Preparing Your Practice for a Possible E&M RAC Audit

Most physicians have heard of Recovery Audit Contractor (RAC) audits, which are part of a program instituted by CMS with the goal of recovering improper payments which were not previously detected using existing error protection and prevention efforts.

Although the RAC audits have been ongoing for a few years, CMS has now announced that RACs will begin auditing claims that contain higher-level CPT codes for E&M services. The first physicians to be subject to these audits are those who live in “Region C” of CMS’ RAC Program (Puerto Rico, U.S. Virgin Islands, Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia). These audits, in particular, will focus on E&M CPT codes 99214 and 99215, which are most commonly billed by family physicians and internists.

This new program of RAC audits appears to be the result of a report issued by the U.S. Health and Human Services OIG in May 2012, in which CMS was encouraged to audit physician E&M codes because they were vulnerable to fraud and abuse. The OIG report noted that between 2001 and 2010, payments for E&M services increased by 48 percent. Of course, this increase in E&M codes can be somewhat explained by the change from use of consultation codes to billing office/outpatient visits (99201 - 99215) as well as hospital inpatient services (99221 - 99233).

The proposed audit of these codes poses a significant threat to physicians and has been strongly opposed by the AMA. According to the AMA, in the context of E&M coding, physician choices regarding appropriate code designations are subjective based on the complexity of patient visits. For this reason, E&M codes do not lend themselves easily to medical review. Moreover, since RACs are not required to have the same-specialty physicians review RAC determinations, there is concern that RACs will not properly understand these variables or their clinical relevance. RACs already have a low accuracy rate (according to CMS’ FY 2010 Recovery Auditor Report to Congress, there was a 46 percent rate of determination in a provider’s favor when results were challenged). Another concern raised by the AMA is CMS’ approval of extrapolation of findings on sample CPT code 99215 claims. Because every E&M visit is different based on the unique need of patients and no two E&M visits are the same, extrapolation would be grossly unfair.

In light of the fact that these RAC audits are a real probability, providers should be aware of issues that may arise in an audit of E&M codes. First, it’s important to make sure to respond in a timely manner to all medical record requests when issued and keep your legal counsel in the loop from start to finish, as a private audit may be needed and there may be other legal issues involved.

In terms of the records themselves, there are precautions that can be taken to minimize audit concerns, including the following:

1. Make sure your records are authenticated, signed, and clear as to authorship to avoid denial. This includes legible signatures and the ability to distinguish staff notes from physician’s notes. Make sure everyone entering a note in the chart clearly signs and dates their entries.

2. When using time as the key component in documenting E&M codes, make sure the total face-to-face time is documented, as well as the total time spent in counseling the patient (and the topics covered in counseling).

3. The patient history must be included in the record and properly documented supporting the level of E&M code that can be legitimately billed. Without the history, you may be deemed to be overbilling or not entitled to payment at all.

There are many more common errors made by physicians when billing E&M codes that can seriously hurt a practice under a RAC audit. Even worse is the fact that if the same errors are found in all charts, extrapolation of the results could be disastrous. I highly recommend providers take a proactive step to conduct an internal audit using a certified coder. Meticulous documentation will be the key to protecting your practice from all federal audits, including RACs.

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