The Alphabet Soup of Patient Charts, Audit Processes and Payment Tracking


We’ve written about the Recovery Audit Contracts (RAC) program previously and thought it would be worthwhile to check back in on recent news in this space.  According to CMS, in FY 2012, RAC auditors collected $2.29B in 2012, nearly three times the amount recouped in 2011.

  FY 2011 FY 2012 Growth
Overpayments Collected $ 798M $ 2,291M 187%
Underpayments Returned $ 142M $ 109M (23%)
Total Corrections $ 939M $ 2,401M 156%


What’s apparent from this data is that a large step up in audit activity is obviously occurring, which will only accelerate in 2013 as auditors begin looking at evaluation and management (E&M) CPT codes commonly used by family physicians outside of the hospital setting.  In fact, when we match this CMS data against the latest results from the American Hospital Association’s RACTrac survey of 2,260 hospitals, it’s even more obvious that the level of activity around responding to requests for patient charts and managing the audit process is growing at an extremely rapid pace.

For example, 89% of hospitals surveyed reported that they have responded to RAC requests in the third quarter of 2012.   Of those, 58% indicated that they spent more than $10,000 managing the RAC process in that period, with 12% spending more than $100,000.  Most respondents indicated that these costs were primarily due to increased administrative costs, additional training and education, and for the use of RAC tracking software.

As many readers undoubtedly know, the RAC program is one of a number of alphabet soup-like initiatives to track and recover improper payments based on review of underlying medical and patient data.  There are also MACs, ZPICs, CERT, RADV audits – and others – that typically rely to some extent on examining a patient’s chart retrieved from that patient’s care provider.  Furthermore, we can add to this the chart activity associated with risk adjustment on behalf of Medicare Advantage plans as well as HEDIS activities across the full spectrum of health plans.

When we sum up all of this activity, it’s apparent how critical access to patient data is for a wide variety of players in the healthcare landscape.  And it helps explain why we have seen continued M&A activity among businesses associated with access to the patient chart.  As the demand for and use of patient data continues to increase, it makes sense that companies and investors are securing their access to patient charts.  In our view, Healthport’s recent acquisition of Discovery Health SolutionsEDG Partners recap of Peak Health SolutionsLLR Partners recap of IOD Incorporated, and Verisk’s acquisition of MediConnect could all fit into this theme – even though these deals cross the spectrum of both provider- and payer-focused businesses.

Given the unrelenting demand for patient chart data– and the inevitable coming backlash – we will continue to watch this space with interest.  In particular, we are on the lookout for vendors that can provide unique solutions to streamline and/or consolidate the efforts required by providers to respond to the growing types and sources of patient data requests.

Let us know what you think.

Conor Green
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