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Preparing for Medicare Audits
Health Data Management Magazine, October 1, 2008
When a financial audit is inevitable, often the best way to prepare is with a self-audit. That's the approach University of Texas Health Center-Tyler is taking to get ready for the inescapable Medicare Recovery Audit Contractor program. A potential juggernaut, the federal financial recovery initiative looms on the horizon.
Beginning this fall, the Medicare program will begin phasing in audits of hospitals and some group practices state by state, primarily focusing on recouping overpayments to providers for certain types of treatments (see sidebar, page 44).
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To prepare for the RAC initiative, the 114-bed Texas hospital is doing what many experts recommend. It's using data mining to analyze its Medicare claims, particularly those most likely to be the focus of an audit. Without the help of a consultant, the small hospital is analyzing whether it has properly coded and documented claims for the kinds of cases, such as 24-hour hospital stays, that the RAC program pinpointed during a three-year demonstration project in six states, says Shannon Roshan, administrative director, revenue cycle operations.
The hospital is using data mining software from The Shams Group, Coppell, Texas, to dig into data from its clinical and financial systems from Medical Information Technology Inc., Westwood, Mass., as well as other applications. It's carefully analyzing whether any claims are incorrect so it can promptly send an adjusted bill to Medicare in advance of an audit. It's also tallying how many cases it has had in each target area, such as 24-hour stays, so it can begin gathering all necessary documentation in advance of an audit. And it's using the data to support a clinician education program.
"We're seeing a big need for physician education on documentation issues," Roshan says. Doctors at the hospital still hand-write their clinical notes, and they're being educated on how to do a more thorough job on such details as providing adequate information to support a particular diagnosis. "As a teaching institution, we have to do our part to teach doctors how to properly document treatment," she adds.
Millions at Risk
Providers face the potential of having millions of dollars in Medicare payments deducted from future billings as a result of overpayments identified by the RAC program.
So it's important that they begin taking steps now to minimize the impact on the bottom line. Information technology, no doubt, will play a role in the complex undertaking.
Virtually every U.S. hospital will eventually face a Medicare audit, predicts Julie Chicoine, R.N. compliance director for Ohio State University Medical Center, Columbus. "No one is safe from scrutiny," stresses Chicoine, who is a nurse, attorney and claims coder.
Officials at The Centers for Medicare and Medicaid point out that although relatively few group practices were audited during the demonstration, many more could be scrutinized once the national effort is rolled out (see sidebar, above).
In addition to conducting a self-audit and submitting adjusted bills when overbilling is discovered, providers should take several key steps, experts say, including he following:
* form a task force to coordinate the RAC preparation process;
* create a database to track the RAC process, including the status of appeals;
* devise a method for gathering all records requested by auditors; and
* make sure claims coders receive proper training and physicians are educated on all of the Medicare program's documentation requirements.
In conducting a self-assessment, providers should "follow the money" and gather detailed information on the accuracy of documentation and coding for their high-volume Medicare procedures, advises Laurie Johnson, senior HIM consultant at Ingenix Consulting, Eden Prairie, Minn.
Chicoine of Ohio State says her organization, like many others, is considering getting help with the internal auditing of all aspects of the claims filing process. Because most hospitals have a "patchwork of legacy systems" to support claims processing, most would benefit from hiring an outside firm to create a data warehouse of claims that can be reviewed for accuracy, she argues.
A growing number of companies are offering hospitals data mining systems designed, at least in part, with the RAC program in mind. For example, Hirschl Associates, a Laguna Niguel, Calif.-based consulting firm, just completed beta tests of business intelligence software that helps identify claims likely to be audited.
Medicare auditors will use data mining to look for such problems as duplicate bills or procedure codes that don't match a diagnosis, and hospitals should go through the same exercise, says Francine Machisko, a senior principal at Noblis Inc., a Falls Church, Va.-based consulting firm.
If an auditor discovers a hospital already has resubmitted bills and returned overpayments, they'll be less motivated to dive into the organization's claims, Machisko and other experts say. That's because auditors are paid contingency fees based on overpayments they recover. Plus, by rebilling, hospitals avoid any penalty fees and interest payments.
All hospitals should be routinely reviewing claims data for patients covered by Medicare and other payers as part of a broader risk management effort, says Barbara Flynn, vice president, health information services, at the Florida Hospital Association, Orlando.
Task Force
Pointing to the experience of Florida hospitals that were scrutinized in the RAC demonstration project, Flynn urges other organizations to form a claims denial management team to tackle RAC issues as well as handle commercial insurance claims denials.
Suzanne Lestina, a technical manager for patient financial services at the Healthcare Financial Management Association, Westchester, Ill., suggests such a task force should be called an "integrity of services" committee. Such a group should prepare to tackle additional payment scrutiny efforts from Medicare as well as managed care contractors. As a result, someone with in-depth knowledge of all payers should head up the effort, she stresses.
To deal with the RAC demonstration program, the five-hospital Lee Memorial Health System in Fort Myers, Fla., formed a multi-disciplinary team. Members represented the I.T. department, the central business office, the medical records department, quality assurance and case management, says Stan Padfield, Lee Memorial's systems director for health information management.
"This is not a health information management project," he stresses. "It goes across all silos, and if you don't work on it as a team, you'll lose track of where you are, and that can cost your organization millions of dollars."
Complying with an auditor's request "is not for the faint of heart," Padfield says. "We spent a lot of time and effort in making sure the RAC program didn't impact us like it did some other hospitals."
Ohio State University Medical Center has created a RAC committee as well as a new position, fiscal integrity officer, to oversee the Medicare audit process, says Chicoine, the compliance director.
A RAC committee should make it a priority to educate the hospital's board of directors about Medicare audits and keep the group informed of preparation efforts as well as the outcome of appeals, says Johnson of Ingenix Consulting. The committee also should acquire a post office box just for receiving letters from Medicare auditors to make sure they don't get lost, she adds.
Committee members also should reach out to their peers who work at hospitals that were audited in the demonstration program to gain insights from their experience, adds Karen Feely, director of network patient financial services for New York-Presbyterian Hospital. The five-hospital delivery system was chosen for an audit in the demonstration.
Tracking the Process
A key task for any RAC committee is to create or acquire a database to carefully track the status of complex Medicare audits, Feely says. The delivery system used a database the Greater New York Hospital Association made available to its members for free.
"One thing we learned is that you have to track every single piece of correspondence for every single case to ensure that the records went out in a timely way," she stresses. Hospitals face multiple deadlines for submitting records to the RAC and then following through with appeals to fiscal intermediaries (see sidebar, page 44). "The database created alerts of when certain deadlines were looming," she says. "For a facility of our size, it's too hard to track all audited claims without a database."
The New York association is updating the database to make it accessible via the Internet and simplify making changes as the RAC process matures, says Stewart Presser, the association's vice president of corporate affairs.
At the national level, the American Hospital Association is creating its own database to gather aggregate statistics on the financial impact of the RAC program, says Alyssa Keefe, senior associate director of policy. Although the AHA will not endorse any one RAC database for hospitals, it will announce this fall which ones can be used for the national data-gathering effort, she adds.
"We are trying to educate our members about how the RAC program is impacting hospitals," she says. "And we're letting them know that it's critically important for them to track records requests and deadlines."
A number of vendors are rolling out databases designed to track RAC compliance. Leveraging its experience in the demonstration project, Lee Memorial Hospital helped HealthPort, Alpharetta, Ga., develop its new RAC Pro database, Padfield, the health information management director, says. The five-hospital delivery system determined it needed a Web-based tracking mechanism to help cope with the overwhelming volume of requests for records and subsequent appeals, he says.
Henry Ford Health System in Detroit is investigating which commercial RAC tracking application to acquire, says Matt Wolocko, director of revenue cycle/compliance officer. The seven-hospital system wants to use an application to carefully track the financial impact of every overpayment identified by the RAC program as well as track every step of the process, especially deadlines for appeals, he explains.
Release of Information
A growing number of providers, including Henry Ford Health System, are relying on vendors to manage their release of medical records from a hodge-podge of electronic and paper-based systems. These outsourcers manage the release of records for the RAC program as well as for other purposes, especially court cases.
Henry Ford uses the outsourcing services of MRO Corp., King of Prussia, Pa. "It would be very labor-intensive to do it on our own," he says.
Lee Memorial relies on HealthPort to handle all requests for medical records. The vendor has employees at Lee Memorial's hospitals who track down charts, scan them into a central system and ultimately link them to their RAC database for tracking, Padfield says. By centralizing the process and using document imaging, Padfield says, the hospital can keep better track of when records were mailed to those who requested them. The hospitals also avoid the high cost of having staff members repeatedly track down and then photocopy the necessary documents, he adds.
Like many hospitals, the Lee Memorial facilities have digitized about 75% of the content of patient records, but physician progress notes and certain other information remain on paper. By storing all requested records centrally, the hospitals can have easy access to documents when they are requested during an appeal, Padfield notes.
Because few hospitals have completely automated their patient records, Johnson of Ingenix says providers should create a detailed matrix listing all areas that generate documentation, and in what format. This will help ease the process of retrieving all information an auditor requests, whether that task is handled internally or by an outsourcer, she says.
"Many facilities are not aware of where all their documentation is," she notes. For example, a radiation therapy department may have its own department-level paper record for patients who visit several times a week, she explains.
Claims coding staff can play a critical role in ensuring a hospital submits accurate bills to Medicare and other payers. At Lee Memorial, for example, a team of six coders focuses solely on checking other coders' work for accuracy, Padfield says.
"Coders need to move beyond just providing accurate codes," says Chicoine of Ohio State University Medical Center. "They must keep current with compliance and reimbursement principles, perform auditing functions and use computer technology as it plays an increasing role in documentation."
Educating Physicians
Hospitals also need to do a better job of educating physicians on the detailed documentation that's required to meet Medicare's medical necessity standards for a procedure or a hospital stay, Padfield stresses. He points out that coders can't do an accurate job if the records on which they rely lack adequate documentation.
Using electronic health records to automate physicians' progress notes is a critical first step, says Nancy Hirschl, president of Hirschl Associates. "But we really have to make sure that the electronic record provides all the information that is needed to justify the claim," she adds.
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