Recovery Audits and Billing Compliance in ASCs

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Any type of review can be subject to extrapolation, making it potentially the largest source of recoupment to date. The methodology for extrapolation can be found in the Medicare Modernization Act Section 935 (a). As a provider, your first defense to extrapolation is a challenge to the validity of the statistical methodology. Another new portion of the statement of work that all ASCs should note is about fraud. The new statement explicitly states that while the RA program mission is to correct past errors, page 29, Section G, states that RAs shall report potential fraud immediately to the appropriate CMS contracting officers technical representative (COTR). Therefore, providers must avoid displaying patterns of disregard which may be interpreted in the future as fraud. Taking immediate action and ensuring billing compliance will help to minimize the risk of fraud accusations.

One area that may set you up for a pattern of disregard and vulnerability to the False Claims Act is your charge description master (CDM). Errors in the CDM can create patterns of undercharging or overcharging. If your CDM is inaccurate, it can lead to a “pattern of behavior" that is discoverable in an automated review and can potentially be interpreted as fraud later on.

Additionally, an RA may receive provider referrals from other CMS contracting entities and may (upon approval from CMS) perform provider-specific reviews. Something to be aware of is that if an RA receives a referral which is not yet approved as a new issue in that region, the RA cannot initiate an audit of that claim until the new issue is approved by CMS for that region.

Finally, unless granted an extension by CMS, RAs shall not receive a contingency fee in cases where more than 60 days have elapsed between receipt of the medical record documentation and issuance of the review results letter. In the past, if a provider missed a deadline, there was no option to appeal, and a take back would happen automatically – but the RAs were not held to the same rule. Now the RAs have some accountability for meeting deadlines.

To survive in this new audit-rich environment, providers will need a paradigm shift to quality systems as the facility backbone to ensure compliance long-term. C-suite, financial, clinical and medical staff must work as equal partners for coordinated care and compliance. The best way to avoid take backs is front-end compliance. ASCs should create an RA committee to oversee all billing compliance and the RAC program. Key members of the committee include the ASC administrator as the chair, a billing manager, physicians, a scheduler, clinical staff, registration staff and ancillary staff so that all entities are well-aware of new billing compliance needs and changes to the RAC program.

The first role of the RA committee is to bring together revenue cycle and clinical operations to work as a team on compliant billing. Only good clinical documentation can ensure appropriate coding and billing. The second role of the committee is to respond to a demand letter and manage the appeals process. The appeals process for RAs will not change and still consists of five levels of appeal. What has changed is the discussion period, which is utilized to determine if the provider has other information relevant to the payment of the claim. In the new SOW, once an appeal is filed, the discussion period ends immediately. Your ASC should perform risk-assessment for RAC focus areas, correct behaviors by building systems for proper documentation and coding, and make RAC a part of quality and compliance. With the committee and all of these steps in place, your organization will have fewer errors on automated reviews, receive less scrutiny and minimize losses ... becoming “RAC proof."

Elizabeth Lamkin is the CEO of PACE Healthcare Consulting LLC, which provides a broad range of strategic and tactical services for hospitals and healthcare providers. Lamkin has more than 20 years of executive experience in the nonprofit, clinical teaching and investor-owned healthcare sector. For more information, go to




The RAC Toolkit for Hospitals and Healthcare Systems, HCPro

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