Skip to main content

RAC Audit Myths Regarding Outpatient Private Practices

February 18, 2013

RAC MythsOn December 17, 2012, the Centers for Medicare and Medicaid Services (CMS) issued a paper to address myths in the healthcare industry about the RAC program. Since the RACs were introduced, outpatient-based medical practices of all sizes have questioned CMS’s intent and re-examined how they submit healthcare claims to Medicare Part B and other government healthcare programs.

At M-Scribe Technologies, we specialize in preparing outpatient medical practices for an eventual RAC audit. With ample preparation beforehand, there is no reason for an outpatient practice of any specialty to fear a RAC audit. Familiarity with best industry practices, adherence to the documentation and reporting standards of National and Local Coverage Determinations (NCDs and LCDs), and conforming to sound coding methodology as defined by specialty practice organizations, professional coding associations, and, most importantly, published CMS guidelines, ensures that a RAC audit will not result in take-backs, fines, or penalties.

The first myth that CMS addresses is the idea that RACs deny every claim that is reviewed. In fact, as CMS points out, RACs identify overpayments for reported services, but they also identify underpayments for medically necessary services that were not reported correctly in ICD-9 and HCPCS Level I and Level II codes on a CMS-1500 (or its electronic counterpart).

RACs are directed by CMS to review claims that may have been paid incorrectly based on Comprehensive Error Rate Testing (CERT). RAC auditors are contracted to identify all improper payments, whether they are for Medicare Part B’s benefit or that of an individual provider. After an improper payment is identified by a RAC auditor, this information is communicated to CMS and retroactive adjustments to paid amounts are made.

CERT identifies codes and code combinations that show a high rate of improper payments.  The RAC requests documentation that should support these codes of interest. The review includes payment amounts for submitted healthcare claims, medically unreasonable and unnecessary services as defined by section 1862(a)(1)(A) of the Social Security Act, duplicate services billed and paid, and incorrectly coded services.

It is that last aspect of the RAC’s mission that should be of most interest to an outpatient medical practice. Good medical billing requires correct coding, whether a healthcare claim will ever be audited or not. Honesty is always the best policy, and professional coding standards demand accurate claims. Outpatient medical practices who employ professionals to review their coding and billing have little to fear from a third-party audit. When accurate claims are submitted the first time, the maximum amount of legal reimbursement (according to contracted fee schedules) is received in a timely manner and is also established by contract. The healthcare system works as it is designed to do.

A myth not addressed by the CMS document is that government healthcare programs are trying to short-change physicians who are are legally due money for medically necessary services. Nothing could be further from the truth. The only practices that need to worry about penalties, fines, and recouped monies previously paid are practices that do not already adhere to accurate medical billing standards.

RACs were established to make medical billing more accurate. The same is true with the transition to ICD-10-CM for diagnosis coding. Thorough documentation in the medical record, accurate medical coding, billing codes according to payer guidelines, and utilizing available technology to streamline operations, means that successful medical practices need not worry about audits. They can comply with any request for supporting documentation within required timeframes, and they can submit that documentation assuring their claims were accurate.

A physician is a professional and is knowledgeable about all aspects pertaining to their specialty field. A medical billing and documentation service is comprised of professionals who help physicians and ancillary healthcare providers navigate the reimbursement system to make sure their practice is financially successful without fraud or abuse.


Share: Share this article on LinkedIn Share this article via email