Brace yourself and get ready for a rough ride.    For over a year now, whenever the subject of medical necessity has been raised, the standard response from CMS has been “medical necessity is not being reviewed at the present time”, or close variations thereof.    “At the present time” gave goosebumps to those who follow the RAC auditing program closely.   The other shoe would fall, we just didn’t know when.

Medical Necessity is a BIG issue.   About 40% of all funds recovered in the initial RAC demonstration project came from medical necessity recoupments.

The Stage is Now Set

Well, it’s finally here.   CMS has now approved Medical Necessity reviews.   But here’s the scary part.

One of the concerns of medical providers has been the question of whether ADR (Additional Documentation Request) claims that have been audited for DRG issues could also be audited for Medical Necessity once such audits would be approved.   The fear was that with all the documentation already in the possession of the RACs, it would be so quick and easy for them to turn right around and audit those same claims again, this time for Medical Necessity.  Double jeopardy!

In  their response to the question, CMS said in their FAQ section on April 13th  of this year “at this time, if the RAC has already requested documentation and issued a review results letter to the provider for a DRG validation, the RAC will not be allowed to re-review the claim again for medical necessity.”  (Note again those troubling words – “at this time”)   They went on to explain that RACs could conduct both DRG validation and Medical Necessity reviews simultaneously on claims where the ADR was made after Medical Necessity was approved.

Now Let’s Connect the Dots

The recent ruling by a federal judge in the case of Palomar Medical Center (see our “Doctors Beware!” article) essentially renders Medicare guidelines meaningless.   It sets the stage for the RACs to take more and more liberties with the law.   With this precedent, how long do you think it will be before a RAC decides to ignore the CMS guidelines, take the path of least resistance, and reopen a previously audited claim for medical necessity?    For those who think this won’t happen – did I ever tell you about this beautiful alligator-free marshland I have for sale down in the Florida Everglades?

Physicians Won’t Escape

Basically, here’s the deal.   Hospitals are going to be hit hard with Medical Necessity takebacks.    However, it’s doctors who send patients to hospitals.   If a RAC audit finds there was no medical necessity for hospitalization, will the physician who made the decision in the first place get to keep his fees?   Of course not!

It’s time – past time actually – for many physicians to get deadly serious about this RAC thing.   Do something now.   Be proactive.   The rules of the game really haven’t changed – it’s just that now consequences will be felt by those who aren’t listening.

Winston Creath is an independent healthcare consultant working in the compliance and revenue cycle management arenas on behalf of physicians and clinics.  He serves as President of National Business Solutions of GA, LLC.  He can be reached at winston@nbsoga.com for questions or comments.

About

Winston Creath is an independent executive healthcare consultant working in the compliance and revenue cycle management arenas on behalf of physicians and clinics. He serves as President of National Business Solutions of GA, LLC. He can be reached at winston@nbsoga.com for questions or comments.

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