Medical Necessity RAC Strategies

After much anticipation, they've finally arrived. With the recent CMS approval of issues for DCS, the RAC for Region A, all four of the RACs are now actively reviewing claims for medical necessity validation. Now what?

HealthLeaders Media sat down with Michael Taylor, MD,vice president of clinical operations at Executive Health Resources in Newtown Square, PA. Taylor has extensive inpatient and outpatient experience in urban, rural, community and academic settings. Taylor has years of experience and expertise in guiding and assisting hospitals throughout all levels of the Medicare appeals process, including vast experience at the administrative law judge level.

Whether you are a provider that was prepared for the inevitable onset of medical necessity or you are now scrambling to catch up, there are undoubtedly some questions and concerns surrounding the medical necessity. Taylor spent a few minutes discussing strategies with us.

Q: What should the unprepared provider do?

A:  For the provider that perhaps hasn't done its due diligence in preparation for medical necessity audits, the first course of action should be building your RAC team, Taylor says. This team should include representatives from different departments including case management / utilization review, health information management, patient financial services, legal and compliance.

Taylor suggests that, as the team members begin to build their response process, some of the questions they should be asking themselves at this point include:

• Who in our organization "owns" RAC response? Since many departments will be involved in the process, who is ultimately accountable for project managing the process?
• What is expected of each department involved in RAC response?
• How will we gauge our level of success overall and at each step in our process?
• How will we utilize the RAC response process to better identify trends and changes that could help prevent future denials?

Q: What should the prepared provider do in addition to what they've already done?

A:  While there may be some facilities that aren't currently up to speed in their processes, most providers have at least done some form of groundwork. These providers likely have a team and system in place; and if they do, the next best step is to test it out by running a few drills, Taylor says.

"Submit a few mock RAC medical record request letters to test the effectiveness of your team and process," he says. "Then identify any potential weaknesses in the process and correct them before the actual letters begin arriving."

Q: What are some potential pitfalls for providers with medical necessity?

A:  First, a comprehensive utilization review process is a prerequisite to a successful appeals process.

"Providers who cannot demonstrate a compliant utilization review process consisting of first level screening criteria followed by a strong concurrent second-level physician review for all inpatients who failed to meet the first-level screening criteria may face difficulties during the appeals process."

Next, and in tandem with a strong utilization review process, you must recognize that documentation is a critically important factor in building strong appeal cases for RAC medical necessity denials. Providers need to be sure that they are submitting all evidence and medical facts that support the case by the second level of appeal, he says.

Lastly, providers should not be discouraged if they do not find success in the first two levels of appeal.

"Some facilities may stop before the ALJ Level because they are intimidated by the hearing; are hesitant to pay legal fees; or begin to doubt the strength of their case," he says. "But many hospitals experience their greatest success at the administrative law judge (ALJ) level of appeal."

Q: What's the most important thing for providers to keep in mind when it comes to RACs and medical necessity?

A: When it comes to developing your appeals strategy for medical necessity, your argument should address the following components:

• Clinical. Form a strong medical necessity argument using evidence-based literature.
• Compliance. Demonstrate a compliant process for certifying medical necessity.
• Regulatory. Show, when applicable, that the RAC has not acted in accordance with rules, regulations or other relevant CMS or contractor guidance.

Dr. Taylor is speaking in the November 3, 2010 HCPro audio conference: RAC Medical Necessity Reviews: Understand Target Areas and Prepare for Audits.