In addition to all of the medical billing changes projected for this year, and entitlement reimbursement legislation that's challenging America's physician practices, there's another item that many doctors are paying attention to that is related to Medicare and Medicaid. It's called a RAC audit and involves recovery audit contractors who work on behalf of entitlement programs to spot Medicare or Medicaid fraud or other types of overpayments.

It's no secret that Medicare and Medicaid fraud are massive problems within the American healthcare industry. However, for the majority of physician practices that operate honestly, RAC audits are less likely to turn up actual fraud but more likely to turn into a huge hassle for a struggling medical business that's trying to treat patients every day, collect accounts receivable and comply with all of the extra work of identifying payers and maintaining patient records.

The Daily Practice Blog, a resource for physicians, offered some tips late last year about how to handle these RAC audits including:

• Have an up-front policy and a strategy for responses to external inquiries. Most physicians know that these auditors can pull a certain number of patient charts, and forward thinking physicians are directing staffers on how to do this if it should become necessary.
• Doctors who are anticipating this kind of audit will also think about when it makes sense to appeal an auditor's decision and when that appeal may be more trouble than it's worth.
• Another big step provided regards medical necessity, which, as many physicians know, is a frustrating, subjective term that can often seem like an unfounded attack on a physician's judgment. But as experts in these types of audits point out, problems are often related to a lack of documentation or explanation rather than an actual challenge to the medical necessity of any given procedure, especially since the great majority of physicians are extremely likely to go by the book in terms of diagnosis and subsequent treatment.

So, as medical businesses get ready for 2012 and the Centers for Medicare and Medicaid Services prepares to ramp up RAC audits, go forward boldly, developing a competent response plan, so that you can rest easy about this eventuality and get back to treating patients. Good patient documentation will help you with audits, and will also help with all of the many potential problems related to medical billing to insurance companies, entitlements and patients, leaving your medical office better able to accomplish its goals in the new year.