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How to improve Medical Billing and Coding Processes for RAC Audit

September 12, 2012

Documentation ImprovementNo healthcare provider of any size can avoid the challenges that RACs present to their documentation standards. RACs, Recovery Audit Contractors, are employed by the Centers for Medicare and Medicaid Services (CMS). They are mandated to detect improper payments by the Medicare system for billed medical services. The RAC’s role is to review documentation to determine, not only if services were performed, but if they were medically necessary based on submitted documentation, and if proper payment was made. CMS does not limit RAC audits to the Medicare program. The 2010 Patient Care Act mandates that states and territories must implement RAC programs to monitor Medicaid payments.

Passing a RAC audit requires a four-pronged strategy that involves proactive steps healthcare providers and healthcare facilities can take to prove, through adequate documentation, that codes and associated charges accurately reflect provided medically necessary services. This involves active awareness of RAC-related issues, chart auditing, provider education, and effective tools to provide accurate documentation.

RAC Issues

RACs are required to publish the issues they intend to examine before they issue record requests to healthcare providers. These issues are regularly published on the RAC websites. Compliance officers and their staff can review these issues prior to a widespread audit being initiated. 

While an ongoing compliance program should be in place to ensure the most accurate billing based on documentation in all aspects of an institution’s operations, being notified beforehand can focus energy and attention on potential trouble spots. This does not mean that billing and coding compliance should be ignored in fields that the RAC has not publicly identified, only that extra effort should be expended when a regional RAC has stated that is looking at a specific set of services and associated billing practices. 

Chart Auditing

The nuts and bolts of any compliance plan consists of auditing medical documentation to ensure that charges and codes match available documentation. Medical auditors are credentialed health information management professionals who keep abreast of all the issues that govern documentation. They are translators who take the contents of the medical record and translate it into industry-standard medical code. Medicare, and state Medicaid programs, publish specific guidelines on how medical codes can be used, and what services are billable for what conditions. 

One of the RACs’ missions is to determine if the documentation adequately conforms to published National and Local Coverage Determinations (NCDs and LCDs). The standards of documentation must meet the criteria published by CMS and state Medicaid programs in order to justify payment for services.

Provider Education

Audits without follow-up with providers, the people who provide the written documentation, are of no use. A proactive compliance plan includes open communication between auditors and providers. When a healthcare institution does not have a written policy of addressing documentation deficiencies that are detected by auditors, no amount of audits will protect the facility from weaknesses in a particular practitioner’s charts. 

Healthcare providers bill according to what medically necessary services they feel they have provided to their patients. A compliance plan’s goal is to ensure that what the provider writes in a chart matches the expectations of payers. 

Effective Tools

Electronic medical records and computer assisted coding (CAC) has made the job of both providers and auditors easier. CAC software employs SNOMED standards to recognize key words and methodologies in provided documentation to assign codes. These codes are then compared to the existing documentation based on payer standards to determine which codes, and combinations of codes, are appropriate for billing purposes.

By utilizing experienced, professional personnel at every stage of the billing process, from initial data entry, to pre-payment audits, claim submission, and post-payment audits, the hazards of being found deficient in a RAC audit are reduced. People are only as good as the tools they are given. State-of-the-art documentation, coding, and auditing software is the key to passing RAC audits and exceeding expectations, perhaps even receiving payment for claims that were improperly denied. RACs are also charged to recognize and recommend reimbursement for these.


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