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Posts Tagged ‘RAC / Recovery Audit Contractors’

Welcome to The RAConteur!

Posted by Paul Spencer, CPC, CPC-H in Fi-Med News, Hot Topics, Industry Updates, J. Paul Spencer, CPC CPC-H, RAC / Recovery Audit Contractors, The RAConteur™

If any of us had any doubts about the expected longevity of the Recovery Audit Contractor (RAC) program, this year’s passage of the Patient Protection and Affordable Care Act (PPACA) left no doubt that RAC’s are here to stay.

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!

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September 1st, 2010 | 3 Comments »

Court Ruling Obliterates “Good Cause” for RAC Audits

Posted by Paul Spencer, CPC, CPC-H in CMS, Hot Topics, RAC / Recovery Audit Contractors

Life is nothing without meaning.

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.

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August 6th, 2010 | No Comments »

Recovery Audit Contractors, Part I: The Dawn Of A Bad Idea

Posted by Paul Spencer, CPC, CPC-H in Fi-Med Services, Industry Updates, J. Paul Spencer, CPC CPC-H

We now find ourselves in the month of May. This time of year is a unique time for all of us. The new baseball season is in full swing, the rains of April bringing forth a world of color from flower beds everywhere and the days begin to give us a little more sunlight, bringing with it the anticipation of summer days ahead.

And me? Lo and behold, I’m a Winter guy. For me, Spring brings with it the promise of allergens, bugs (my only pathological fear) and the promise of the long humid days that continually aggravate both of my afflictions. Fear not, for a predilection for Winter makes me uniquely suited to be a compliance officer in these difficult times.

Being “blessed” with my chosen Spring temperament will suit me well in the coming days, months and years for the Recovery Audit Contractor program, which has now become known (fittingly) by its medieval torture device of an acronym – RAC.

Before I delve deeply into why the RAC’s are a fundamentally flawed idea whose time has apparently arrived, we must first gain perspective about how we have been brought to this point.

When we look to the government as a safeguard against the loss of tax dollars, we learn very quickly that there are portions of the U. S. Government that are not suited to the task. When we get to the individual department level, in many cases it becomes easy to draw sides both for and against a department continuing on the same path.

This cannot be said of the Office of Inspector General for the Department of Health & Human Services. The OIG has been a department section whose recoveries in dollars to the Medicare program have far outpaced their annual operating budget for many years. Billions of dollars have been returned to CMS per year due to the efforts of the OIG, with nearly $6 billion returned in the fiscal year of 2008 alone.

So why do we now have the RAC program?

The previous administration brought forward a philosophy, demonstrated in excruciating detail by companies such as Halliburton and Blackwater, that unfettered capitalism, in the form of independent government contractors, is the solitary panacea to all of the government’s ills as a structure. Rising out of this set of beliefs comes the RAC program, which in the sales pitch sounds like a fine way to return money to the Medicare program, until the fine print is magnified.

For every dollar returned to CMS through the RAC program, 22 cents will go to the contractors who discover the overpayments. As a taxpayer who pays into the Medicare program, I would be happy to pay some portion of recovered monies to a contractor if it was bringing forward a new and as yet unheard-of method of forensic auditing on its own that would lead to the return of dollars to a taxpayer-funded program. Instead, the RAC’s will make all of their incorrect payment determinations from CMS-proprietary computer software. All the contractors need do is enter data, run reports and send out letters either demanding overpaid dollars or requesting medical records. Apparently, this type of revolutionary thinking is worth 22% of recovered dollars to a federal program I pay into twice a month.

It gets worse.

The RAC program was designed for four regional contractors, each covering a different listing of states. When the permanent contractors were selected for the RAC program in October of 2008, two contractors who had been part of the Demonstration Project in previous years filed a grievance for being excluded from the permanent program. The settlement between the government and these orphaned contractors states that these two contractors will now work as subcontractors for two Permanent RAC contractors. Without conducting a single permanent audit, the program already has 50% more hands in the till than originally designed.

If common sense were entered into this complex equation, the shelf life of the RAC contractors would be fairly short. As it stands now, the RAC’s are here to stay, and are about to become an uncomfortable part of life for every portion of our healthcare delivery system. In the concluding part of this post, I’ll give the reader a blueprint for what is coming at the end of this month with regard to RAC activities, as well as a preview of best practices going forward should you be the recipient of correspondence from a recovery audit contractor.

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May 4th, 2009 | No Comments »