influx of approved underpayment issues.

Prior to the three-year RAC demonstration, the national error rate for underpayments was determined through the Comprehensive Error Rate Testing (CERT) program and the Hospital Payment Monitoring Program (HPMP) to be at 9%. During the same time period in the demonstration, however, only a 4% underpayment rate was actually found, showing that overpayments were clearly the main target during the demonstration, according to Kimberly Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc.

"We may start to see a tip in underpayment appeals," says Hoy. "This could be to try to get us to look a little more carefully and closer at the national measurement."

With HDI looking specifically at underpayments now, providers may wish to bring these issues to their attention. By being aware of these underpayment issues—such as DRG validation-amputations and DRG validation-burns—and preparing for the audits, it will put providers in a better situation going forward.

"Region D states are definitely keeping an acute eye toward the underpayment situation and plan on appealing any necessary claim," said William Malm, ND, RN, a healthcare consultant for Craneware, Inc. "Several large and small hospitals in the region were expecting this or something like it, and have been preparing since the demonstration."

Underpayment issues for review came up recently as part of a list of nearly 70 new issues that HDI released for complex RAC review. The arrival of these new issues brings the total number of DRG validation issues to 530 out of a possible 747.

The only other RAC to post any issues for complex RAC review is Connolly Healthcare (Region C). However, since the approval for RACs to begin DRG validation didn't happen until late 2009, the trend may continue across all four US RAC regions, which may not bode well for providers, according to Hoy.

"One thing that concerns me a little bit, is that it really leaves providers susceptible," said Hoy. "Having all of these issues approved means they could in effect go after a provider for all of these issues and hit them hard."

James Carroll is associate editor for the HCPro Revenue Cycle Institute.

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