Hospital revenue cycle leaders establish protocols for responding to RACs

Most hospital revenue cycle leaders have established protocols for responding to Revenue Audit Contractors (RACs), as well as post-payment audits targeting Medicaid and commercial claims.  Mindful of the dollars at stake, these leaders have employed a number of technology and process-related improvements to mitigate risk and solidify overall revenue integrity.

After researching post-payment audit responses at hundreds of healthcare providers across all four RAC regions for the past 18 months, The Advisory Board Company's research suggests that best practice hospitals have derived an unexpected benefit from their increased scrutiny of claims and clinical documentation: these hospitals have located favorable opportunities for revenue generation.

"In their response to the first RAC and MIC (Medicaid Integrity Contractors) audits, hospitals focused largely on overpayments and have made solid progress in addressing underlying coding and documentation underperformance, as well as other root causes that drive increased audit risk," said Zachary Stillerman, Managing Director of The Advisory Board Company's Revenue Cycle Services. Stillerman oversees Revenue Integrity Compass, which provides solutions for hospitals' challenges stemming from payer-based audits and appeals.  "What we have observed as of late, is that a small group of providers are using this renewed focus on revenue integrity to identify underpayments, as well."

In essence, Stillerman noted, these providers are finding an unexpected positive outcome from the audit experience, adding, "These providers have recognized that revenue integrity can work both ways and have begun to use analytics to pinpoint areas of underpayment.  The result, in several cases we have studied, is the recovery of significant dollars."

One organization that has surfaced such revenue opportunities is Bellin Health Systems of Green Bay, Wisconsin, a member of the Revenue Integrity Compass cohort since 2009.  "Hospitals must have both a mechanism and strategy to focus on the right risk areas in an efficient and effective manner," said Bellin's Revenue Audit Coordinator, Karen Sagen.

"We use the Revenue Integrity Compass platform to pinpoint threats of overpayment and capture revenue by finding underpayments," Sagen added, "freeing us to think more broadly about revenue integrity, and spend more time enhancing physician documentation and clinical coding."

According to Sagen, Bellin Health has recovered approximately $300,000 in underpayments in the past six months.

Baystate Health of Springfield, Massachusetts, also a member of the Revenue Integrity Compass cohort since 2009, offers another example of current best practice.  "One lesson learned from the demonstration project is that if anyone thought they could run their approach to RACs on an Excel sheet, they can't," said Susana Hall, Baystate's Clinical Business Consultant for Managed Care and Director, Post Acute Services. "Revenue cycle leadership means thinking broadly about revenue integrity.  Institutionally, every area involved in the revenue cycle, including clinical and financial personnel, is proactively working to reduce risk and also looking for ways to increase [revenue] capture through the identification of underpayments."

Bellin Health and Baystate Health have joined a cohort of more than 200 hospitals and health systems exchanging best practices and experiences relating to RAC audits and appeals through The Advisory Board Company's Revenue Integrity Compass.  Other cohort members include:

• Bayhealth (Dover and Milford, Delaware);
• Summa Health System (Akron, Ohio); and
• Overlake Hospital Medical Center (Seattle, Washington)

Members of the Revenue Integrity Compass cohort will convene in Washington, D.C. on August 10 to exchange best practices at a User Summit.