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August 2010 | Hospital Compliance Watch

CMS issues wake-up call on documentation in RAC audits

Insufficient documentation called a serious problem in many audits

Make sure your paperwork is in order or expect the government to ask for its money back. That was the warning from the Centers for Medicare & Medicaid Services (CMS). Submitting incomplete or illegible records to a Recovery Audit Contractor (RAC), or submitting them late, will cost you.

The warning came in a special edition MLN Matters article from CMS addressing high-dollar improper payment vulnerabilities. (For the CMS article, go to
http://www.cms.gov/MLNMattersArticles/downloads/SE1024.pdf.) In that article, CMS recommends that compliance officers review the information and take the necessary steps to meet Medicare’s documentation requirements to avoid unnecessary denial of claims.

The CMS article “should be a wake-up call for compliance officers,” says Barbara Piascik, senior solutions manager for MedeAnalytics, a health care consulting company based in Emeryville, CA.

“It’s a wake-up call for a lot of organizations, telling us that we could do a better job monitoring ourselves sometimes,” Piascik says. “Hospital margins are so slim now, and we can’t afford to lose a payment on a case that was absolutely clinically appropriate, the patient got a good clinical outcome, and we end up giving the money back because a doctor forgot to write a word to clarify something or we forgot to include a certain document. We just can’t let that happen.”

The information in the special CMS article will not come as a surprise to most compliance officers, but it still serves as an important reminder, says Janice Jacobs, director of the Huron Consulting Group in New York City.

“The recommendations to prepare for RAC audits by having a point person in place, tracking ADR letters, tracking and trending issues and results are all very good and practical suggestions. Most providers have undertaken this work and are prepared in this way,” she says. “For institutions that have not implemented these efforts, now is certainly the time to do so. For institutions that have this infrastructure in place and believe these efforts to be operating effectively, the next step is to utilize the trending data to educate the workforce and drive performance improvement efforts.”

Documentation matters

CMS notes that the primary goal of the RAC demonstration project was to determine if recovery auditing could be effective in Medicare, but it also identified best practices for developing a national program and allowed CMS to identify high-risk vulnerabilities. Two of the high-risk vulnerabilities identified during the RAC demonstration include provider noncompliance with timely submission of requested medical documentation and insufficient documentation that did not justify that the services billed were covered, medically necessary, or correctly coded. (See the next story for more on the RAC program.)

“CMS reminds providers that medical documentation must be submitted within 45 days of the date of the Additional Documentation Request [ADR] letter,” CMS writes. “Medicare contractors, including RACs, have the legal authority to review any information, including medical records, pertaining to a Medicare claim. If a provider fails to submit documentation, there is no justification for the services or the level of care billed. Failure to submit medical records [unless an extension has been granted] results in denial of the claim.”

Submission of incomplete or illegible medical records also can result in denial of payment for services billed. If there is insufficient documentation for the services billed, the claim may be considered an overpayment and the provider may be requested to repay the claim paid amount to Medicare.

Piascik says the CMS article emphasizes how much proper documentation matters in the claims process and in RAC audits, and compliance officers should not take the message lightly.

“This seems like stuff we all know, that documentation on claims should be complete, legible, and submitted in a timely manner. It’s not a new or complex concept,” she says. “But CMS is telling us that some of us just aren’t doing it well enough, and they’re warning that if we don’t get it together, a lot of money is at stake. There is a greater spotlight on these concerns now.”

Physicians often confused

Jacobs agrees, saying documentation is the most common problem faced by providers dealing with RAC audits.

“Proper clinical documentation continues to haunt health care providers. Services most likely were rendered, just not appropriately captured due to time constraints or lack of understanding on the part of the physician as to what exactly is the definition of complete,” she says. “What is Medicare looking for and how should it be presented are questions that frequently come up at physician training sessions. Also, physicians fail to make appropriate references to lab work and other diagnostic studies when coordinating care, resulting in services coming into question for medical necessity.”

Submission of documentation can’t be improved unless you know you are working with good data, Piascik says. She urges compliance directors to begin the improvement process by validating that the information seen internally is correct, and then prioritizing which issues need attention first. Hospitals will have difficulty with various coding or documentation issues, so it is not wise to sit down with the OIG’s work plan and begin auditing all the areas outlined there.

“You may be wasting some resources if you do it that way,” she says. “A better way is to use a process of risk assessment - a really good data-driven, scientifically based risk assessment. You can determine what areas need attention the most.”

A good risk assessment program also will help you move from a defensive posture of merely responding to the audits, to a more proactive effort to avoid audits.

“We need to start trending our own data. If the government is doing data mining, then we need to do it, too,” Piascik says. “It’s good to respond appropriately to an audit; but isn’t it better to not get the letter at all? Or if you do get audited, the issues that come up might be far less serious than they might have been. You can save a tremendous amount of resources that way.”

The goal, Piascik says, should be to develop a system that lets you rest comfortably once payment has been received and not worry constantly about fighting to keep the money.

Must train staff specialists

Training staff is crucial to avoid faulty claims and to respond properly to audits, Jacobs says. Training will be necessary for every single individual who comes in contact with a claim.

“Even with appropriate medical record documentation, medical coding may not be accurate and result in a higher DRG. Therefore, even with the most comprehensive documentation, an overpayment situation may occur due to an error on the back end,” Jacobs says. “It is essential to have on staff properly trained and certified coders who are experienced in coding high-risk areas such as cardiology and neurology.”

Jacobs reminds compliance officers that every provider can go to the RAC contractor’s website for their region to understand what the RACs are targeting. This is a huge difference from the demonstration program where no one knew what was being reviewed, she says.

And Jacobs says providers must have a backbone. Don’t give up money that you know is rightly yours; but above all else, never miss those deadlines.

“If the clinical documentation is complete and accurate, providers should appeal the claims and track responses based on the various levels of appeal. Also, RAC reviewers are many times incorrect,” she says. “Proper documentation and presentation of the support, many times, will satisfy the RAC reviewers. However, if the deadline is missed by even one day, the money goes back and there is no recourse.”

For more information on RAC audits, contact:

Barbara Piascik, Senior Solutions Manager, MedeAnalytics, Emeryville, CA. Phone: (845) 496-1056.
E-mail: barbara.piascik@medeanalytics.com.

Source: “CMS issues wake-up call on documentation in RAC audits,” Hospital Compliance Watch, http://www.hospitalcompliance.com/publication.php?id=55, August 2010.