As reported on, by the third quarter of 2011, Recovery Auditors (RAs) were behind in terms of projected recoupments from providers and were relying heavily on automated reviews. With these shortfalls and the fact that automated reviews recoup about a tenth of what complex reviews recoup, the Centers for Medicare & Medicaid Services (CMS), from its perspective, had a problem.

On Sept. 1, 2011, the new statement of work (SOW) was released,[1] putting a far more aggressive workload, including quotas and CMS oversight, on RAs. The new SOW also included cross-referrals between CMS and contracting entities. Consequently, the RAs made up ground in the fourth quarter of 2011 and ended the fiscal year with $939.3 million in corrected billing – an average of $235 million per quarter. This momentum has not slowed during the current fiscal year, with $422.7 million corrected in the first quarter and $649.9 million corrected in the second.[2] This is due in large part to the fact that the RAs dramatically shifted their focus to complex reviews. The new SOW also clarified that all providers will be affected by this, not just hospitals, and that RAs are being instructed to report potential fraud. With the Medicare Administrative Contractors (MACs) in place, CMS can view a patient’s entire episode of care across providers, including physicians.

The point is, RAs and other billing auditors are not going away – they are growing. A sure indicator is the article from last month in which Greg Calosso reported on congressional and U.S. Government Accountability Office (GAO) efforts to ensure coordination among CMS audits. As the audits expand and affect providers’ margins and staff workloads, members of Congress are hearing from their provider constituents.

What to Do?

The American Hospital Association’s RACTrac results indicate that, for the 2,220 hospitals reporting, only about 30 percent of RA denials are appealed. We know the only way to win an appeal is by assigning the appropriate level of care for the patient and appropriately documenting to support that level of care – this is true of all CMS billing audits. Only a strong, coordinated system of compliance will safeguard a provider on all fronts and provide strong evidence when appealing.

We cannot emphasize the multi-disciplinary team effort required to build and maintain a compliant billing system enough. In speaking with colleagues and providers, I have noted a consistent theme: at many facilities, an RA coordinator and the revenue cycle team, without additional resources and support, are solely responsible for responding to audits and recoupments. Concurrently, we hear that RA coordinators cannot keep up with record requests and tracking of deadlines. Additionally, hospitals are acquiring physician practices, and, depending on how the contracts are developed, those hospitals are inheriting the physicians’ RA risks – and the related audit duties again are falling primarily to the RA coordinator and the revenue cycle team.

Providers need to turn this into a “team sport” with a coordinated committee structure in order to properly address the teams that make up the long list of auditors.

Providers who have been successful in building a strong offensive team to deal with audits and compliance not only have defended against recoupments and takebacks, but they have reduced the number of audits they are facing by becoming a less inviting target.

Forming the Team

Start with a RA committee that is a permanent part of your quality committee structure; while we call this an RA committee, it should serve as the billing compliance committee. As performance improvement teams go, the RA committee should serve as the hub of knowledge for billing audits, ensuring a global perspective on risk and vulnerability. Typically, the director or vice president of care coordination heads this committee, with the HIM director serving as vice chair. Your physician advisor or chief medical officer also is vital to the success of this committee, along with strong C-suite support. This is where a strong RA coordinator under the direction of the committee is extremely effective.

Then set external and internal benchmarks for compliance improvement. The AHA RACTrac is an excellent source for external information. (Go online to for more information.) The latest results from RACTrac show that one- and two-day stays are the main focus for inpatient reviews. In the outpatient setting, coding is the top reason for takebacks accomplished via automated review. For internal benchmarks, use reports from your RAC/audit-tracking tool to look for a trend highlighting where your recoupments have occurred or identifying a pattern in record requests. Is the issue in cardiology, or another high-volume service in your hospital?

Once you determine where you are vulnerable, create a multi-disciplinary chart audit team to find the root cause of your billing denials. Just like the RA committee, the chart audit team should be a permanent fixture and expand into open chart reviews to be proactive in terms of ensuring the existence of appropriate documentation.

While the average hospital has been playing defense, and losing, we see that successful hospitals have been playing offense, winning 77 percent of appeals.[3]

As the old sports saying goes, sometimes the best defense is a good offense.

Setting up the Offensive Line

In football we see three main positions – the center, tackle and guard – making up the offensive line. For audits we also have three main positions: the admission care manager (ADC), the clinical documentation improvement specialist (CDIS) and the physician advisor (PA). The ADCs review every patient for appropriate bed status and advise physicians; the CDIS reviews concurrent documentation and coordinates with physicians and clinicians on appropriate documentation; the PA provides advice and second-level medical necessity reviews with medical staff. If everything goes smoothly, your medical staff will depend on these individuals for advice like a quarterback reads a blitz. The back-end coding and billing will reflect the level of care. In fact, you may find yourself collecting more reimbursement thanks to more accurate coding – and  maybe throwing a few more touchdowns per game.

About the Authors

Elizabeth Lambin, MHA, is a partner in PACE Healthcare Consulting. Elizabeth has more than 20 years of C-suite level hospital executive management experience.  Most recently, she was the CEO/Market President for Tenet Healthcare’s Hilton Head Regional Healthcare. Elizabeth holds an undergraduate degree in Business Administration, Cum Laude and a Master’s in Healthcare Administration from the University of South Carolina.

Gregory Calosso is a senior consultant for PACE Healthcare Consulting. Greg joined PACE in 2011 after receiving his Masters degree in health administration from the Sloan Program in Health Administration at Cornell University. His past experiences include working in hospital planning and business development, organizational leadership consulting, and clinical research. He holds an undergraduate degree from Cornell University’s Division of Nutritional Sciences.

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[1] “Statement of Work for the Recovery Audit Program.” CMS RAC website, URL: Accessed July 30, 2012.

[2] “Medicare Fee-for-Service Recovery Audit Program May 2012.” CMS RAC website, URL: Accessed July 30, 2012.

[3] “Exploring the Impact of the RAC Program on Hospitals Nationwide: Results of the AHA RACTrac Survey, 1st Quarter 2012.” May 10, 2012.  May soon be available on the AHA RACTrac website:

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