Certainly, CFOs of hospitals can relate to the challenges when it comes to managing a financially viable hospital organization. And with the RACs looking like something of a meteor shower, it is more imperative than ever that your facility has the right process improvement, internal control policies and ongoing education programs in place in order to dramatically reduce exposure to damage.

As we have been reading on RACMonitor.com, Florida is the only state that has received automated demand letters, and it is likely that your state is not far behind. Your hospital’s action plan should include the following:

1.   A data-mining analysis of your discharge data compared to the RAC hit list;

2.   An analysis of your top 10 DRGs to determine whether they are on the RAC hit list;

3.   A comprehensive review of your clinical documentation and coding on all cases, but most importantly on your high risk cases;

4.   An independent evaluation of your clinical documentation and coding;

5.   An appeals program for your complex demand letter claims, and verification that your RAC committee knows in advance what specific types of claims it wants to appeal;

6.   Development of an audit tool that includes a physician advisor admission worksheet and RAC mock-auditing worksheets;

7.   The establishment of a record management mock audit to ensure that, from demand letter receipt to hospital response, the 45-day limit is met. This process is imperative if a hospital uses an outside record management vendor to retrieve and duplicate medical records;

8.   Awareness of the new RAC auditor initiatives that have been focused on outpatient cases. Refer to RACMonitor.com for this information.

Your hospital can have a successful journey through the RAC audit process if the proper action plan is in place. As we have been discussing all along, hospitals must take a proactive, not reactive, approach in order to minimize the risk of recoupment.  T-minus and counting…. Blast off!

About the Author

Leo Paul. D’Orazio, MBA, FACHE, is the director of Healthcare Services Group, based in the New Brunswick, NJ, office of WithumSmith+Brown, Certified Public Accountants and Consultants. He has directed many consulting engagements for hospitals and physicians, home healthcare, mental health and addictive disease and outpatient treatment facilities, and is a Fellow in the American College of Healthcare Executives.

Contact the Author

Leo can be reached at 610-737-7962 or ldorazio@withum.com.

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