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Benefits of RAC Audit Checklist

August 21, 2012
RAC Audit ChecklistThe Recovery Audit Program was permanently established in 2006 as part of the Tax Relief and Health Care Act. Unlike what many people think, the program’s mission is not only to recoup over payments. Instead, it is to reduce improper payments by the Medicare program, either in Medicare’s favor or in the billing institution’s favor. The Recovery Audit Program is meant to increase efficiency, to improve reliability of reimbursement, and to create greater transparency when medical claims are submitted to Medicare. An additional goal of the program is to identify actions that will prevent improper payments in the future. Every healthcare institution, of any size, should have a proactive and comprehensive compliance plan in place in order to form a RAC audit checklist.

In practice, the Recovery Audit Program empowers the Centers for Medicare and Medicaid Services (CMS) to employ third-party Recovery Audit Contractors (RACs) to request and review pertinent documentation that supports medical claims. RACs are a powerful tool for CMS to augment its overall compliance efforts designed to ensure accurate claims are submitted, and that those claims are accurately reimbursed, for medically necessary services provided to the Medicare program’s beneficiaries. A RAC audit checklist should be in place before a facility is requested to provide supporting documentation, and a system should already be in place at institutions that value accurate claim submission through appropriate internal documentation and coding policies. A RAC audit should confirm that a healthcare institution is submitting its claims properly.

The Patient Protection and Affordable Care Act, enacted in 2010, requires states to employ Medicaid RACs to monitor claim and reimbursement errors. In 2012, every state has submitted contractual proposals to CMS to enable statewide RACs to monitor Medicaid claim submission and payment within their jurisdictions. In the Medicare program, jurisdiction is divided between four geographically-oriented RACs to manage and monitor the auditing process. As of June 30, 2012, the nationwide figures for FY 2012 totaled over $1.7 billion in corrected payments. Of this amount, approximately $657 million were due to overpayments recouped by the RACs, while a little over $44 million were paid back to billing entities. The difference is made up of adjustments to prior decisions.

RAC contractors announce which issues they are going to study, and for which they plan to request documentation, beforehand. This is similar to the U.S. Inspector General’s issues of concern regarding healthcare reimbursement that are published and updated on a regular basis. Even if a specific specialty or billing practice is not announced today, there is no guarantee that it will not be announced tomorrow. Healthcare facilities that value accurate reimbursement that is transparent and supported by accurate documentation have nothing to fear from a RAC audit. When an audit request is received, however, healthcare providers need to be prepared to supply the necessary information.

Download: RAC Audit Checklist – Simple Action Plan for RAC Audit Compliance

A RAC audit checklist is an invaluable component of any medical institution’s compliance program. Every healthcare provider, whether it is a large teaching hospital, a small private practice, an independent laboratory, an ambulatory care center, or a skilled nursing facility, needs to have a designated compliance officer to oversee accurate documentation within clinical and contractual standards, and the billing process that stems from that documentation. A RAC audit checklist means that there is one designated office that receives audit requests, but, if requests are received by another department, all staff members need to know how and why to refer the request to the compliance officer.

RAC requests need to be answered within a short timeframe. A centralized, well-defined process needs to follow a request in order to ensure that all available supporting documentation can be assembled and submitted in a contractually-required timely manner. Professional Health Information Management (HIM) is key to conforming to RAC audit requirements. Ongoing education of proper documentation and coding process, and appropriate internal processes and software applications, is the only way to ensure that a RAC’s findings will be one of underpayment to the healthcare provider rather than overpayment by Medicare or Medicaid.


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