Now that the stop-work order has ceased, many of those I talk to are looking for magic-bullet solutions-best practices of other facilities, especially those that have already been through the demonstration project or exercises of other traditional audit strategies that have been successful. Although these aspects of preparing for the RAC audits are valuable, I often find that other very obvious resources already within the hospital are not employed: namely, internal communication and data mining. And since we’re in the throes of March Madness, I have quotes from some notable coaches to help me make those points.



Failure is not fatal, but failure to change might be.


-The venerable UCLA basketball coaching legend, John Wooden


Never before in my 20-plus years in health care have I seen the facilitation of the kind of communication that is now going on in RAC committees. The siloed departments -medical staff, patient accounting, HIM, legal, case management, utilization review, and compliance-are communicating infinitely better than they did during their pre-RAC history. The change has been a slow and, I’m sure, painful process for many hospitals. However, the upside of the change is obvious. People are working together more effectively, actually getting things done for the betterment of the hospital and, ultimately, the patient. Doing things the way they’ve always been done is no longer an option, and the failure to change does have fatal consequences: huge cash and enforcement results.


What can you do to help facilitate better interdepartmental communication? As an example, take a look at how your hospital communicates regulatory changes. I’ve seen so many times, on both sides of the desk, situations in which a select few individuals in the reimbursement or business office were aware of an impact-laden regulatory change. Unaccountably, however, it ended up neatly filed away somewhere, the information never communicated to the front-line people most affected. Hospitals need to create an environment that encourages information sharing. That is, they need not only to disseminate information among departments but also to document how changes affect each department and operationalize them into the existing workflow. Document your processes and have team members memorialize their own understanding and awareness of regulatory changes and how they directly affect their own workflow.

Data Mining

It’s not so important who starts the game but who finishes it.


-Again, UCLA’s legendary John Wooden


I would respectfully disagree with Coach Wooden on this. When it comes to dealing with the RACs, it matters considerably both who starts the game and who finishes it. The ramifications of the RAC’s finding an error are quite different from those of discovering it yourself, from both an enforcement and a cash-impact standpoint. The key features of this aspect of the process are who has the information and who has it first. Right now, the RACs have years of data not only on your facility but also on all other hospitals in the country: they have been data mining for some time now and, unfortunately, know much more about most hospitals and their vulnerabilities than do the hospitals themselves.


When I was with the Medicare Program Safeguard Contractor, PSC, like other Medicare contractors doing integrity work, had access to years and volumes of data to analyze, compare, contrast, track, and trend. In my work with hospitals, I have found that a high proportion of the very same data Medicare is examining is not at the disposal of the people helping to create the codes, bills, and remittances that make up the data. The data is obviously there, but I’m constantly surprised by facilities that are not accessing and analyzing that data to their benefit. Work with your IT personnel to identify where this information is housed and determine how you can get access to it and routinely analyze it to identify potential areas of vulnerability and risk. Employ the same techniques that the external auditors use and get the jump on them.


Preparing for the RACs Is Both a Defensive and an Offensive Strategy

Once you receive your first RAC request letter, you are in a defensive mode. Your claims are under consideration for review, and you will have to fight to keep the money that you’ve already received-sometimes at a great cost to you. You may need to dedicate internal and external resources to the process, especially if you choose to appeal. But preparing for the RACs (and the MICs, ZPICs, and other review entities) is both a defensive and an offensive strategy. To quote another coach (and yes, I do know he is a football coach and not a basketball coach, but it’s such a great quote I had to include it anyway), Steve Spurrier, “We got to get better on defense; we got to get better on offense; we got to get better everywhere. Simple as that.” The same applies to hospitals and our strategy now. We’ve got to get better at everything, and I see that we are getting better-through more effective internal communication and information sharing.


Most hospitals have been preparing their defensive strategy for some time. I hope that your hospital is already on top of these imperatives:

  • Establish an interdisciplinary RAC team and have a RAC point person leading the team.
  • Establish your workflow management-from the initial request letter to the final appeal-and assign key personnel to tasks in the process.

  • Have an audit-tracking tool to assure that nothing falls through the cracks. The timelines are tight, and losing an appeal because of a technical denial (by not responding) loses money.
  • Document and report the impact of the audit to facility management and board members.

  • Describe the way your appeal process will look, how you will determine whether to appeal, who will do the actual appeal process (internal resources or outside consultants), and how the research of the appeal will flow (for example, researching codes, NCDs, and LCDs).

But how do you take an offensive stance to prepare for the RACs and other auditing bodies?


  • Develop a mechanism for communicating with relevant staff members and keeping them informed of regulatory updates and changes in a timely fashion. This facilitates the process for operationalizing regulatory changes to prevent any future liability.
  • Document and manage your remediation processes for those issues you do identify in the future.
  • Document your proactive activities in anticipation of an external review and conduct internal audits to identify medical-record and payment problems before the audit, particularly in those areas the RACs targeted during the demonstration project.
  • Develop reporting capabilities to keep management and the board up-to-date on the actions being taken to stem future risk and monetary losses from enforcement agencies.
  • Look at previous RAC denials during the demonstration project, learn where your hospital may be vulnerable, and conduct proactive data analysis and internal audits of those areas.
  • Establish communication with your RAC.

In closing, my favorite quote happens to be from my favorite coach-the NCAA coach with the most career wins-Tennessee’s own Pat Summit: “Losing the way we lost is unacceptable in this program. We will learn from it.” Those of us who have experienced the demonstration project know this already. We were hit hard during that phase and emerged much better prepared to deal with the expansion. We learned. And I’m pleased to see that most hospitals are now learning from that experience as well. These are challenging times, but I see hospitals responding both offensively and defensively. Get ready for the RACs. They have been getting ready for you.


About the author

Carla Engle, MBA – Product Manager

Carla’s background includes over twenty years in hospital and physician practice operations, particularly in reimbursement and billing functions. Prior to joining Wolters Kluwer recently, she was the Vice President of Compliance for a national revenue cycle solutions company and prior to that was in the Reimbursement Training Department with HCA. For several years she headed up the Part A Fraud Investigation Unit for a CMS Program Safeguard Contractor (PSC) where she was successful in the prosecution of several national cases. In her revenue cycle compliance capacity, she worked with a number of clients in California and Florida with Recovery Audit Contractors (RACs) in setting up processes and appeals.

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