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June 4, 2012

Charts on Alert
By Selena Chavis
For The Record
Vol. 24 No. 11 P. 14

Keeping documentation on the straight and narrow and planning with a purpose can help alleviate anxiety when the federal government and payers come calling.

Federal and private payer initiatives point toward two realities for healthcare audits going forward: There will be more, and they are here to stay.

As the industry lets out a collective groan, many hospitals might prefer to stick their head in the sand and hope it will go away, especially in light of so many other high-level initiatives tugging at resources, budgets, and strategic energy. But with much at stake in terms of potential revenue losses and penalties, industry experts suggest that hospitals must be proactive and have solid readiness strategies in place before auditors come knocking.

“Proper planning is the most essential component to ensure an audit runs smoothly. This involves ensuring that the documentation is requested and obtained prior to the arrival of the auditors if possible,” says Andrea Merritt, director of compliance and audit services with the legal firm Hall, Render, Killian, Heath & Lyman.

Hospitals will want to avoid a last-minute scramble and present a posture of helpfulness for auditors. This means that an internal party should review all documentation once pulled to ensure supporting documentation is being provided. “The hospital should also plan for appropriate support for the auditors while on site in case questions arise,” Merritt adds.

Audits Are Growing
The audit initiatives and acronyms are seemingly endless: recovery audit contractors (RACs), Medicare administrative contractors (MACs), comprehensive error rate testing, payment error rate measurement, and zone program integrity contractors to name a few. Hospitals are already feeling the pressure of these requests, and the outlook suggests the audit field is only going to expand in number and frequency.

In addition to MAC prepayment reviews, the Centers for Medicare & Medicaid Services (CMS) announced that it would launch a RAC prepayment demonstration project scheduled to begin this month. Hospitals in 11 states (Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina, and Missouri) can expect audits to ramp up with that initiative alone.

“The audits are here and are only going to increase,” notes Mike Schramm, president of healthcare services with IVANS, Inc, a technology services company that recently published a white paper detailing the importance of being prepared for future audit initiatives, who says to expect increased audits from the current MAC and RAC initiatives.

Terry Kelly, CPC, CCP, a member of AAPC and clinical liaison for the patient financial services department at a five-hospital system, suggests hospitals view audits as an opportunity to make improvements to systems and patient care. “It does give providers an opportunity to fix things,” she notes, pointing to changes her organization made in the emergency department (ED) based on issues that were uncovered during the RAC program. Specifically, the organization made the decision to add a case manager to the ED when it identified a problem occurring with communication regarding how a patient was to be admitted. Staff had to choose to admit either for observation, inpatient status, or outpatient telemetry. “There is definitely a shift in how we handle patients coming through the ED,” she notes, pointing to the need to treat patients in the correct setting.

Even in light of expectations for increased audit activity, hospitals don’t have to view the process with fear and dread going forward, Schramm says. A proactive and focused strategy for managing audits will enable healthcare organizations to easily navigate the process and sail through successfully. Experts recommend adhering to several best practices to be fully prepared.

Don’t wait for the audit request to arrive before identifying a steering committee and audit team with well-defined roles and responsibilities, Kelly says. “With RAC, we put together a steering committee and pulled in people from various departments that would be affected,” she notes, pointing to patient accounts, HIM, compliance, case management, and physician champions. “It was critical to have a physician on board due to the education required for doctors. We had to have buy-in on that level.”

To ensure nothing is overlooked, hospitals should identify a go-to person for requests—someone appointed to receive the requests and manage the overall responsibility of ensuring they are handled in a timely manner with proper follow-up. While many hospitals choose HIM to manage audit requests, Kelly says her organization chose someone in patient accounts.

“The decision for us was made by our vice president of finance because so many dollars were at stake,” she explains, adding that an HIM professional would have been a wise choice as well.

Regardless of who leads the charge for audit response, Merritt points out that it is essential to include the HIM director and the compliance officer in the loop. “Based on the type of audit being performed, the compliance officer may choose to engage the hospital’s attorneys to perform the review under attorney-client privilege,” she notes. “The director of HIM can assist in obtaining the appropriate documentation along with engaging others within the organization if needed.”

The go-to person should be aided by professionals who have the knowledge to dig deep and locate all necessary documentation needed to substantiate what is being audited, says Susan deCathelineau, senior manager of healthcare solutions for Hyland Software. They also need to have a clear understanding of what is included in the legal medical record.

Pointing out that in an electronic environment it would seemingly be easy to locate information, deCathelineau notes that professionals often have to go to numerous areas to access all the appropriate documentation. “It can be challenging to identify what system to go to,” she says.

Identifying someone to follow the audit or any appeal action taken after documentation has been submitted to the appropriate agency or payer is critical to ensure that potential payments don’t get held up. deCathelineau points out that it’s on the hospital’s shoulders to stay on top of these efforts.

“It’s up to the organization to be proactive. Hospitals are the ones responsible for making sure the audit process keeps moving. It’s in their best interest,” she says.

Internal and External Reviews
Hospitals can’t move forward and be adequately prepared for audits—or improve their outlook—if they don’t have a baseline understanding of their current position. According to Merritt, internal audits are the best method of self-monitoring and should be embraced from the top down.

Kelly notes that one of the best places to start is at the source. The CMS and RACs publish their audit process to reveal specific areas of concern. The Office of Inspector General Work Plan also provides guidance.

“Those are good ways to see if there are issues that need to be addressed,” Kelly says. “We usually involve the compliance department. They get bills from patient accounting and documentation from HIM.”

Once billing is reviewed against documentation practices, organizations can identify potential problems areas and develop action plans. “Organizations need to understand trends being seen in relation to a certain diagnosis or treatment process,” deCathelineau explains, adding that internal audits should always leverage the knowledge of coding professionals to help identify trends and communicate future documentation needs to the physician staff.

Kelly emphasizes that it all goes back to documentation, and if hospitals have the right supporting documentation, there should not be any problems. “Just having someone track denials is an important step,” she notes. “It really gives insight into what the problems are.”
Merritt points out that error rates from an internal audit are best determined by looking at the number of errors divided by the number reviewed. “Although some choose to look at the difference in revenue between what was billed and the amount determined by the auditor, I do not believe this captures the full effect of the audit since overcoding and undercoding may be netted,” she points out. “With this said, it is very helpful to show the revenue differences, but errors rates should be reflective of the numbers of errors whether over or undercoding.”

External sources and consultants can help with this process and should be considered to identify high-risk patient encounters, according to deCathelineau. “Medicare is looking at particular trends,” she emphasizes. “There are certain high-risk areas that pose more of an opportunity to monitor.”

Hit the Books
Education is an integral part of any auditing and monitoring program, Schramm says, adding that staff and clinicians who are armed with knowledge of what to expect from auditors will be much better equipped to ready an organization for what’s coming. “You need to be prepared. You need to make sure people are aware of what’s going on in the industry,” he says.

deCathelineau suggests there are various ways to approach education and identify the professionals who would best fill the role of developing education strategies. When considering potential resources, make sure to look at HIM, she says, calling it “a great opportunity for HIM professionals to take the lead.”

Education that leads to improvement often begins with more accurate documentation practices. This is why it is crucial and necessary to have physician champions on board to lead the charge, Kelly says.

At the five-hospital system where she is employed, Kelly says case management and the steering committee’s vice president of clinical effectiveness (physician champion) were chosen to develop the organization’s education program. As patient accounts identifies problems, the information is passed along to the committee. Education is then coordinated through clinical effectiveness and case management.

Merritt explains that when providers are able to obtain a more thorough understanding of documentation requirements, the result not only leads to an increase in accuracy but also has the potential to boost revenues. “By educating providers after the audit process is completed, you are able to institute a follow-up process that is effective in attempting to achieve improvement in future audits,” she notes.

Leveraging Automation
Technology can vastly improve the auditing process, according to Merritt. “Not only can a hospital data mine using technology, but technology also can assist in pulling a sample from the appropriate population,” she says. “Also, by using technology, a hospital may prepare a bell curve analysis to assist in narrowing the areas they will review.”

In a nutshell, hospitals should take advantage of the inherent data-mining benefits of their own EHR as well as consider automated solutions that help make the audit process more efficient. Kelly says her organization tracked everything manually on spreadsheets prior to the arrival of RACs but quickly realized that this process would be inadequate to manage the onslaught of audits going forward.

“With RAC, we looked at three different tracking systems,” she says. “You can have a claim in appeals over a year. Trying to track all of that history on a spreadsheet is impossible.”

Automated systems also help healthcare organizations monitor daily auditing activity, a tall task if performed by hand. Kelly notes that one of the organization’s hospitals opted to continue to manage this process manually rather than deploy a tracking system with poor results. “It didn’t work for the long term,” she says.

Further emphasizing the value of automation, Schramm says there are healthcare organizations that spend upward of $3,000 in resources to manage audits manually. Employing technology can ease such labor-intensive efforts, he notes.

— Selena Chavis is a Florida-based freelance journalist whose writing appears regularly in various trade and consumer publications covering everything from corporate and managerial topics to healthcare and travel.