Florida hospitals had a front-row seat to the genesis of the Recovery Audit Contractor program due to the Sunshine State's participation in the three-year RAC demonstration project. FierceHealthFinance recently spoke with Bruce Rueben, CEO of the Florida Hospital Association, to find out what his member hospitals have learned from the RAC program so far.

FierceHealthFinance: Based on the experiences of your member hospitals, what is your global forecast for hospitals nationwide in 2010 as the national RAC program ramps up?

Rueben: Florida, like New York and California, served as the initial testing ground for the Centers for Medicare and Medicaid Services to develop the RAC program.

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For example, the demonstration RACs could look back four years, but in the national program CMS has limited the look-back period to three years past the claim paid date, as well as setting a maximum look-back date of Oct. 1, 2007. In addition, CMS has limited the amount of information that the national RACs can collect without good reason. The RACs won't be able to conduct either automated or complex medical reviews of more than 10 records without obtaining CMS approval via a new issue review process and identifying all approved issues for review on their websites. And even with this, there is now a limit on the number of records that can be requested every 45 days.

Much debate and wringing of the hands occurred nationally as the demonstration unfolded in the test states. These and other changes to the national program mean that hospitals around the country can breathe easier about RAC implementation in 2010 and beyond. That said, hospitals certainly need to take the program very seriously and prepare for national implementation.

FHF: If CMS holds to its current timetable, hospitals could begin seeing complex reviews for DRG (diagnosis-related groups) validation and coding errors by the end of the year, and for medical necessity in 2010. Based on Florida's experiences with complex reviews in the demonstration, what should hospitals expect?

Rueben: In complex reviews, the RACs are looking for claims that aren't substantiated. It is up to the hospital to ensure that physicians provide documentation that adequately substantiates coding, DRG assignment, and medical necessity of services. Hospitals in Florida have worked to develop billing systems that will help them avoid having claims pulled in the first place and documentation systems that will substantiate any claims that do get pulled by a RAC. Hospitals must understand that they have to get it right the first time if they want to avoid extra bureaucratic burdens.

FHF: What do you foresee as the biggest misunderstanding about the appeals process in the national RAC program?

Rueben: With a program like this, the contractors get very ambitious in terms of the claims that they feel should be disallowed. So I anticipate a continued aggressive approach from the RACs and a lot of claims being flagged initially. However, I also expect many of those claims to end up being paid--if the hospitals appeal. At some Florida hospitals, we have found that as many as 75 to 80 percent of the claims that were first recouped are now being paid.

Interview conducted by Caralyn Davis.