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Reduce RAC Audits Risk While Improving Audit Management

September 11, 2018

Reduce your RAC audit riskIn recent months, the CMS has increased its Recovery Audit Contractor (RAC) efforts to identify over payments and other “outliers.” Other payers are following suit, thanks to more sophisticated data analytics tools to identify billing errors and discrepancies as audit targets. If you receive a notice for an audit, what should you do?

First of all, don’t panic.

Second, and more importantly, don’t be tempted to ignore that letter, even if you believe the notice is in error.

Audits, like anything else, can be managed, but you need to know what steps to take, as well as what to do to reduce the changes of future audits and additional documentation requests (ADR). 

What’s the difference between an audit and an ADR?

As a prepayment request concerning frequently-abused, high volume or expensive procedures, an additional document request (ADR) asks for more specific chart notes and other supporting documentation showing medical necessity before a claim can be paid. Deadlines for ADR claims are often suspended under some prompt-payment regulations. 

An audit takes place after a claim has been paid, with the purpose of determining whether the claim was actually in compliance with payer regulations and has a definite deadline for a provider’s response.

Red flags that trigger investigations and the consequences

Payer algorithms in use are designed to detect a higher-than-expected utilization of certain codes or at ordering a larger number of higher cost procedures than those used by their peers.

Overuse of levels 4 and 5 are especially apt to grab attention as these are regularly on payer audit radars.

If an algorithm is tripped by an improper utilization or other means, there are several remedies at a payer’s disposal, ranging from moderate to severe:

  • Notices may first come in the form of warning letters that utilization is higher than for peers, with no further action other than alerting to the proscribed behavior.
  • If the billing or coding problems persist, the next step is for the practice to be placed in pre-payment review status, where payment is withheld until sufficient documentation is provided.
  • A recoupment demand may also be made for repayment of those claims already paid.
  • Participation in the network, if applicable, may be terminated.
  • A complaint may be made to the provider’s licensing board, especially in cases of out-of-network or balance claims.
  • In the worst cases, a criminal complaint may be made to the state’s prosecutor or the FBI.

Time is of the essence

Instruct your mail handler to immediately report any letters or other notices to the appropriate department or personnel.

Not responding in a timely manner will result in either a failed audit or a denied claim. These can likely result in the provider being placed in a pre-payment audit or document-hold status, with potentially serious financial consequences.

Because payers can and do make auditing mistakes, never send a check before thoroughly reviewing and verifying all claim data: some audit results can be extrapolated.

Be sure to have the notice carefully reviewed for:

  • Stated reason(s) for the audit
  • Due date for a response
  • Materials requested in the letter or notice

Make the review of requested materials easier for the auditor by transcribing any hard-to-read handwritten notes along with a copy of the chart notes. Never submit originals unless specifically requested. 

Make sure that the date of the transcription is noted if submitting along with chart records. The last thing you want is to antagonize them with illegible material, which will then result in a denial.

Never modify records, even slightly, or correct and clarify any wrong information you discover. An addendum is permissible so long as you make it clear that it is not part of the original records nor alters them in any way.

Gather all requested documents and organize them for each patient or claim, carefully reviewing the packet for any missing documents before submitting. If your EHR system stores test results and provider interpretation and notes in different places, be sure to thoroughly check it for all documents and assessments.

Conduct post-audit follow-up to prevent future problems

At the conclusion of any audit, it is essential to identify and correct the problems that caused the audit. Follow-up audits are not unusual and failure to correct issues may be seen as a deliberate disregard for the regulations, with unpleasant consequences for the practice.

Tips for reducing RAC audits

  • Beware of overusing certain codes and modifiers, especially E/M coding for levels 4 and 5 unless you have impeccable documentation supporting their use.
  • Be careful with systems that automatically “repopulate” notes from a previous visit: make sure that notes are modified to reflect the reasons for the current visit as well as comments and additional notes of any specific issues addressed.
  • Some EHR templates can give the appearance of “cloning” if not modified to reflect each patient’s unique visit. Better yet, create specific templates for the practice’s 20 most-treated conditions or diagnoses.
  • With some systems, electronic records that were not closed out or “signed” by the provider may show the date they were printed out rather than the actual date. This underscores the importance of ensuring the closing out of all records.
  • Partner with a claims management service to reduce future audits by sending out accurately coded and documented claims in the first place.

Partner with an expert to review records and reduce future audits

Teaming up with an experienced claims management service such as M-Scribe will help you examine the payer’s policies covering the disputed dates of service and procedure determine whether the payer has a legitimate reason for auditing.
For example, some audits apply current policies to dates of service that were outside the current policy period. Knowing this beforehand could save you thousands in recoupment fees and payments. 

Since 2002, M-Scribe has helped practices of all specialties and sizes improve their reimbursement rates through more accurate and compliant coding and billing. Contact them at 770-666-0470 or email for a free analysis of your practice’s needs and revenue goals.


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