4 steps to prepare for a RAC Audit

MIPS/MACRA coupled with ICD-10 have made it more necessary than ever for medical practices to have their billing and coding audited by an external auditor to ensure they are maximizing their revenue today and into the future.

CMS implemented ICD-10s on October 2015, however they were paying if the practice/provider was close with their codes.  October 2016 CMS changed the rules and now are looking for more granularity and specificity for claims to get paid promptly.

Practices with providers who are still using general codes with ICD-10 are experiencing more denials and more request for notes.

That is where having a professional auditor review a sample of charts can help.  The cost is low and the return can be high.  Whether it is an increase in revenue coming into the practice or avoidance of CMS RAC audit penalties.

Taking these measures could detect incorrect coding/billing practices.  (Incorrect does not always have a negative connotation, many times practices are leaving between 10% – 30% of revenue on the table because of missed charges)

It may also be considered reasonable effort to detect fraud and abuse by federal agencies.

Here are the four steps to perform an external audit:

1. Hire qualified external auditor (Auditing Certification should be mandatory)

  • Chart audits are based on specific criteria that federal agency look for in a review.  Professional auditors have tested on these criteria by a governing agency such as AAPC and understand medical necessity, sequencing, granularity and specificity of codes.

 2. Establish coding/billing action plan (How many Charts, How often and Type of Review)

  • Some providers are stronger at coding than others so based on level of proficiency might determine chart size.
  • The size of your practice can determine the frequency that audits are performed.  Most offices should have charts audited every one to two years.
  • Random audits are representative of your practice’s patient mix.  Focused audits are more direct based on identified problem areas. (Random audits can sometimes identify where there might need to be a focused audit in one particular area.)
  • Prospective audits are done before the claim has been submitted.  Retrospective audits are performed after the claims have been submitted.

3.Record summary of finding

  • Reports should be thorough, stating all deficiencies and well as areas that can be improved on to maximize revenue.
  • The OIG states that a minimum of 95% accuracy is best for a practice’s coding/billing standards.  This affords a 5% margin of error.

4.Establish corrective action plan

  • Based on the audit findings, the practice will need to establish a corrective action plan.  This can include but not limited to: Provider Training, Biller/Coder Training, and establishing an Ethics and Compliance Program.


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