What You Can Learn From 31 RAC Attacks

With so much noise about how to prepare for a RAC audit, maybe its best to go directly to the source for your intel: hospitals that have suffered a RAC attack. These hospitals are a few steps ahead of the rest of the country in that they have first-hand experience in what kind of charts are being reviewed, what types of diagnoses are being targeted, and what's being turned down on appeal.

In San Francisco, CA, Alan Rosenstein, MD, a practicing physician, and vice president and medical director of VHA Inc., west coast operations, has spent the last year surveying 31 VHA hospitals in California, New York, and Florida that have gone through RAC audits as part of the CMS demonstration project. The idea is to let hospitals in non-demonstration states know what will happen as RAC moves through the rest of nation, says Rosenstein, who partnered on the project with VHA colleague Michelle O'Daniel.

"Some of the results we found were astounding," says Rosenstein, noting that the hospitals paid back a total $45 million to CMS. A total of 47,243 charts were requested by RAC auditors. One-third were turned down and didn't meet criteria, which was a lot, says Rosenstein. "The main reason was a failure of appropriate documentation and coding that supported medical necessity," he says.

Rosenstein says 50% of the retracted charts were submitted for appeal and a third of those were upheld. This number could be even higher today, he says as the data is six months old. Part of the problem with the appeals process is RAC auditors were looking at 2005 and 2006 charts using 2008 and 2009 criteria. Still, the hospitals won so many appeals, says Rosenstein, because they were able to extract information from the charts that supported clinical necessity, which the reviewers didn't take into consideration.

The VHA data also revealed that the RACs targeted three primary areas: less than 24-hour care, inpatient stays, and rehabilitation. Rosenstein says the RACs also targeted medical diseases such as respiratory, cardiac, metabolic, and nutritional diseases over surgical diseases.

So what can hospitals learn from their colleagues in demonstration states? "It's a wake up call for better documentation and coding," says Rosenstein. "It is illegal to retrospectively go back and change any of the charts, so hospitals are stuck, and whatever the auditors pull out and review that is what you are under pressure to, if appropriate appeal."

Moving forward, he says, it is all about physician education. "The physician is the one who writes in the chart that supports documentation." Of course how to bring physicians on board for anything has turned into a full-time role on most hospital management teams. Rosenstein says it's important to appeal to their concern for quality and reputation rather than the bottom line. "Physicians don't really care about the hospital losing a dollar or saving a dollar, but quality rankings and reputation stimulates their interest." Hospitals must also enhance processes like coding and case management that help physicians to be more compliant.

At the same time, Rosenstein says he is sharing RAC and other VHA data with hospital CFOs. "We are on the quality side but there is really big financial impact of what this data means, and so it is making a case that we need more resources to make this happen," he says, such as technology and personnel.

Hospitals that have been audited are beginning to understand the full reality of the RAC process, the consequences of decisions made today, and hopefully even the best strategies for appeals. Still, with RAC being so new, some hospitals, and rightfully so, are in reactive mode, struggling to educate their boards, physicians, staff, and coders. Perhaps before hospitals can even begin to address educational needs, they must—as Rosenstein recommends—break down barriers, bureaucracy, and tradition.