RAC Audit Relief May Be On the Horizon

March 25th, 2013 / By Ann Chenoweth, MBA, RHIA, FAHIMA

There is some good news on the horizon for HIM professionals buried in RAC audit requests and appeals. Last week, the much-anticipated Medicare Audit Improvement Act of 2013 was introduced into Congress. Hooray!

We all know the problem. :  According to the AHA, 75 percent of appealed RAC denials are overturned in favor of hospitals and providers. That is three out of four denials!  Unfortunately, these appeals can take months (or even years) before a decision is made. As HIM professionals know, the inefficiencies of the RAC program are resulting in a significant waste of valuable resources. Many hospitals don’t have time to even appeal due to the time and effort involved in doing so.   Furthermore, there is a lack of transparency in the audit process itself: Auditors frequently don’t meet the timeline in which they must make a determination, and they often ignore the annual limits for the number of audits that can be requested.

The Medicare Audit Improvement Act of 2013, a bipartisan bill introduced by Representative Sam Graves (R-Mo) and Adam Schiff (D-CA), will provide needed oversight of CMS audit contractors.  It will establish a consolidated limit for medical record requests—which is welcome news for HIM professionals.  CFOs will be happy in that this bill will allow denied inpatient claims to be billed as outpatient claims when appropriate.

The bill will also improve recovery auditor transparency and will improve auditor performance by implementing financial penalties and by requiring medical necessity audits to focus on widespread payment errors. Finally, it will also require physician review for Medicare denials.

Coding compliance and data integrity are extremely critical. Revenue cycle and HIM professionals take seriously their obligation to properly code and bill for the services their hospitals provide and recognize the need for auditors to identify billing problems; however, the deluge of audit requests are causing a tremendous burden. This legislation will provide much needed and overdue relief.

Ann Chenoweth is Director of Industry Relations and Market Research with 3M Health Information Systems.