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The RAConteur: Second Quarter RAC Results Released

Posted by J. Paul Spencer, CPC, CPC-H in The RAConteur™

In a late Thursday news release, CMS made available the second quarter results of the Recovery Audit Contractor program.

Similar to the results from the first quarter of 2011, the numbers were released as a one-page newsletter on the CMS website in the Recovery Audit Program section. Confirming my suspicions after the release of the last notification of this type, CMS now clearly labels this as a quarterly newsletter. As an added feature from the previous release, financial results are now divided by contractor, which illustrates the veracity of contractor efforts and allows for comparison. In order to match the federal fiscal year, the newsletter identifies results for the “3rd Quarter, FY 2011″. The report also shows totals for the entire fiscal year of 2011 to date.  

Between April 1st and June 30th, a total of $233.4 million in overpayments were recovered from providers. This number represent an overall increase of 26% from Quarter 1 to Quarter 2 in 2011. Additionally, this dollar amount also represents nearly 43% of all overpayments collected since the beginning of the permanent program in October of 2009. There cannot be clearer evidence presented to the provider community that the RACs are just scratching the surface with regard to recovering overpaid dollars to Medicare providers.  

Of the four contractors, HDI, the Region D RAC, appears to be leading the way with regard to activity, as measured in dollars. HDI collected $112.2 million in overpayments (48% of the overall quarterly total) and returned $33.7 million in underpayments to providers (60% of the overall quarterly total). For fiscal year 2011, HDI has accounted for 41% of all payment corrections under the RAC program. Connolly, the Region C RAC, comes in second at 22.5%, followed by CGI in Region B at 20%, and DCS in Region A, clocking in with 16.5% of the total.

As with the previous quarterly newsletter, there was a short listing of the top RAC issues for each region. The top issues for Regions B and C have not changed from the previous release. Region B still lists the DRG validation issue of an extensive operating room procedure that is unrelated to the principal diagnosis for the stay, leading to misreporting. Region C continues to see the problem of durable medical equipment (DME) provided during an inpatient stay being erroneously reimbursed separately from the Part A services most prominently.

In the last newsletter, Region A indicated that their top issue was the miscalculation of total hours for patients on a ventilator. The new top issue for DCS has been the medical necessity of inpatient stays related to renal and urinary tract disorders. In Region D, last quarter’s top issue of separate DME reimbursement was shared with Connolly. Currently, HDI has identified minor surgeries being billed as inpatient services as their top issue.

As with the last news release, the news isn’t completely bleak. The identification of underpayments to providers have also spiked. A total of $55.9 million was returned to providers in the second quarter, which is a whopping 247% increase from the first quarter. This amount represents nearly 52% of all dollars returned to providers since the commencement of the permanent program. This trend can only be seen as a positive offshoot of increasing RAC activity.

While there have been some formatting changes, two important items are still missing from the quarterly newsletter, and both of these issues have to do with the quality of the work product emanating from the RACs. CMS continues to obscure the numbers related to provider appeals of RAC determinations behind a wall of secrecy. Aside from the now long-expired RAC demonstration project, no one outside CMS has any idea of the percentage of claims appealed, the appeal success rate or the amount of overpayment dollars removed from the total dollars recovered. Until this information is compiled, we remain tied to the AHA RACTrac survey results, which to date have not been updated for the 2nd quarter of 2011. These results indicate that the RACs are on a steep learning curve, but a definitive measure from CMS could further quantify this belief.

Additionally, CMS is not sharing the cumulative quality scores of the contractors, as compiled and provided to CMS by the RAC Validation Contractor. We can glean only a perception of RAC work product from the AHA survey, but the score is also supposed to take into account issues such as overall provider relations and the accuracy of communications with the entities the contractors are auditing. We are left with only anecdotal evidence in these areas that is simply too small to provide an accurate picture of quality.

So far, based on the CMS numbers (minus appeals data), the RAC contractors have recovered almost $547 million dollars in overpayments to providers since the beginning of the permanent program on October 1, 2009. The issues lists on the RAC websites continue to expand. Given the recent spike in activity, I project that this number will reach well over $1 billion by the end of 2011. Considering that the RACs have barely begun to scratch the surface with Part B services, I see this number skyrocketing as the issues lists expand.

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July 15th, 2011 | 2 Comments »

The RAConteur: The First Numbers Are In

Posted by J. Paul Spencer, CPC, CPC-H in The RAConteur™

As the reader knows, The RAConteur is usually a Wednesday proposition, but an update hit my inbox this morning that begins to give hints of results of the Recovery Audit Contractor program.

On the Medicare RAC page, a document was added this morning entitled “2011 FFS Newsletter“. When opened, it shows the overall financial results of the RAC program.

In all, the RAC program has identified $365.8 million in improper payments in the period from October of 2009 thru the end of March 2011. From this number, $313.2 million were overpayments and $52.6 million were underpayments that were returned to providers. This already reflects one key percentage change. Under the RAC demonstration program, roughly 96% of improper payments identified were overpayments. Thus far under the permanent program, the percentage is 86%, which represents a decline, but not enough to make affected providers feel any better about the RAC process.

Of the total improper payments identified since October of 2009, $184.6 million, or just over 50%, were identified in the first quarter of 2011. This represents a nearly 114% increase in the identification of improper payments from the last quarter of 2010. Factor in the number of issues that have been added to the RAC websites since the beginning of the calendar year, and all trends point to the RACs rapidly expanding their activities.

The total numbers released represent a time period of one-half of the entire RAC Demonstration project. Interestingly, the improper payments identified through 6 quarters is 35.5% of the total improper payments identified in the 12 quarters of the Demonstration Project. With the enormous jump in improper payments in the last two quarters, it is reasonable to expect that the quarterly numbers will continue to increase at their present rate.

The one-page report identifies the largest RAC issues for each contractor. For Connolly Consulting and Health Data Insights, the Region C and D contractors respectively, the top issue has been the billing and reimbursement of durable medical equipment during an inpatient stay, which is considered a bundled component of the inpatient services. For Diversified Collection Services, the Region A RAC, the top issue has been the identification of coding errors related to improper calculations of the number of hours of ventilator support. CGI, the Region B RAC, has identified the improper surgical DRG being selected based on the severity of the primary and/or secondary diagnosis selected for the procedure performed during a stay. All of these problems are representative of the current heavy RAC focus on Part A services.  

While the grand totals offered by CMS are interesting, there are two sets of numbers that are glaring in their absence.

During the RAC Demonstration Project, 12.7% of claim determinations were appealed, with the rate of successful provider appeals being 64.4%. The one-page RAC results “newsletter” offers no indication of either the percentage of total claims appealed or the success rate of appeals filed. 

With this temporary void, we are left to review the results of the American Hospital Association’s RACTrac report. The latest report from the final quarter of 2010 shows that hospitals taking part in the survey have submitted successful appeals 85% of the time. I eagerly await the final appeal totals from CMS to see if the numbers under the permanent RAC program are on a par with these findings or perhaps show signs of improvement.

The other numbers that are missing have to do with the overall job performance of the RAC contractors. Provider Resources, Inc., the RAC Validation Contractor, is tasked with assigning a score to each of the four RACs that acts as a grade to assess the quality of the work product of the contractors. To date, none of these scores have been revealed by CMS. While there have been anecotes regarding less-than-adequate RAC performance across the country, in the context of the missing appeal numbers, there is currently no way to determine the quality of the work being produced by the RAC contractors.   

There are many conclusions to be reached from this first set of numbers, but it is reasonable to conclude that the Recovery Audit Contractors have now joined the pantheon of the many entrenched government programs we have come to know and barely tolerate.

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April 26th, 2011 | 4 Comments »