When it comes to government programs that malfunction, one truth shines through; nothing ever truly gets fixed at the foundation. Repairing a government program is more akin to repairing a house on a beach that is susceptible to hurricanes. You get some 2X4s, prop it up again and hope for a reprieve.
The biggest example of this phenomenon happened in the past 48 hours with the announcement of the budget agreement that keeps the federal government operating for the next six months. Missing from the deal was any type of fix to the sustainable growth rate formula, which after years of indiscriminate can-kicking, now finds itself with a scheduled reduction of 27% in 2013. Yet we all know that if you’re reading anything in this particular space, government audits can’t be far behind as a subject.
CMS recently announced that the once-delayed RAC Prepayment Demonstration Project will begin on August 27th, 2012. Eleven states will fall under the demonstration project, divided into two groups based on identified improper payment issues. Due to the density of fraud and error-prone providers within their borders, the states of California, Florida, Illinois, Louisiana, Michigan, New York and Texas will be reviewed during the project. The states of Missouri, North Carolina, Ohio and Pennsylvania will be scrutinized based on the high volume of claims for short inpatient hospital stays.
As I digested the announcement from CMS upon release, my thoughts drifted back to the first RAC demonstration project, which eventually led to the permanent program we all barely tolerate today. All of the numbers from the Demonstration Project were updated in June of 2010 (9 months after the commencement of the permanent RAC program), and the final report glossed over technical problems that have only intensified under the permanent program. The statistic that stands out was that 64.4% of all appeals were overturned in favor of the provider. The last AHA RACTrac survey, with statistics through the second quarter of fiscal year 2012, shows that the percentage has increased to 75%, with several thousand RAC appeals still awaiting a final determination.
In addition, there was an issue with one type of demonstration audit where the CMS guidelines were misinterpreted by the contractor, which led to hundreds of erroneous denials. With many more facilities now involved with the permanent RAC program, it is much more difficult for technical issues to rise to the surface unless there is a coordinated effort from multiple facilities that shines a light on it.
Now hospitals in 11 states will find themselves under a new demonstration project in 26 days. I can imagine that the providers in the high fraud areas are going to feel more discomfort than those in the short-stay states, but there is an overarching problem with the now two-tiered RAC program. CMS is desperate to trumpet a positive, believable result from audit programs and continue to rig the audits in favor of the contractors to maximize returned dollars to the Medicare program. Never mind that the audits are built on an ever-shifting foundation; CMS is supplying the boards and propping up the programs until they are told that they can’t based on legislation. Unfortunately, the ones who suffer the consequences of this kind of constant reclamation project are the gatekeepers of health care, that being the providers.
Some hurricanes, it would appear, happen out of season.