To date, because of the monetary incentives built into the RAC program, services paid under Medicare Part A have been the preferred target of the four regional RAC contractors. Hospitals and other facilities paid by Part A continue to deal with the ever-expanding demands of the contractors in the realms of both DRG validation and medical necessity. Simultaneously, individual physicians and groups have been existing in a world seemingly beneath the radar of the RAC’s.

The new world under PPACA is about to change this set of circumstances, with RAC’s gearing up to train their sights on a distracted physician population that after years of federal warnings and compliance guidance, remains ill-prepared to weather the storm. The planned expansion of the RAC program into avenues currently traveled by Medicaid Integrity Contractors (MIC’s) only makes the need for data on practice vulnerabilities, and opportunities for coding and documentation improvement, that much more important.

Stepping into this information void comes…….The RAConteur.

As the RAC contractors begin to circle above the heads of the individual and group physician populations, there are steps that can be taken pre-emptively to:

• Identify probable RAC audit targets;
• Determine practice vulnerability based on these targets; THEREBY
• Strengthening your practice’s defenses against your RAC contractor.

Every Wednesday, The RAConteur will focus on RAC information specifically tailored for the physician practice. In future posts, it is my hope that I can assist practices to begin to view the paper trail that accompanies their daily work product with the same highly trained critical eyes developed and possessed by all physicians as part of their medical training. Rather than leaving physicians to continue guessing about where their vulnerabilities may exist. Instead it is my mission to empower the physician to detect errors and modify long-held thinking and behaviors, which will hopefully lead to decreased risk and increased peace of mind.

The paved-over swamp that is official Washington, D. C. has decided that increased audit recoveries are the pathway to offsetting the cost of healthcare reform for the next decade. While the opportunities to weed out the fraud in the American healthcare system is a task for which we all have a positive financial stake, The RAConteur will relate as much information and advice as possible to ensure that you are not the physician providing a high percentage of this healthcare funding.

As we go forward together, I look forward to your comments and questions on specific elements of physician RAC audits, coding, documentation and best practices in a world of hyper-investigation.

Welcome to The RAConteur!

As a demonstration of this statement, imagine for a moment that everything in your life that has some kind of fixed value or representation suddenly shifts. Here are a few illustrations to help you: the nickels in your pocket are now worth nine cents, the dishwasher in your kitchen is now used for the cleaning of clothing and your family dog is now an animal known as a boopwiffle.

To the best of our abilities, we have attempted to assign shape and definition to everything that exists. The moment of debate occurs when someone else applies a different set of definitions to things in our world with a long-established value. Depending on the new person’s definition, the result is either a clearer understanding of the things that surround us (such as someone like Copernicus or Galileo) or a complete and total breakdown of established order, leading to chaos. Last week, a judicial decision was handed down from a U. S. District Court in a case involving a hospital and a Recovery Audit Contractor that, if left to stand, could hold dire consequences for all providers of medical services paid by the Medicare program.

In February of 2009, CMS issued Change Request 6157, that stated that a contractor could go back as far as 4 years to reopen an initial determination on a claim, provided that the contractor has ”good cause” for the reopening. Specifically, this update clarified what constituted new and material evidence needed to substantiate good cause. The Change Request stated that the information has to be something that was not readily available at the time of initial determination. There was a key passage in this document that was at issue in last week’s case:

“A contractor’s decision to reopen based on the existence of good cause, or refusal to reopen after determining good cause does not exist, is not subject to appeal.”

The plaintiff in this case sued the Department of Health & Human Services, stating that a RAC auditor reopened a claim 20 months after the initial determination without sufficiently providing just cause for the reopening. The final decision of the judge was that a decision by a contractor to reopen a claim is not subject to appeal, regardless of whether “good cause” exists.

In summation, this decision means that RAC’s and ZPIC’s no longer have to follow any rules for the reopening of claims. No appeal rights are available to any provider to force the disclosure of a reason for claim reopening and no court can provide relief. Any contractor can reopen any claim at any time for any reason, and CMS isn’t interested in monitoring contractor reopenings to determine whether good cause exists.

While the RAC program as designed on paper was to find both overpayments and underpayments, there is no financial incentive for the RAC’s to identify both with the same veracity. If one factors in that RAC’s keep anywhere from 9% to 12.5% of all overpayment dollars collected depending on geographic area, the judge’s decision has devastating potential.

If I were to identify one silver lining with regard to the RAC’s, it would be the success rate of appeals of RAC determinations. Currently, 8.2% of all RAC decisions have been appealed by providers with a success rate of 64.4%. This indicates a high error rate on initial determination, and provides a great argument for internalizing an inherent mistrust of any RAC determination. Thanks to a short-sighted court decision, appeals against a RAC as it relates to the administration of statute are limited. Yet if the decision of the RAC as it relates to the payment determination for services seems incorrect, anecdotal evidence strongly suggests that it is, and that’s worth an appeal.

I can’t promise that the process is as easy as taking your boopwiffle for a walk around the park, but half of survival is the art of making yourself an unappealing target for predators. An aggressive response is a provider’s best defense against continued RAC audits.

To start out with a bracing dose of truth, I tend to live by very few rules, mainly because I fall back on survival instincts for most of my decision making process. This includes not dancing barefoot in poison ivy, realizing that I’m not cut out for living in the forest and stopping at the occasional red light. However, when it comes to what is referred to in more puritanical quarters as a moral code, my list of rules is rather short: don’t kill, don’t steal and don’t profit from other people’s bad luck (there’s one more multitiered rule that’s rather graphic and won’t be shared in this forum).

A good example of the application of these ideas is the fact that on the side, I’m a singer. My mother once suggested to me that there could be money to be made singing hymns at funerals and I found this idea incredibly revolting and insulting. It’s not enough that someone has just lost a loved one, but you’re going to stick a hand in the family’s pocket for the act of ushering the deceased into the next life with song? I find the very thought disgraceful.

As an extension of this rule, I have a deeply wired disdain for anyone who makes a living profiting from human misfortune. My hit list of occupational vultures includes funeral homes, pawn shops, payday and title loan stores and drug dealers. For purposes of this posting, let’s add an obvious one to the list: health insurance companies.

It is a well-documented reality that since the introduction of “managed care”, insurance companies are making out pretty well on the profit side. Hand in hand with this is the fact one study indicates that in 2007, 62% of all bankruptcies filed were due to outstanding medical expenses. Of that number, 80% had health insurance coverage. Given this statistic, why are we calling the purchased product “insurance”, as the very definition of this term suggests a contract that provides a guarantee against loss?

The effects of this same industry upon the provider community are no less damaging. Due to over 20+ years of deleterious contract terms, providers across the country are struggling with the costs of practice operation. With the proliferation of PPO plans that expand abhorrent fee schedules and payment rates to insurers across the country through the use of silent PPO’s and wraparound plans, the reimbursement playing field is evolving into a mine field.

It is my duty to inform the provider community that after six paragraphs, 400+ words and a brief discussion of funeral music, I’ve reached the point in this narrative where I can relay some good news; these mine fields have maps, and these would be your insurance carrier contracts.

Provider contracts make for interesting reading. What at first presentation will sound like an opportunity to expand your patient base to another insurance population can quickly shift in shape to something more resembling indentured servitude with the simple act of a signature. Knowing this, there is no longer any valid reason for not reviewing your insurance contracts on a regular basis, at the very least yearly.

In addition to the base contract, it is equally important to be wary of any and all amendments to that contract that are offered after initial contracting. I recently came upon a case where a physician had been under contract with an insurer for 4 years (with no legitimate review of the base contract language in that time span) and was sent an amendment that he dutifully signed which gave the insurer permission to share their pricing structure with other insurers. This had the effect of extending already negative contract terms far afield to insurers to which the provider had never been formally introduced.

Health care delivery finds itself on the brink of entering a world of increased physician cost and time investment. If a provider looks at his or her bottom line today and can see beyond all doubt that the current path is unsustainable, the best way to plug the income leak engulfing the practice is to go right to the source, which would be your insurance contracts. There are many directions that can be taken with regard to building a successful and sustainable medical practice. Given what we know about the singularly predatory nature of the modern insurance industry, the time has come to ask the most important question; where are your contracts taking you?

The legislation that originally contained the pay fix was returned to the Senate for consideration by House Speaker Nancy Pelosi on Friday June 18th. In addition to the pay increase, the larger bill contained extensions of unemployment benefits and supplemental payments to the states to augment Medicaid programs. Senate Majority Leader Harry Reid spent the second half of yesterday afternoon attempting to garner the 60 votes needed to advance the legislation to a full vote on the floor. Ultimately, his efforts failed when the cloture vote tally of 57-40 doomed the bill. Minutes after the Senate vote, the House, by an overwhelming majority, passed the breakaway bill containing the pay fix that was sent to them late last week. The legislation was signed this morning by President Obama.

CMS has been processing claims with a 21.3% cut for the last 5 working days.  It is expected that CMS will soon announce that claims are now going to be processed at the pay fix rate. Any claims that have been processed over the last week will need to be reprocessed at the new, higher rates absent the previous cut.

While this legislation brings the latest chapter in this drama to a close, the story will begin anew as December 1st approaches. If either another temporary remedy affecting the fee schedule or a permanent fix to the Sustainable Growth Rate (SGR) formula is not passed prior to this date, physicians will face a 23% across-the-board cut in reimbursement.

I invite you to look very carefully at the mathematics involved with this. The conversion factor for 2010 was frozen at the beginning of January at 36.0846. Due to the larger health care reform legislation passed earlier in the year, the conversion factor was decreased for all 2010 claims to 36.0791. This did not affect claims already processed, but if you have recently submitted claims to your contractor for dates of service from early 2010, you may have noticed that the payments are decreased by a few pennies from how similar services were processed in the beginning of the year. The 2.2% increase now in effect applies to the lower, updated conversion factor.

While the latest conversion factor for the six-month period has not been released as of yet, a 2.2% increase to 36.0791 gives you a number in the neighborhood of 36.8728. Now, let’s suppose for purposes of envisioning the worst-case scenario that a 23% cut goes into effect on December 1st. This cut would be applied not to the temporary conversion factor, but the legislated conversion factor of 36.0791, which would give you a conversion factor closely resembling (again, not exact due to a lack of CMS announcement at the time of this writing) 27.7809.

The conversion factor is slated to take a further hit at the beginning on 2011, which would result in reductions that would bring the total net cut very close to the 30% range. Words have yet to be devised that would fully describe the negative impact on the healthcare delivery system in the United States that occurs if such a cut ever takes place.

For now, enjoy the summer sun and bask in the beauty of Autumn’s color when it arrives, as it could very well be a winter longer than any other we’ve ever experienced.

The bill under consideration last evening, which also included an extension of long-term unemployment benefits, was defeated on primarily on a straight party line vote. Following the vote, Senate Majority Leader Harry Reid (D-NV) attempted to bring a bill to the floor for a vote that addressed only the physician pay cut. This bill would delay the pay cut until the end of 2010. Minority leader Mitch McConnell (R-KY) raised an immediate objection to the bill being brought up for debate, and the Senate adjourned until this morning.

A look at the executive schedule of business for the Senate today shows that no legislation is scheduled to be brought up for debate.

Fi-Med will be following this story as it develops throughout the day. This post will be updated immediately upon release of new information regarding a possible fix to this situation.

UPDATE: [2:18 PM EDT, 6/18/2010]: The Senate has passed legislation that delays the 21.3% pay cut for a six-month period. Because this bill is now a new piece of legislation, it must be returned to the House of Representatives for approval. Apparently, the House is unable to take up the legislation until next week. Moments after the bill passed the Senate, CMS issued a statement saying that claims processing will begin today at the lower pay rate. By law, CMS has run out of options with regard to delaying claims processing any further.

One good piece of news comes out of this. When the bill is passed by the House, all claims with dates of service between June1st and November 30th, 2010 will be subject to a 2.2% increase in the fee schedule that has been followed in the first 5 months of this year.

So to recap, this is a 21.3% cut, followed by reprocessing that repays the cut, plus 2.2%.

A curiosity in all of this is that the AMA is stating that after the cut is eliminated, CMS will only automatically reprocess claims when the submitted charges are higher than the reinstated allowed amount. Those claims with charge amounts that are lower than the new rate will require contact with the contractor.  When the cut is reversed, this needs to be watched carefully.

This current hold affects services from June 1st, 2010 and after. If for some reason legislation is not passed by Thursday, the claims hold will be lifted on Friday and claims will be processed with the cut.

The pay reduction was originally scheduled to be implemented on June 1st. CMS is currently holding claims for the first 10 working days of June, which is delaying the cut until this coming Monday, June 14th. Senator Reid’s office has stated that no votes are scheduled on the pending legislation either tomorrow or Monday, as senators will be visiting their home states during this time.

The earliest a vote could be cast on the legislation would be Tuesday, June 15th. In the recent past, when faced with a similar deadline, Congress requested that CMS not release claims for payment until the legislation could be considered and sent to the president for his signature. Given this history, I am of the opinion that this legislation will be reviewed and passed upon the Senate reconvening on Tuesday the 15th. The only way to be certain of this outcome is to stay tuned.

The legislation currently on the table provides for a 2.2% payment increase for the remainder of 2010, followed by a 1% increase in 2011. The current oft-delayed pay cut would be restored in 2012, more than likely at a deeper percentage rate, unless a permanent fix to the Sustainable Growth Rate is implemented prior to 2012.

I’m sure that at least once in your life, you’ve been asked this question. Maybe it was your high school guidance counselor trying to steer your post-high school ship? Eventually, it moved into the realm of job interviews or an older and (allegedly, in my case) wiser adult who couldn’t wait to dispense sage advice about your life plan. Thinking about it now, you grappled for an answer, thinking about your first choice of major for college or that special someone who was in your life when you were younger that you thought was going to be by your side for years to come. Looking back on it now, you shake your head wondering why you ever wanted to enter that long-abandoned field of study as you shared you life with a person you haven’t seen or thought about in years.

For someone like me who lives his life as a passenger of The Flow, I think about several different scenarios in my 5-year plan. Will I still be in the same house? Given my familial history of early male heart disease, will I be there to see it? Will the ice caps melt, leaving me on my homemade wooden skiff, forever floating upon the landless seas until the eventual invasion and enslavement from the skies by our distant alien overlords who have searched the universe for water to ensure their survival? As you can see, a vivid imagination has been a constant impediment to setting my ever-evolving 5-year plan in stone.

Unfortunately, when it comes to a single or multiple provider medical practice, imagination will not be useful in the current climate. Five years from now, quality reporting will be mandatory, as well as e-prescribing and the use of interoperable electronic health records. Add CMS’ doubling down on rooting out fraud and abuse to this equation, and suddenly the idea of operating a small, independent physician practice without a support network of IT, compliance and financial management professionals appears to be extremely difficult, if not impossible.

In this environment, many small practices are suddenly discovering the idea of strength in numbers and contemplating either selling their practice or merging with other larger physician groups. This approach presents dangers to both sides of the equation.

For the selling or pursued practice, the concerns deal mainly with sale price, but other problem areas line the road to sale. The practice needs to be certain that the larger practice has an experienced compliance and IT infrastructure that is prepared for the new environment on the horizon. For the practice’s patient population, the effect of the purchaser’s current insurance contracts must be assessed, not only to provide cost certainty for contract redundancies between the two entities, but to determine if the purchaser’s active contracts are compatible with the practice’s already developed patient population.

For the purchasing practice, the compliance risk of acquiring the new physician needs to be examined. Does the new practice have billing and coding patterns that would suddenly represent an outlier when compared to the current physician population? Do the typical services performed by the provider have the potential to lead to an increase in initial purchase price or eventual overhead costs for the purchaser? How easily will the new practice be integrated into the group when it comes to capacity for training and new system adaptability?

With the impending storm of regulatory changes fast approaching, the instinct is to attempt to get a deal done as quickly as possible. With the future of your bottom line, as well as what is in the best interests of your patients on the line, a small investment of time in the due diligence process prior to sale or acquisition can provide a healthy foundation for facing the coming changes.

Physician Pay Fix - To no one’s surprise, Congress was unable to pass a payment fix to the projected 21.3% pay cut that is due to take effect today. As a result, CMS has once again stated that claims with dates of service of June 1st and after are now subject to a hold in processing for ten business days to avoid applying the cut to claims. This will last on the calendar until June 14th. Congress is in recess for the remainder of this week as part of their “Memorial Day Recess” (funny how we get one day and they get five), meaning that almost half of CMS’ hold period will be spent waiting for Congress to come back to work and pass yet another temporary pay fix.

Red Flags Rules - The Red Flags Rules, of which the delays in enforcement  I have now officially lost count, have once again been delayed, this time until December 31st, 2010. Congress requested this particular delay in the rule because it is currently working on legislation that would either exempt certain businesses automatically from the rules or would allow businesses to request an exemption. At the same time as this legislation is being crafted, the AMA, the American Osteopathic Association and the Medical Society of the District of Columbia filed suit against the FTC on May 21, 2010 requesting that the FTC be barred from enforcing the rules against physicians. The suit argues that the FTC is exceeding its statutory authority by defining physicians as “creditors”.

As you can see, this is your typical federal government Friday news dump. Be certain to keep an eye on this space for further updates as they occur.

A vacation is not usually a time of positive personal accomplishment. From this particular respite, I can say that the only net gains in my column were 4 1/2 pounds of buffet weight, the free beer I had bestowed upon me in an Irish bar on 6th Street from a friendly couple who enjoyed my musical interlude (thank you again, kind strangers) and the bodies of dead bugs from seven different states that now decorate my windshield in all of their Jackson Pollock-esque splendor.

When it comes to a permanent fix to the Sustainable Growth Rate formula (SGR) for Medicare payments, the U. S. Congress accomplished little more than I did during the same period of time.

Currently, there is a plan being floated by the Democrats in the House of Representatives that would delay a permanent fix to SGR until 2015. The plan would provide pay increases for a four-year period. This legislation would again need to advance prior to the latest deadline of June 1, 2010 to avoid the oft-delayed 21.3% cut that was set to originally take place at the beginning of this calendar year.

As with all past temporary fixes that have taken place, this legislation has the effect of kicking the larger problem down the road and feeding the vulture that is the pay cut, which by some estimates could be as high as 37% when 2015 rolls around.

Looking at the calendar, we are again faced with five working days to attend to the latest temporary fix before Congress takes a one-week recess for Memorial Day. This recess is expected to be spent knee-deep in the process of campaigning in an election year. If I had to make a prediction, I would begin to get comfortable with the idea of another CMS-induced delay of 10 business days for claims processing beginning on June 1st until either the legislation above or a different package offering a stay of execution of the current planned pay cut is implemented.

Also greeting me upon my return was another bit of news regarding a study published in the New England Journal of Medicine. The study was conducted jointly by scholars at Harvard Medical School and Tufts University School of Medicine among others, and focused on the effects felt by insiders who decide to file qui tam, or “whistleblower” lawsuits in the pharmaceutical industry. Despite the fact that $9 billion had been recovered due to qui tam lawsuits between 1996 and 2005, the study concluded that there is a high personal and professional toll felt by those who file qui tam lawsuits against their employer.

Twenty-six informants were interviewed for the study, which in addition to the above, led to a variety of findings:

• 82% were subjected to firing, intimidation or blackballing upon filing the lawsuit;
• The filing of lawsuits in most cases is precipitated by a job change, such as a promotion or other career change that makes the person privy to inside information about company operations;
• Most of the whistleblowers attempted in vain to find an internal remedy to the unethical behavior, but were either ignored, dismissed or given orders to continue the behavior unabated.

What jumped out at me was that last bullet. With 90% of fraud suits starting with the qui tam process, I find it amazing that after years of awareness of the consequences of non-compliance, the primary reaction of companies whose policies are questioned from the inside tends not to be “OK, let’s investigate and if necessary, fix this”, but instead defaults to “Don’t rock the boat”.

The study recommended several steps to improve the qui tam process, including better employee protections against retaliation, increased resources for the U. S. Justice Department for enforcement (over 1,000 qui tam cases are pending currently with the department) and rewards for insiders that are equitable based on the dollar amount of the fraud that is uncovered.

The co-authors also recommended that policymakers try to instill an ethical sense that encourages more people to come forward. While that is a noble endeavor, it is also up to the companies themselves to operate in an environment of ethics and integrity that encourages the solving of problems as they arise, rather than the time-honored tradition of sweeping the problem under the rug in hopes that problems disappear permanently. 

To put it another way based on recent personal experience, if you’re driving the same road without windshield washer fluid and the bugs are continually hitting your windshield, there will come a time when you can’t see where you’re going and you lose direction.