April 2009

Your RAC Auditing Plan: A Tool for RAC Readiness

By Ruth Orcutt, RHIA

Are you prepared for the arrival of the Recovery Audit Contractor (RAC) program? Are you confident in the accuracy of the inpatient coding done by your coders? Have you had an external coding audit done to assess your risk under the RAC program? If not, you may want to consider developing a RAC Audit Plan to assess your RAC readiness.

A baseline review of coding quality of individual coders and the coding team will help to identify opportunities for improvement both in educating coders and in documentation improvement. This knowledge provides the direction needed to meet the RAC challenge, and promote confidence in your coding staff.

If you have never conducted a coding audit, getting started may actually be easier than you think. Most RAC audits are conducted by the coding manager or by one of the more experienced coders on staff. Based on the results of the RAC demonstration project, a good place to begin is by reviewing the targeted Medicare MS-DRGs (see Table 1. below) and Short Stays (see Table 2. below) which are likely to be the focus of the initial RAC reviews in the permanent RAC program. It may be wise to include a sample of all financial classes so that coding trends can be uncovered. There may only be a few cases in some of these MS-DRGs; therefore, 100% of cases should be reviewed. When there are many cases, a sample of 40 to 50 percent of the cases may be sufficient for review purposes. 

Follow these seven basic steps for auditing inpatient records: 

STEP 1.  Design a simple form to capture information for summarizing audit results.  It should include patient identifiers, original and revised MS-DRGs, disposition code changes, and POA changes. A comment section may be used to describe the type/source of error.

STEP 2.  Review all medical record documentation along with ICD-9-CM code assignments, MS-DRG assignment, disposition code and POA indicators. Ask yourself these seven questions: 

1. Does the principal diagnosis truly meet the Uniform Hospital Discharge Data Set (UHDDS) definition of principal diagnosis (“reason for admission after study”)?  Does it conform to the circumstances of admission and ICD-9-CM coding conventions and guidelines?
2. Are there multiple diagnoses that meet the definition of principal diagnosis, and if so, is the focus of the admission on one diagnosis more than others? Is a change needed?
3. Is the MS-DRG assignment valid? If it is a MS-DRG OR procedure unrelated to Principal Diagnosis, analyze carefully.
4. Are all CCs/MCCs supported by documentation in the medical record?  Is a CC missing? This is especially important when a single CC/MCC impacts the MS-DRG assignment. 
5. Have all appropriate procedure codes been assigned and are they accurate and supported by documentation?
6. Is a physician query necessary; would this possibly change MS-DRG assignment?
7. When changes are necessary, are supporting reference materials (e.g. Coding Clinics, official coding guidelines) available to explain the recommended changes?

STEP 3.  Identify types of coding errors, including the principal diagnosis selection, resequencing, omissions, code revisions, disposition code, and POA indicator changes.

STEP 4.  Determine accuracy and error rates, and prepare summary reports by MS-DRG and by coder.

STEP 5. When errors are discovered, determine the impact on reimbursement, make the corrections and re-submit corrected claims as necessary. 

STEP 6.  Analyze audit results to determine opportunities both for coder education and for documentation improvement. Does an individual coder need specific training and/or continued focused review, or do all coders need additional training? Is your query process adequate? Are changes in coding policies and procedures necessary?

STEP 7. Develop and implement a corrective action plan to avoid repeated mistakes.
 
Your RAC Audit Plan is manageable and the benefits are many. Your plan focuses on specific areas of risk that you need to address immediately and over the next 12 months. The entire plan or specific steps in the plan can be reviewed quarterly or more frequently if warranted.

Additionally, you must be confident that your audits are unbiased and being performed independently. This can be through an internal audit team or if resources are limited through an external auditor with appropriate skills. 

This activity should demonstrate to your administration that you are proactive in RAC preparedness. Furthermore, knowing where documentation is lacking may also help in preparing for ICD-10 implementation in your facility.  

Table 1.  Targeted MS-DRGs

Table 2.  Targeted MS-DRGs for Short-Stays Discharged Alive
NOTE: Medical necessity is important to short stay review; however, this is not addressed in a coding audit, and should be reviewed by Care Management.

Editor’s Note: Ruth Orcutt, RHIA is a coding and auditing consultant in Chapel Hill, NC for Clinical-Insights.

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