Managing Risk Against RAC Audits

As recovery audits become more common in the healthcare industry, it is increasingly important that doctors and nurses communicate with one another and thoroughly document the reasons for the services they bill.

At President Obama's urging, recovery audit contractors will be more aggressive in pursuit of fraud, and some well-intentioned providers will come within their crosshairs. The audit contractors get paid based on how much money they can recoup for the government, so their focus is not necessarily on the quality of care provided to a patient but on whether the patient record fully supports the charges submitted to Medicare.

"It is important to think about how well you documented the patient's story," said Day Egusquiza, a nationally recognized expert on healthcare reimbursement and compliance issues.

According to the Centers for Medicare and Medicaid Services, all medical records "must be complete ... dated, timed and authenticated ... (and) legible." Any Medicare or Medicaid claim that is backed by an incomplete or illegible medical record can be deemed a knowingly false claim, which is practically an invitation to audit contractors. In those cases, Egusquiza said, it is "next to impossible" to prove the validity of a claim.

"It is all about documentation to support the billable services," she said.

If a hospital and physician report a different status for the same patient, it is a red flag for auditors, so it is paramount that all parties communicate throughout the patient-care process. The patient's status might change as his or her condition changes, but the reasons for the change must be well-documented in order to make a successful claim.

Physicians should understand the Medicare guidelines for what justifies inpatient care vs. observation, and they must be able to document the severity of the illness. Nurses then must document the intensity of the illness throughout the treatment process.

Health care providers also are encouraged to establish a relationship with their local Medicare Appeals Council, or MAC, in case they are audited by a recovery audit contractor. There are gray areas where MACs in different regions could interpret the same case in different ways.