In the fast-changing world of commercial insurance, agents must stay ahead of industry trends and recognize burgeoning opportunities for their continued success. But for those who want to increase their income, there are two ways of achieving that: They can either find more clients, or discover a way to provide more value to existing clients.
One such opportunity to provide more value, is to introduce your clients to RAC (Recovery Audit Contractor) Audits. If they haven’t yet been through an RAC Audit, they are probably unaware of the potential financial loss it can bring them. The repercussions of a RAC audit can be just as consequential for healthcare facilities as a malpractice claim.
In fact, many agents may be inadvertently doing their clients a disservice by not offering this vital coverage. Let’s take a look at this opportunity agents might be missing and why it’s time to prioritize RAC Audit Coverage.
The Financial Impact of RAC Audits
While malpractice claims have long been recognized for their potential to cause significant financial and reputational harm, RAC (Recovery Audit Contractor) audits, can wield a similar hammer of financial loss. RACs meticulously review claims submitted by healthcare providers to ensure compliance with Medicare/Medicaid rules. Any discrepancies, be they inadvertent errors or misinterpretations of billing codes, can lead to hefty penalties and demands for repayment.
ZPIC audits are even more serious as they can freeze your reimbursements until they’re resolved.
RAC Audits are incentivized to find errors, and can extrapolate their results. That means that they can take an error rate from a sample of records and apply it to all of that provider’s Medicare days. According to McKnight’s Long-Term Care News, “A penalty of $75,000 for one provider became a fine of $750,000 from CMS.”
The Shield of RAC Audit Coverage
RAC Audit coverage offers a robust defense against the potential financial pitfalls of a RAC audit. Here’s what’s typically covered:
- Legal Assistance and Fees: Expert legal counsel can guide organizations through the complex landscape of RAC audits and potential appeals.
- Fines, Penalties, and Repayments: Direct financial consequences of audit findings are typically defended, ensuring that a facility’s operations aren’t severely impacted.
- Additional Costs: The audit process might necessitate hiring external consultants or specialized staff. These costs can also be covered.
The Consequences of Overlooking RAC Audit coverage
For healthcare providers, not having RAC Audit coverage can mean:
- Severe Financial Strain: Penalties and repayments can run into hundreds of thousands of dollars; in some cases even millions of dollars.
- Operational Disruptions: Resources might have to be diverted to address audit findings, impacting patient care and other core activities.
- Reputational Damage: Being flagged for Medicare discrepancies, even if inadvertent, can tarnish an organization’s reputation and lead to increased scrutiny.
For insurance agents, the consequences are twofold:
- Missed Commissions: With the increasing relevance of RAC audits, RAC Audit coverage is becoming a sought-after product. Not offering it means missed commissions and lost revenue.
- Disservice to Clients: Agents have a responsibility to provide comprehensive risk management solutions. By not introducing clients to RAC Audit coverage, they’re potentially leaving them exposed to significant risk.
Seizing the Opportunity
For insurance agents, the message is clear: RAC audits are a niche area of opportunity to provide essential coverage in today’s healthcare landscape. By offering this coverage, agents not only bolster their portfolio and potential commissions but also reinforce their commitment to their clients’ comprehensive protection.
In the face of ever-tightening healthcare regulations and oversight, the demand for RAC Audit coverage is poised to grow. It’s an opportunity that forward-thinking insurance agents can’t afford to miss.