Nothing stokes the darker recesses of the human imagination like a conspiracy theory.

Usually, a conspiracy theory begins with a confluence of facts leading to an unanswered question. From the Kennedy Assassination to the Bilderburg Group, lack of knowledge leaves the majority of people at the mercy of anyone who comes in to fill the void, no matter what the level of their actual knowledge or credibility on the subject.

With regard to RACs, we have one such knowledge gap that is becoming more glaring by the day based on the paucity of information currently in existence. I am writing of the RAC Validation Contractor (RVC).

Who are they? What shadowy deeds are they responsible for in this country? What darkened room with circular tables, 25 long-backed, padded chairs and a large video screen showing the world divided up into fief-like parcels holds this covert group of movers and shakers?

If only this entity was half as interesting.

Our investigation begins in Erie, PA (such a fittingly spooky name!), the “Flagship City” located in Northwestern Pennsylvania on the banks of the Great Lake that bears its name. It is in this city of roughly of 100,000 people where Provider Resources, Inc. (PRI) works as the only RVC.

PRI was named publicly by CMS as the RVC on October 9, 2008. It is on the CMS website where the search for further information begins.

According to the original announcement of PRI as the validation contractor, CMS works with PRI and the regional RACs to approve new issues RACs want to pursue in search of improper payments. In addition, PRI should be conducting accuracy reviews of RAC claims that have already resulted in overpayments being collected and returned to CMS. In a slide show available on CMS’s RAC Recent Updates page, it is stated that the RVC provides annual accuracy scores for each RAC.

Seeing this as a healthy head start in determining the work of the RVC, I decided to take a brief look at PRI. 

The following description of the services PRI renders as the RVC is taken directly from the company’s website:

….CMS looked to PRI to perform the critical quality control function of this program as the RAC Validation Contractor (RCV). In performing this work, PRI applies its considerable depth of Medicare knowledge and expertise on behalf of CMS to validate those efforts of the Medicare RACs. Our medical review teams—paired with our Medicare policy and procedures experts—audit the RACs’ determinations for Medicare claims which were paid under Part A or Part B of title XVIII of the Social Security Act. Through its reports to CMS, PRI ensures that the RACs are not unnecessarily denying Medicare claims which were properly paid. Similarly, our findings can also assure CMS that the RACs are properly recovering improperly-paid claims.

The above paragraph appears to be the usual self-aggrandizement often seen on the websites of small businesses and does very little to illuminate the full scope of the work PRI conducts as the RVC.

To set my mind in motion further, I contacted Scott Wakefield, the CMS Project Officer for Recovery Audit Operations for RAC Regions A & B with a few questions. I first asked about the idea of accuracy scores for the RACs, and was told that these scores would be released “along with the Annual Report to Congress in early 2011″. The release of this report will be announced on CMS’ RAC web page.

The second question I had was a blast from the recent past. I’ve decided to make it a mission of mine to nail down someone on defining “good cause”, since the term has been rendered meaningless by the current status of Palomar Medical Center vs. Sebelius, which states that good cause cannot be reviewed in an appeal by a provider based on the RAC statute. According to Mr. Wakefield, “…the RAC must establish good cause.  RACs and the RVC are required to comply with Reopening Regulations located at 42 CFR 405.980″. That’s an interesting comment, as the regulations in this portion of the Federal Register do not directly define good cause. The only references to good cause made in this section refer to appeal timelines from the original or subsequent determination of good cause. This just about proves that “good cause” remains largely undefined by both CMS and the RVC, and is better interpreted to mean “We look at whatever we want to because we said so. Nyah Nyah!”

CMS’ Annual Report to Congress will provide some picture about the work product of PRI in their capacity as the validation contractor. We know that the RAC rate of successful appeals in the Demonstration Project was conspicuously high. The RVC, which has so far been relatively invisible publicly to the quality control process, will be the internal line of defense to RAC improvement. Yet if the first rate of successful provider appeals is anywhere in the neighborhood of the numbers seen in the Demonstration Project, a few blinds over windows in an office in Erie, PA will more than likely open a little wider.

If each one of us thinks about it for just a moment, we can probably think of a product, service or perhaps a person who doesn’t match up to their perceived value.

Since it’s Christmas time, I think back to the sales pitches of my childhood. Seemingly every December in the 1970’s brought forward an onslaught of commercials for Ronco products. From the Pocket Fisherman to Mr. Dentist (“Buy a separate Mr. Dentist for your DOG!”), each one of these ridiculous, fell-off-the-back-of-a-truck curios sold for $9.98, then usually worked once and broke. 

As a sports fan, I can think of countless examples of players who have signed long-term contracts for obscene amounts of money who didn’t come close to their value. The Washington Redskins discovered this belatedly with Albert Haynesworth two days ago. My fellow hockey fan friends know that I can sum up underachievement based on contract terms in two words: Alexei Yashin (I realize that the NHL ranks roughly 6th among sports in the United States, so I invite you to look it up).

On the subject of RACs, this topic comes up when I again review the results of the RAC Demonstration Project. When we look at the successful appeal rate of 64.4%, most people in health care see a great chance for victory for the provider community simply by drowning the RACs in appeals, and I can’t say that I disagree with that assessment.

I, however, remembering the abject lesson of the Veg-O-Matic, have internalized the idea that the demonstrated usefulness of a product or service and its actual value exist on different planets. At a bare minimum, RAC determinations were incorrect 8.4% of the time based on the percentage of RAC results reviewed. I suspect that based on the high percentage of Part B claims reviewed in the demonstration project, coupled with well-documented abysmal response rates from physicians to requests for documentation, the RAC error rate is much higher.

In baseball, it’s acceptable to be good with a bat 30% of the time, and when it is less than that, who other than the owners of the 30 teams and degenerate gamblers have a financial stake in a better outcome? The RACs are independent contractors, but at the very root of their payment structure for uncovering incorrect payments by the Medicare program is a tax payer. We invest in the Recovery Audit Contractor program with the promise that what they uncover strengthens the Medicare program financially. Yet their is an outstanding question that hangs over the heads of the RACs like a sword, and that is a question of competence.

One of the more frustrating aspects of a country that currently carries a 17% true unemployment rate is the knowledge that there are gifted, productive people who for a variety of reasons are viewing working life from the sidelines. We are handed conflicting rationales for this phenomenon on a daily basis from our leaders and the national media, none of which directly address the abandonment of the fundamental belief in shared experience and sacrifice being a cornerstone of building a strong society.

However, it takes a special blend of arrogance and blatant exploitation to ask a country’s people to fund incompetence. If our order in the fast food drive-thru line is screwed up, we’re getting what we pay for. When an independent contractor of the federal government produces shoddy work product, it affects all of us in a fashion much more profound than a few hours of bad digestion.

It is hoped that future reports of results of the RAC program reveal better results than their poor showing out of starting gate. Given my direct experience with the law of diminishing returns, I suggest we not hold our collective breaths.

I can’t say that I have the widest and most diverse skill set as a human being, but one thing at which I consider myself somewhat accomplished is pattern recognition. Considering the downward spiral currently being experienced on so many levels in this country, one pattern that has emerged more than any other is the continuing absence of any sense of urgency.

With 17% true unemployment, a banking system that for all intents and purposes has collapsed, two ongoing wars and crumbling infrastructures for transportation and energy delivery, no one is standing up anywhere and saying “Fix it now!”. In fact, the solution of the incoming Congress for all of these ills can be summed up by the phrase “shut down the government”.

Erasing a deadline for self-satisfaction is not what I would call a useful policy. If one unilaterally decides not to comply with a deadline, there are consequences to that, a short list of which would include a newspaper with blank pages, a penalty for not making a payment on your credit card by the due date or (as many people have found out over the last four years) a foreclosure notice.

There is nothing in the world that brings forth success better than a healthy respect of the clock. Failure to accomplish a time-sensitive task is supposed to have consequences.  When a time frame is codified into law, one would expect that an entity that operates outside the mandated parameters would face consequences.

As a shining example of this rule crumbling before our eyes, I’d like to introduce you to the complex review process of the Recovery Audit Contractor program.

The RAC Statement of Work states that when a provider submits medical records to the RAC for complex review, the contractor has up to 60 days to review the records, then subsequently make a claim determination and issue a review results letter.

When a Midwestern provider recently asked the Division of RAC Operations at CMS what penalty is imposed upon a contractor for not complying with the deadline, the answer was rather revealing. In his response, the project officer stated the following (key passage italicized for effect):

“The 60 day time frame for a RAC to respond to medical records sent by a provider is a contractual requirement for the RAC National Program, therefore, it is possible that non-compliance by the RAC may result in assessment of a lower score in their annual performance appraisal.  The cumulative results of this appraisal impacts CMS’s determination of whether to extend the incumbent RAC’s contract for an additional year.  I recommend you contact the RAC directly and inquire about follow up with the remaining records”.

I would make a wager that if I polled providers who have had money recouped due to a RAC audit, they could come up with a substantially stronger penalty for non-compliance by a RAC than “I’m putting a demerit in your file, young man”. The problem is that the Statement of Work for the RACs didn’t specify any penalty for behavior in opposition to established standards. In response, CMS came up with a penalty that doesn’t even rise to the level of going to bed without dessert. Note that the response stated that the assessment of a low score in the performance appraisal is possible, not probable.

With this type of lack of accountability as a backdrop, the solution to this falls upon the provider community. Careful tracking of time frames when a complex review is undertaken by a RAC is the key to protecting yourself under the established guidelines. Be certain to contact the RAC after records have been forwarded to determine the date of receipt. If more than 60 days elapses between that date and the date indicated on the review results letter, mark the claim for appeal if there is a determination for overpayment. With no established penalties for not following the guidelines, an actual penalty with teeth may fall to the higher reaches of the RAC discussion period process. While not guaranteed, it is certain to get the RAC’s attention if a large number of cases are appealed for this reason.

Additionally, there is no harm in following the above suggestion of CMS and reporting the RAC’s non-compliance with the time frame. In the absence of actual consequences, nothing stops any provider adversely affected by a RAC audit from doing the right thing and creating them from scratch themselves. In a world without clocks, every moment takes on importance.