RAC Training: Get the Scoop on RAC Audit Hot Spots

RACs are looking for overpayments and in theory, underpayments although the underpayment is a very minor percentage. The main general areas of concern are incorrect payments, non-covered services, medical necessity, duplicated services, lack of supervision -- there are a whole bunch of issues.

Medical Necessity

Well, probably the biggest issue is medical necessity. In other words, this service is “non-covered”. But this service is not covered by Medicare because it was not medically necessary. In other words, the individual must be covered as per healthcare rules. In this case, a Medicare beneficiary. The service must be covered. You must be a qualified practitioner. The doctor must have ordered it. The service must be medically necessary. It must have been provided under correct supervision.

The big one is going to be medical necessity. And we're going to find this particularly with short stay inpatient admissions, short stay inpatient admissions because the RACs will come in and say, “Well, this patient was only in the hospital for 18 hours. They came in on the morning. You discharged them in the afternoon.” And this does happen.

Jan 1, 1970
Jill M. Young
Feb 23, 2018
Barbara J. Cobuzzi
Jan 1, 1970
Kelly Dennis

Now, the question becomes one of, well, okay, that doesn't mean it shouldn't have been inpatient. We meant the inpatient criteria. Our expert mentioned in a compliance on-demand conference that you may be using one of the standard commercial products for this. And then the question becomes will the RACs follow those inpatient criteria? Interesting question, everyone, but medical necessity is one of the big ones.

Incorrect Coding

Obviously, this has always been a problem. Now, incorrect medical coding goes both ways. Sometimes we incorrectly code and get overpaid. Sometimes we incorrectly code and get underpaid.

Now, there's another issue here that we want you to note. In this case it's a hospital. It could be a physician or clinic. But the hospital has been coding and billing correctly. The FI has paid for the service but then after the fact we come back and realized that the FI shouldn't have paid for it. The FI shouldn't have paid for it.

So the question becomes are you hospital still liable for what the FI did incorrectly? And the answer is yes. So even if you code and billed correctly if the FI improperly adjudicate your medical coding and billing claim and pays you, you're still going to be held liable.

Well, what kind of determinations do we have here? Well, it's coverage. It's healthcare coding. Hopefully, we won't get into the charging area. But almost anything out there relative to this process of the patient coming, the patient receiving the service, the medical necessity and proper supervision, proper documentation, the list goes on. Any of those can be attacked.

RAC Training Tip: Monitor anything you can, everyone -- the RAC websites, the CMS website. Develop a RAC library. Get all of your information together. Review your coding, billing and reimbursement knowledge base. You probably use a knowledge base of some sort. And I'll tell you right now at the Medicare program, keeping up-to-date on all of the healthcare rules, regulations, policies, procedures and everything else is a mess.

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