Hopefully hospitals have been taking advantage of the slow CMS RAC audit implementation process to make their hospitals RAC-ready.  Billing compliance and audit preparedness for claims reviews should be permanent part of your facility’s DNA:


1.   Have a proactive RAC committee that includes members from medical records, revenue cycle and physician advisory services and compliance;

2.   Educate the hospital medical records’ staff on how insufficient documentation or improper coding will negatively impact the hospital’s bottom line; then develop policies and procedures to ensure accurate physician clinical documentation and accurate coding;

3.   Determine the hospital’s RAC preparedness by written policies and procedures that outline the operational effectiveness, expediting “RAC Demand Letters” to a successful conclusion.  This process will prove useful for future insurer claims reviews;

4.   Have the hospital’s written Internal Control Policies and Procedures in place to avoid future clinical documentation and coding errors that would result in lost reimbursement;

5.   Keep current on potential risk areas and issues;

6.   Respond promptly to internal complaints and regulatory inquiries. Watch out for enforcement trends, ripple effects and old issues resurfacing;

7.   Respond appropriately and thoroughly the first time, you may not get a second chance;

8.   Get counsel and subject matter experts involved early;

9.   Have in place a formal RAC tracking system

10. Perform ongoing data mining reviews on the hospital’s Medicare discharge data as it relates to the historical RAC targets.


Top DRGs Uncovered


Since my first RACmonitor.com article, hospitals nationwide that have deployed their own data-mining initiatives are finding the categories listed below to be RAC targets.


Hospitals and data-mining vendors, however, report that some top DRGs in RAC target areas were identified as having a potential for increased reimbursement:


  • 474/475/476 Amput for muskel and conn tissue
  • 180/181/182 Respiratory neoplasm
  • 984/985/986 Prostatic OR Proc unrel to PDX
  • 064/065/066 Intercranial hemm or cereb infarc
  • 551/552 Medical back problems


The following list reflects the top diagnoses and DRGs in RAC target areas, identified as having potential for reimbursement recovery by the RACs:


  • Asthma/Pneumonia
  • CHF/Chest Pain
  • Dehydration/Diabetes
  • Back Pain
  • Abdominal Pain
  • Syncope Nervous System Disorders
  • Red Blood Cell Disorders


At-Risk DRGs (IP With OP Proc)

  • 585 Breast biop local excis and oth w/o CC/MCC
  • 227 Card defrib implant w/o cath w/o MCC
  • 512 Should, elb, forearm proc no maj joint w/o CC/MCC
  • 117 Intraocular proc w/o CC/MCC
  • 627 Thyroid, parathy, thyrogloss proc w/o CC/MCC


It is important that hospitals continue to take a proactive/preemptive self-audit/process improvement approach to the RAC audits.  Members of your hospital board and management team have a fiduciary responsibility to deal with this major Medicare billing take- back issue, and to ensure the financial viability of your facility. The biggest lesson learned from this experience: Having a preemptive, proactive formal RAC Plan in place can potentially go a long, long way in minimizing the risk of RAC take-backs.


About the Author

Leo Paul. D’Orazio, MBA, FACHE, is 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.   Leo can be reached at 610-737-7962 or ldorazio@withum.com.

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