Ready for the RAC attack? Hospitals, vendors prepare for CMS crackdown

While the Centers for Medicare and Medicaid Services' Recovery Audit Contractor (RAC) program is moving toward national implementation in fits and starts, healthcare IT vendors are lining up with software designed to help hospitals make sense of the program.

Bruce Hallowell, finance and revenue director at the Falls Church, Va.-based Computer Science Corporation (CSC), says hospitals are spending millions of dollars getting ready for the RAC program but aren't necessarily spending money in the right places.

"Hospitals know what's wrong. What they don't know is what their exposure is," he said. "They're getting defensive, and that isn't what they should be doing here."

Hallowell said hospitals need to "look outside the box" in selecting RAC vendors and tools that not only compile data, but tell them what to do with it.

"Software is not a solution  -  it's a tool," he said. "Sampling is not going to give you the answer. This is not a time for hospitals to be shy about what they're doing."

"Today's hospitals need to be proactive in designing processes to ensure appropriate medical necessity certification and documentation, and processes to ensure coding accuracy," added Joseph Zebrowitz, MD, executive vice president of Executive Health Resources, a provider of Physician Advisor solutions. "Without having strong processes in place, hospitals may find themselves returning a significant amount of their revenues to CMS."

MRO, a King of Prussia, Pa.-based developer of release of information software, among other products, developed its RAC Tracker product at the request of clients.

"We really didn't know what to make of it at first," said John Walton, vice president of client relations. "Our clients made us aware of (RAC), and after taking a look at it we realized it was a natural extension of our ROI services."

The company is now implementing RAC Tracker in the Henry Ford Health System in Detroit.

"Data mining has been frustrating," said Matt Wolocko, compliance officer at the health system. "Lots of software programs are out there tracking different things. We want software that's specific, that tracks our RAC activities and helps us with any appeal process."

"There are so many databases out there, and too often you get someone who says, 'This is what you bought; this is what you get,'" he added.

Walton said MRO expects to develop further uses for RAC Tracker as it refines the process. He sees uses for the product on online denial management and auditing.

Aside from MRO and CSC, there are an estimated 50 vendors offering RAC products, including McKesson, Ingenix, 3M, MediRegs, MedAssets, HealthPort and Compliance 360. All are advertising data-mining capabilities that allow a hospital to aggregate claims audits and appeals, determine what needs to be sent to CMS and file those reports on time.

CMS launched the RAC program in a pilot project in several states in 2005, targeting the estimated $10 billion in annual improper Medicare payments. More than $1 billion in improper payments was corrected in the pilot, and the program was due to begin its national rollout in February. Full implementation is scheduled for sometime in 2010.

CMS halted the program in November, following protests filed by two unsuccessful bidders for the program with the Government Accountability Office. The GAO is expected to rule on the protests by early February.

"We've seen people react kinda funny" to the delay, said Hallowell. "Some have decided not to do anything at all, and that's a problem. RAC isn't going to go away."

At the Henry Ford Health System, officials expect to have everything in place in time.

"It's kind of a two-edged sword," said Wolonko. "You prepare for it and prepare for it, and then it gets (delayed). It's been kind of frustrating." 

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