According to a Medicare Recovery Audit Contractor (RAC) program evaluation update published earlier this year, RACs succeeded in collecting $992 million in improper payments during their six-state demonstration project.  That's an average "take back" of $165 million per state. In 75 percent of these cases, the primary culprit was incorrectly coded cases or those deemed medically unnecessary based on available clinical documentation.

Better coding and more thorough clinical documentation will help mitigate provider risk for RAC audits and take-backs. Seventeen states are scheduled to begin receiving RAC requests for complex reviews this fall, and all states will be involved in 2010. How can CIOs help their organizations prepare?

What follows are some practical tips and pragmatic steps that CIOs can take to effectively work with HIM and compliance professionals in a joint effort against the RAC. By implementing these specific recommendations, CIOs can help their organizations mitigate RAC risk, minimize human resource demands and avoid financial loss. It's time for teamwork, and technology is at the helm!

Back to basics

The ultimate goal of the RAC program is to implement actions that will prevent future improper payments, according to a recent AHIMA Toolkit. With this goal in mind, CIOs and their HIM counterparts can begin to formulate an effective strategy and implement the four basic IT initiatives for success under RAC.

1.      Conduct a technology assessment

The first step in assessing RAC technology capabilities is to review existing systems in registration, coding, billing and financial reporting as follows: 

·        Make sure inpatient and outpatient claims data is clean by ensuring claims scrubbers, editing software, charge capture systems and charge masters are correct and up-to-date. This will also reduce claims denials and improve medical necessity compliance.

·        Check systems used by coders, case management, clinical documentation improvement teams and compliance. Are they current and up-to-date with new codes? Are alerts set for specific RAC-targeted diagnosis, procedures, etc.?

·        Audit registration systems along with their associated interfaces to coding and billing applications to ensure data is being captured, transmitted and shared between systems correctly. Also, are all checks and alerts functioning correctly (e.g. medical necessity prescreening)?

·        Finally, double-check financial reporting tools and business intelligence software for data compilation and reporting accuracy.

2.      Shore up data-mining capabilities

When it comes to RAC, ignorance is not bliss. Besides keeping up with the latest RAC updates and news, data mining tools are your best protection against RAC surprises. Furthermore, executives will need data from existing systems to quantify financial risk and set aside cash for RAC (RAC cash reserves).

CIOs can help by mining existing claims and coding data for specific points of RAC risk or, alternatively, creating user-friendly queries for the RAC team. RAC targets -- diagnosis, procedures and patient types -- are easily identifiable and documented. If data mining capabilities are not already available, CIOs should make sure they are. Implement tools specifically designed for RAC or contract with a third-party vendor to do so.