Q&A: ICD-10 and RAC, better together

Carl Natale
by Carl Natale

ICD-10 is but one piece of the healthcare puzzle with which IT shops and the CIOs who support them need concern themselves. The usual suspects include EHRs, Meaningful Use, healthcare reform, and the HITECH Act – and while simmering that acronym soup don’t forget about RAC.

Otherwise known as the Medicare Recovery Audit Contractor project, RAC is designed to root-out and reduce improper payments. John Dugan, PricewaterhouseCoopers partner in charge of RAC, speaks with ICD10Watch editor Tom Sullivan about how ICD-10 and RAC are tied to each other, why healthcare organizations should plan for them together, and what benefits doing so might yield.

Q: For starters, what's the relationship between RAC and ICD-10?
A: The relationship is very simple. The areas of risk that clients are focusing on now become much more complicated downstream as it relates to a whole new environment and group of resources to be trained associated with coding. The original linkage is that ICD-10 needs to be very closely fit within most organizations electronic health record initiatives, and that’s where I see a little bit of a disconnect. What you see is a lot of our clients focusing on the adoption of EHRs to meet the requirement for meaningful use so the available funds are available for them by the soonest deadline, as well as making sure that there’s no penalties. But in the same vein that type of workforce group is not necessarily linking the ICD-10 implications of implementing those clinical information systems. The opportunity to do it once, versus twice, is still there.

Q: Given that, how should healthcare organizations fit RAC into their ICD-10 plans, or is it the other way around?
A: In regards to linking them up together, if you think about ICD-10 and where that migration is going, if organizations really focused on expanding and evaluating their clinical documentation practices, to look at GEMs to really see what we currently do as a business relative to treating our patients, i.e. the diagnoses that are coming through, it becomes not as challenging an opportunity. So if you’re looking at 16,000 codes but you only use about 20 percent of those in real mapping of your patient population, think about taking that over to ICD-10 and what is going to have to happen relative to documentation specificity. Once you get your arms around that, what you’re ultimately doing is providing some compliance protections around future RAC initiatives because the further you can identify what your patient population is in regards to what you’re serving – whether you’re a community hospital or a hospital with a great concentration of patients in cardiac or orthopedic – once you know your numbers, so to speak, associated with ICD-10, you can drive greater documentation clarity. So they go hand-in-hand, RAC and ICD-10, from an overall compliance mitigation.

Q: Well, what are the benefits of leveraging RAC and ICD-10 together?
A: If ICD-10 is utilized appropriately as it is in the rest of the world, the output is much more reliable information on outcomes. When you think about quality and safety in the effectiveness of care relative to what works, what doesn’t work. It also links to a more efficient, improved payment system. To have much more granular information associated with clinical documentation and deeper coding creates an opportunity to have a much sophisticated payment platform with more reliable information coming out. Everyone would agree that having more detailed information could only help the research population in regards to looking at clinical trials. Certainly, looking at overall utilization of services that come out through the system is another added benefit of ICD-10, but where RAC and ICD-10 go much more hand-in-hand and this goes back to how sophisticated the various RAC contractors are going to be because let’s face it traditionally they are large data management companies, collection-agency type companies that have sophisticated technology to screen through average trends. So the opportunity of ICD-10 and RAC coming together is that it will be really easy to identify someone who’s really not fully deployed with ICD-10 codes. That should come out pretty easily through a RAC data diving exercise. ICD-10 starts and stops with the patient. The fact that we now can provide much more information associated with the patient encounter, whether it can be used for future clinical care delivery as well as research and payment, that’s a step in a positive direction.