How to Be RAC-Ready in 2011

James Carroll, for HealthLeaders Media, December 16, 2010

HCPro Associate Editor James Carroll recently sat down with Kimberly Anderwood Hoy, JD, CPC,  and director of Medicare and Compliance for HCPro, Inc. to discuss some of the hot recovery audit contractor (RAC) issues of this past year, and what 2011 might hold for healthcare providers.

JC: What was one of most common front-end problems hospitals may have had that led to RAC audits and/or recoupments?

KAH:  I’m not sure that there’s anything specific. I think that if there’s a strong compliance plan that is looking out for errors, a facility should and can be in good standing. In other words, the best defense is a strong compliance plan. [Editor's note: Can't hurt to read these survival tips.]

JC: Was there any one particular CMS-approved issue that may have given providers the most trouble this past year, and why?

KAH:  If you went by the last year, there hasn’t been one particular issue, but rather a number of issues across the board.  What’s been giving providers the most trouble are the operational difficulties the RACs have been having with everything from records receipt to timing of denial notices and recoupments.

JC: When it comes to a facility’s RAC team, is there a specific member of the team that is the most integral?

KAH:  In my opinion there are a few members that are most important, and then there are other members that—if a hospital can afford it—are helpful and valuable to the team as well. I do think a compliance auditor is an extremely vital member. I also think that somebody from case management is valuable too because the majority of the errors that caused problems in the demonstration were medical necessity. In addition, you need somebody from the business office or billing area who understands the appeals process and billing aspect that can truly determine whether an error was an overpayment or an underpayment.

JC: Speaking of payments, in your opinion, what was it about Medicare’s three-day rule that had providers in such an uproar in 2010?  

KAH:  The problem with the three-day payment window is that some fiscal intermediaries and MACS had misapplied it even after CMS came out with additional guidance.  The claims processing contractors were giving incorrect advice to providers and processing the claims incorrectly. Providers assumed the way the claims processing contractors were processing the claims followed the rule correctly, but unfortunately that was not always the case.  Even providers who understood the rule and billed it correctly were getting denials when they should not have been, causing them to doubt how the rule should be applied.

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