3 RAC targets to watch for

Editor's note: The following is an excerpt from FierceHealthFinance's new eBook, Best Practices For Surviving Audits And Denials. Download the eBook here to read more.

Auditors go where the money is.

It makes sense--after all, audits are designed to save government and commercial insurers as much money as possible. And payers don't save a whole lot of money issuing line-item denials on saline drips and bandages.

If you know where auditors are most likely to look, you can better fend off their attentions. Consider these three audit hotspots:

1. Medical necessity

Rather than focusing in on the little picture, auditors tend to take a big-picture approach. Auditors will ask not only whether patients required a specific treatment, but also whether they required it in a specific venue. And if the answer is no, the payer could invalidate the entire claim and recoup tens of thousands of dollars.

"Medical necessity is really the hot button," Virginia Sizemore, director of internal audits for nonprofit South Georgia Medical Center in Valdosta, Ga., told FierceHealthFinance. For her facility, which is the region's safety-net hospital, providing the right care in the right location is a huge challenge.

"You wind up with a lot of elderly patients with a lot of co-morbidities, and it often makes it [unsafe] for them to be in the outpatient setting," she said. "Then, [if] the facilities do a good job of treating them as an inpatient [and] they get released pretty quickly, the provider is penalized."

According to Sizemore, recovery auditors (better known as RACs) are moving away from diagnosis-related group (DRG) validation--audits focused on what could be potential coding errors--in favor of investigating medical necessity.


"Medical necessity is really the hot button."

Further, medical necessity cases most often focus on complicated medical procedures, such as a pricey medical device. Even relatively simple procedures that involve devices could eventually be targets for audits, and in the cases of commercial payers, such claims can be outright denied.

If the claim lies on the fine line between inpatient and outpatient care, it also could be rejected. For instance, a cardiac procedure performed in the catheterization lab can cost tens of thousands of dollars less than one performed in the hospital. And a patient with chest pains hospitalized overnight costs much more in claims than someone who is held for observation care. Again, auditors are more likely to take a closer look at the more complicated and costly scenario.

2. Short stays

Auditors are particularly interested in inpatient stays that last two days or fewer.

Ironically, the shortest stays can be the result of hospitals being overly cautious about admitting a patient.

Baptist Health, a four-hospital system based in Birmingham, Ala., has developed an elaborate checklist to determine whether an inpatient admission should occur. Ironically, the checklist can take so long to complete that the patient actually improves as the process toward admission moves along. In some instances, patients wind up being discharged 20 minutes after they were admitted, according to Jeff Butler, Baptist Health's senior compliance auditor.

"One-day stays are immediately flagged," Butler said. "It makes it a really difficult decision about how you provide the best care for your patient."

3. Cardiac services

At the moment, at least, auditors are paying close attention to cardiac procedures. Trailblazer Health Enterprises, the Dallas-based RAC auditor for Southwestern U.S., lists 19 DRGs on its website that are considered at high risk for audits. Twelve of them fall into the cardiac category.

"You want to be on top of those lists," Jason Pinkall, associate counsel for Dallas-based hospital chain Tenet Healthcare Corp., said last June at the Health Financial Management Association's annual conference in Las Vegas. "You want to educate your hospital about them. It's teaching to the test, as it were."

With price tags of $3,000 or more a piece--plus the cost of implantation--cardiac stents are another audit hotspot.

Be consistent

So you've done your homework and you're up-to-date on the latest audit hotspots. What's next? Coordination and planning is a good start to avoiding audits, Smith said.

Be prepared, too, to make a coherent clinical and legal argument to rationalize care. If you have both and are consistent, auditors will have little in response during the appeals process.

For more tips, check out FierceHealthFinance's free eBook, Best Practices for Surviving Audits and Denials.