Closer eye on RAC

Re­port warns of need to watch for over­pay­ments

Modern Healthcare - - The Week In Healthcare - Jen­nifer Lubell

Are­cent fed­eral re­port un­der­scores the need for hos­pi­tals and the CMS to step it up in pre­vent­ing the most sig­nif­i­cant types of er­rors iden­ti­fied by the Re­cov­ery Au­dit Con­trac­tor pro­gram, in­dus­try ex­perts say.

The RAC pro­gram al­lows third-party au­di­tors hired by the CMS to keep 9% to 12.5% of provider pay­ments they iden­tify as im­proper. The pro­gram was pi­lot-tested in sev­eral states from March 2005 to March 2008, re­coup­ing more than $992 mil­lion in over­pay­ments to providers. The CMS’ goal is to have a per­ma­nent pro­gram op­er­at­ing in all 50 states this year, with four con­trac­tors each hav­ing ju­ris­dic­tion for one-quar­ter of the coun­try.

Some is­sues re­main, how­ever, in the fed­eral gov­ern­ment’s han­dling of ser­vice-spe­cific er­rors or “vul­ner­a­bil­i­ties” that re­sult in im­proper pay­ments un­der the RAC pro­gram, the Gov­ern­ment Ac­count­abil­ity Of­fice de­ter­mined in a re­port re­leased April 5.

The GAO in its re­search found that an ad­e­quate process for tak­ing cor­rec­tive action or suf­fi­ciently mon­i­tor­ing or con­trol­ling th­ese types of er­rors or “vul­ner­a­bil­i­ties” was miss­ing from both the demon­stra­tion project and in the plan­ning for the na­tional pro­gram.

Specif­i­cally, the agency has yet to im­ple­ment cor­rec­tive ac­tions for 60% of the most sig­nif­i­cant RAC-iden­ti­fied vul­ner­a­bil­i­ties that led to im­proper pay­ments dur­ing its demon­stra­tion project, “a sit­u­a­tion that left 35 of 58 (of th­ese vul­ner­a­bil­i­ties) un­ad­dressed,” the re­port found.

“I def­i­nitely think the main con­cern the GAO high­lighted was the CMS hadn’t taken the nec­es­sary steps to ad­dress th­ese types of vul­ner­a­ble ar­eas and pre­vent them from hap­pen­ing,” said Don May, vice pres­i­dent for pol­icy with the Amer­i­can Hospi­tal As­so­ci­a­tion.

Specif­i­cally, the CMS hasn’t taken steps to ad­dress those vul­ner­a­ble ar­eas by chang­ing pay­ment mod­els, or soft­ware to pre­vent er­rors, such as drug dosages or pre­vent­ing a pay­ment for ob­vi­ous er­rors such as mul­ti­ple ap­pen­dec­tomies on the same pa­tient, he said.

It is the CMS’ re­spon­si­bil­ity to main­tain good com­puter sys­tems, an agency staff RAC spokes­woman con­ceded. How­ever, it is also im­por­tant to note that many of the im­proper pay­ments iden­ti­fied dur­ing the RAC demon­stra­tion would not be caught by a sys­tem au­dit, she said.

“Many re­quired re­view of the med­i­cal record. This is where it is im­por­tant for the hos­pi­tals to as­sume some of the re­spon­si­bil­ity. Hos­pi­tals need to en­sure that they are billing cor­rectly, know the billing rules and doc­u­ment the ser­vices pro­vided in the med­i­cal record,” she said.

The watch­dog agency rec­om­mended that the CMS im­prove its cor­rec­tive action process by ap­point­ing re­spon­si­ble per­son­nel to eval­u­ate and swiftly ad­dress th­ese ser­vice-spe­cific er­rors. The CMS agreed with the GAO’s rec­om­men­da­tions.

The RAC pro­gram has re­cently taken on new sig­nif­i­cance, high­lighted as a model by the Obama ad­min­is­tra­tion to crack down on fraud, waste and abuse in fed­eral pro­grams. Also, pro­vi­sions in the new health re­form law will ex­pand the RAC’s reach be­yond Medi­care fee-for-ser­vice into Parts C and D and to Med­i­caid by the end of this year.

Hos­pi­tals in the mean­time are do­ing their part to pre­vent er­rors, May said. “We spend mil­lions of dol­lars in com­pli­ance ac­tiv­i­ties, to pre­vent er­rors in the cod­ing area, in the ad­mis­sion re­view process, to ad­dress vul­ner­a­bil­i­ties, but the CMS has some re­spon­si­bil­ity as well,” May said. If the agency knows its soft­ware is let­ting cer­tain er­rors go through, and that num­ber is high enough to be high­lighted in a re­port—and the agency still hasn’t ad­dressed th­ese vul­ner­a­bil­i­ties two years af­ter the demon­stra­tion has ended, then it’s to every­one’s ben­e­fit to im­prove the sys­tem, May said.

“I think providers get frus­trated be­cause, in most cases, they think they are do­ing things cor­rectly be­cause they get paid, but then with au­dits such as RAC, is­sues get iden­ti­fied that should have been iden­ti­fied much sooner in the process and they are asked to re­fund their pay­ment,” said Lori Bro­cato, rev­enue-cy­cle-man­age­ment prod­uct man­ager with HealthPort, a tech­nol­ogy com­pany that con­sults on the RAC pro­gram.

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