3 RAC targets to watch for

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Editor's note: The following is an excerpt from FierceHealthFinance's new eBook, Best Practices For Surviving Audits And Denials. Download the eBook here to read more.

Auditors go where the money is.

It makes sense--after all, audits are designed to save government and commercial insurers as much money as possible. And payers don't save a whole lot of money issuing line-item denials on saline drips and bandages.

If you know where auditors are most likely to look, you can better fend off their attentions. Consider these three audit hotspots:

1. Medical necessity

Rather than focusing in on the little picture, auditors tend to take a big-picture approach. Auditors will ask not only whether patients required a specific treatment, but also whether they required it in a specific venue. And if the answer is no, the payer could invalidate the entire claim and recoup tens of thousands of dollars.

"Medical necessity is really the hot button," Virginia Sizemore, director of internal audits for nonprofit South Georgia Medical Center in Valdosta, Ga., told FierceHealthFinance. For her facility, which is the region's safety-net hospital, providing the right care in the right location is a huge challenge.

"You wind up with a lot of elderly patients with a lot of co-morbidities, and it often makes it [unsafe] for them to be in the outpatient setting," she said. "Then, [if] the facilities do a good job of treating them as an inpatient [and] they get released pretty quickly, the provider is penalized."

According to Sizemore, recovery auditors (better known as RACs) are moving away from diagnosis-related group (DRG) validation--audits focused on what could be potential coding errors--in favor of investigating medical necessity.

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"Medical necessity is really the hot button."
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Further, medical necessity cases most often focus on complicated medical procedures, such as a pricey medical device. Even relatively simple procedures that involve devices could eventually be targets for audits, and in the cases of commercial payers, such claims can be outright denied.

If the claim lies on the fine line between inpatient and outpatient care, it also could be rejected. For instance, a cardiac procedure performed in the catheterization lab can cost tens of thousands of dollars less than one performed in the hospital. And a patient with chest pains hospitalized overnight costs much more in claims than someone who is held for observation care. Again, auditors are more likely to take a closer look at the more complicated and costly scenario.