Dear Doctors, Coders and Administrators,

As you probably have already heard, the RAC is on the way.

Medicare started the Recovery Audit Contractor, or RAC program, in 2003 to identify and correct improper Medicare payments paid to fee-for-service healthcare providers. The RAC demonstration project was rolled out in six states from 2005 to 2007 and recovered $1 billion in improper payments, for a net gain of $693.6 million to the government. It is not surprising that the demonstration project was considered a "success." The plan is to deploy the RAC audits in all 50 states by January, 2010.

A unique and somewhat controversial aspect of the RAC program is that the auditors themselves are not federal employees, but instead work for private companies and are paid a percentage of the "over-payments" recovered. This has led some to view the auditors as "bounty hunters" who have a vested interest in being as aggressive as possible in finding mistakes made by providers. The amount of the payment to the auditor ranges from ten to 25% of the claw-back money collected from the provider or hospital.This does raise serious questions about the motivation of the auditors. In other words, it is unlikely that an auditor will do a cursory review and say, "Everything looks okay," because this would mean they will not be paid.

For most doctors, the RAC program has not been an active threat because E/M visits per se were not included in the earlier RAC demonstration project. Unfortunately, it looks like those days are over because E/M services will certainly be added to the scope of the nationwide audit starting in 2010. According to CMS, "The review of all evaluation and management (E & M) services will be allowed under the RAC program...The review of the level of the visit of some E & M services was not included in the RAC demonstration. CMS will work closely with the American Medical Association and the physician community prior to any reviews being completed regarding the level of the visit and will provide notice to the physician community before the RACs are allowed to begin reviews of evaluation and management (E & M) services and the level of the visit."

This means that, yes, they are coming for us, but they will do us the courtesy of letting us know the time and date. This gives us a little breathing room and maybe even enough time to straighten out our documentation. The bad news is that I have seen enough physician documentation over the years to realize that nobody--and I do mean nobody--really does a good job on their E/M documentation. This is going to have to change.

How can you prepare for a RAC audit of your E/M services? You can spend thousands of dollars to hire a consultant to do a "Pre-RAC audit" to evaluate the strenghts and weaknesses of your documentation. This will involve multiple meetings and metrics and glossy pie charts. They will probably also provide just enough fear-based E/M coding advice to scare your providers half to death.

Or you can simply make sure that, from now on, your E/M services will be documented correctly. In other words, E/M coding education is the key.

For a motivated phyisican, there is enough free information available on our website to ensure E/M documentation compliance. For providers who need a gentle "push", we also offer fee-based services which we are happy to provide. (In fact, you might think about incorporating our web-based E/M coding modules into your existing compliance plan.)

The point is we all have to do something because the auditors are definitely going to review our notes with the proverbial fine-toothed comb. The only way they will not find errors is if those errors don't exist. Therefore, the best defense against an E/M audit is a well educated medical staff.

Sincerely,

Peter R. Jensen, MD, CPC
pjensen@emuniversity.com