e-lamkinIf you read our last article, “The RAC Tsunami on the Horizon,” you know that The Centers for Medicare & Medicaid Services (CMS) will be pushing the RACs to make up for a projected $307.5 million shortfall from the agency’s financial goal for 2011.

As we study the RACs’ recent focus on automated reviews and the need to escalate recoupment, we predict that healthcare providers will experience an increase in activity when it comes to complex reviews related to medical necessity. According to the American Hospital Association, the difference in recoupment per claim between the average automated recoupment and the average complex recoupment is $4,882 ($399 for the former, $5,281 for the latter).

Couple this with the new CMS Statement of Work (SOW) for RACs, published Sept. 12 – which calls for RecoveryAuditors to review all provider types (page 8-9) – and it adds up to a daunting set of circumstances. We believe this will affect the following types of services:

·Outpatient hospitals

·Physician/non-physician practitioners

·Home health agencies


·Ambulance services

·Skilled nursing facilities

·Home health agencies


·Inpatient rehabilitation facilities

·Critical-access hospitals

·Long-term care hospitals

·Ambulatory surgical centers

We also believe these factors will incentivize RAs to elevate medical necessity as a leading RAC target once again.

For all healthcare providers, getting medical necessity right on the front end is crucial to preventing recoupments. Hospitals are particularly vulnerable, but with the right structure, processes and people in place, you can get it right most of the time and have the documentation in place to mount successful appeals.

First, the structure – and by structure we mean the right committees and reporting relationships. A RAC committee should be the mechanism through which the financial and clinical sides of a practice come together, and it also should be a permanent part of the quality reporting system. This ensures accountability and awareness on the part of the governing board.

Secondly, implement an effective process through which staff members review each and every admission for proper bed placement. The process should gauge compliance with meeting medical necessity and ensure adherence to policies and procedures covering the documentation of severity and intensity of illness.

The third item to consider, again, is people. The right culture, people and training are essential to achieving success. Specifically, there are three key positions that play critical roles in billing and RAC compliance: the admission care manger, the physician advisor and the clinical documentation specialist.

We suggest filling an admission care manager position (or positions) as a first line of defense. This person works with the admissions department and physicians to ensure that requested bed statuses meet criteria. Remember, only a physician may request an inpatient stay. All admissions, not just inpatient admissions, must be reviewed within 24 hours to allow time for queries if necessary.

The physician advisor role also is crucial because admission care managers may have questions about admissions or find themselves unable to win the cooperation of admitting physicians. The physician advisor often emerges as a valued peer and consultant regarding care management, plus a liaison to the medical staff. This person also leads utilization review and is a key member of the utilization committee. This is especially helpful with Code 44, in which the inpatient bed status is changed from inpatient to outpatient prior to patient discharge. The PA and care management department also are key to working with attending physicians to change orders – and notifying and explaining changes to patients when there are financial implications.

The final key role, again, is the clinical documentation improvement specialist (CDIS), who most likely will work within the HIM department. This person audits relevant documentation for appropriateness and works with staff and physicians to meet criteria for intensity and severity of care. This staff member is also a key to higher-quality care, as the CDIS interfaces between all clinicians to ensure that everyone is aware of key documentation. For instance, if a physician misses therapy notes indicating a change in status, the CDIS can notify the physician and make a query to clarify any subsequent orders.

One indicator that will be key to monitor after implementing the above guidelines is the number of queries made by HIM coders. There should be a dramatic drop in the number of queries required by coders, resulting in better reimbursements, less undercoding and less manpower for HIM – thus offsetting the cost of salaries for the three key positions named above.


About the Author

Elizabeth Lamkin, 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.

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1.Source: CMS, “Medicare Fee-for-Service Recovery Audit Program as of June 2011.” Retrieved Aug. 31, 2011 from http://www.cms.gov/Recovery-Audit-Program/Downloads/NatProg.pdf.

2.Source: Axsom-Brown, V. “RACs Fall Short in Third Quarter by $82.5 Million.” RAC Monitor.Retrieved August 7, 2011, fromwww.racmonitor.com/news/3-feature-aritcles/624-racs-fall-short-in-third-quarter-by-825-million.html.Source: AHA, “Exploring the Impact of the RAC Program on Hospitals Nationwide: Results of AHA RACTrac Survey, 4thQuarter 2010, February 24, 2011.” Retrieved July 26 fromhttp://www.aha.org/aha/content/2011/pdf/Q4-2010-RACTrac-results-chartpk.pdf.

3.Bruce Redler, M.D. Medical Advsior, PACE Healthcare Consulting, LLC.

4.For information on our book, the RAC Toolkit for Hospitals and Health Systems, visit our website atwww.pacehcconsulting.com. A RAC workbook for physician practices will be available in October 2011.

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