Take a look at this summary report from the CMS.
It will open in a new window.

Basically from Oct 2009 to Mar 2011 the RACs have recovered $365.8M.

Of that over half was collected from Jan 2011 to Mar 2011.

Things are speeding up.

There has been, and still is, a learning curve going on at the RACs.

Once they get fully spun up…look out.

It is interesting to see, yet not surprising at all, that both Region C & Region D RAC top issue are identical.

Really, why not?

I would expect each RAC to share their results among each other to ensure each operates as efficiently as possible.

It is not like they are competing for the same “customers”.

What I don’t understand is how the 3 year demonstration period resulted in $1.03B in recoveries while now, about a year-and-a-half into the full blown program, the recovery is not on track to meet the same goal.

Granted, with the acceleration that is occurring, this exponential increase may take the actual recoveries well past the demo program.

Wake up and smell the coffee Docs…this is going to become a huge headache for you.

On July 28th, a report (see REPORT ) was sent to the Centers for Medicare & Medicaid Services (CMS) from the Inspector General’s office that will have widespread attention in the near future.  And it’s without question a physician issue, not a hospital one.   If you’re a doctor it will affect your wallet or purse, so you might want to know this.

The report resulted from a study of coding errors causing overpayments to physicians.  Medicare payments were made for patient encounters at non-facility locations that actually took place at hospital outpatient departments or ambulatory surgical centers (ASCs).   As everyone knows, non-facility encounters reimburse at a higher rate than if the encounter was at a facility such as a hospital in order to help cover the overhead expenses of the physician.

Straight Quotes from the Report

“Physicians are required to identify the place of service on the health insurance claim forms that they submit to Medicare contractors. The correct place-of-service code ensures that Medicare does not incorrectly reimburse the physician for the overhead portion of the payment if the service was performed in a facility setting.”

The report continues.    “Our audit covered 484,218 nonfacility-coded physician services valued at $42,385,710 that were provided in calendar year 2007 and that matched hospital outpatient or ASC claims for the same type of service provided to the same beneficiary on the same day.”

In this study, “Physicians correctly coded the claims for 10 of the 100 services that we sampled. However, physicians incorrectly coded the claims for 90 sampled services by using nonfacility place-of-service codes for services that were actually performed in hospital outpatient departments or ASCs. The incorrect coding resulted in overpayments totaling $4,710.”

“Based on these sample results, we estimated that Medicare contractors nationwide overpaid physicians $13.8 million for incorrectly coded services provided during calendar year 2007. We attribute the overpayments to internal control weaknesses at the physician billing level…”, etc.

But That Was from the Year 2007

Yes it was.  But think about it.   In their random sampling, 90% of the time the place-of-service codes were wrong!   The first thing I’d want to know if I were a physician is whether the coding in my office is being done correctly in 2010.    Am I sure my in-house biller or billing company is doing it right?     If not, could I be setting myself up for a RAC Audit?    Could they discover a “pattern of abuse” that then triggers a ZPIC investigation?

Your RAC Is On Its Way

Trust me when I say this – even if your RAC hasn’t yet audited you or a doctor near you, it’s coming.    Just in the past 30 days, physician audits have increased in pockets all over the country.   In fact, we’ve learned of more physician audits in the past month than the previous six months combined.

If you sense that maybe it would be wise to check into your office’s compliance with Medicare guidelines, you’re probably right.   Help is as close as an email away.

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.

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.

On July 28, 2010, a U.S. District Court in the Southern District of California rendered a decision of monumental significance to all providers who may consider challenging a RAC Contractor for violating the law.     The original lawsuit, filed by Palomar Medical Center on March 24, 2009, was the first lawsuit filed against a RAC.  The charge was that HHS (Health and Human Services) had allowed PRG-Schultz, the RAC Contractor for California, to unlawfully reopen a claim without showing “good cause” as required by Medicare regulations.  The appeal was made, and the judge rendered his verdict – bottom line?   The decision to reopen a claim with or without good cause is not subject to appeal.

Not Subject to Appeal??    Surely you jest, Your Honor!

The regulation is not complicated on this issue.   (Pss … Judge Benitez – Your Honor – didn’t you check out the CMS website?   No?   You never heard of it?  Umm … Sir, that would be the “official government website” that spells out the regulations all providers have to live by.)

Medicare’s regulation states that “A [RAC] 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 operative words are “based on the existence of good cause”.

So … What is “Good Cause”?

Again, let’s go straight to the CMS website for the answer.  Here’s what it says.   “Good cause exists when there is new and material evidence … used to make the initial determination.”

They go on to define new and material evidence.   “New and material evidence includes any evidence that (1) was not readily available or known to the person or entity requesting/initiating the reopening at the time of the initial determination or redetermination; and (2) may result in a conclusion different from that reached in the initial determination or redetermination.”

In reopening the claim in question, PRG-Schultz did so without showing good cause, HHS arrogantly said they didn’t have to, and now a federal judge has upheld this flagrant disregard for the law.   Wonderful.   This does not bode well for the future, ladies and gentlemen.

What Can You Do?

Do as more and more of your fellow physicians are doing.   Get serious about compliance in your practice.   Drop me an e-mail at winston@nbsoga.com and I will help you.

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.

As mentioned before, it is not in the interest of the RAC’s to report a physician for fraud.

Why?

The RAC’s get ZERO if they report for fraud…BUT if they retract funds paid to a Doc, they then get a percentage of that take.

Make sense?

How about this:

As report in USA Today on 9 Aug 2010, the contractors that are hired to investigate and report fraud are slow to do anything.

Hmm, why might this be?

The contractors that are hired to investigate Medicare fraud are called “Program Safeguard Contractors”.

These PSC’s are hired to research fraud, then report the fraud (if it exists) to law enforcement.

Apparently it takes an average of 178 day for the PSC’s to refer fraud cases.

The amount of time tends to allow the trail to go cold.

As reported:

Out of $834 million in questionable Medicare payments identified by private contractors in 2007, the federal government was only able to recover some $55 million, or about 7% of the funds.

The hoopla is centered around this – the federal government has to find a way to pay for what they are trying to provide.

This means fun and exciting things like:

• 1099′s for any purchase of a product or server greater than $600…for everyone!
• more fraud investigations
• more RAC audits
• more of anything that can increase the revenue brought into the federal government

Watch out…the Fed’s aren’t just coming after individuals, but all you private practice Docs out there are the prey also.

Do what you can to protect yourself.

The annual conference of the American Association of Medical Society Executives (AAMSE) was held this year in Seattle, Washington July 21-24th.   The nearly 300 attending executives represented medical societies with memberships of a few hundred to several thousand physicians each.   Needless to say, these were some very sharp professional people with their fingers on the pulse of physician concerns.

Their Concerns

While there were many interests represented, as my colleagues and I interacted with them during breaks, exhibits and over lunch, several topics seemed to grab the most attention.  When asked “what do you do”, we would mention various services we offer, and more often than not the most interest seemed to center on document management, our web-based EMR, and the RAC Review (baseline audits).

Closely connected with RAC audits of course is the ZPIC threat.  I found that the executives want to educate their physicians regarding the need for strict compliance with Medicare guidelines, thus conserving income and preventing “pattern of abuse” investigations by ZPIC.

Their Sense of Urgency

Regarding RAC Audits, the consensus seemed to be that the time is rapidly approaching when RACs will target physicians, and it may get ugly.   This has been our prediction all along, as regular readers will recognize.   Really in-the-know physicians are taking the necessary steps – RAC baseline independent audits, remote coding services, office staff and physician coding training, etc.

The government’s July 2010 announcement of arrests and prosecution of physicians in Florida and elsewhere – with more to follow – has everyone’s attention.   Several executives I spoke with mentioned that they were not concerned with protecting those involved in deliberate criminal activity.   Their concern is that some physicians, whether through carelessness or otherwise, may be setting themselves up for charges of fraud through a “pattern of abuse”.

No Idle Threat

Their concern was that the “highly sophisticated data mining technology” mentioned by President Obama earlier this year was no idle threat.   The belief was that probably most physicians either don’t know about it or underestimate just how effective it is.   Hospitals are finding out.   Physicians are about to.

We had a number of executives express the desire to have someone come and speak to their membership.   Medical societies are beginning to take the RAC threat seriously, and are concerned that their physician members do likewise.

We do these audits nationwide.  The average practice scores run about 60% compliant.  The lowest score nationwide has been 32%, and the highest so far has been 78%.

If you are reading this article and either know or are a physician who has not had an independent third-party RAC compliance analysis, drop me an e-mail at winston@nbsoga.com and let’s talk.

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.

Recently a friend mentioned some advice he often heard as a boy.  His dad would say if you have time to do it wrong and then do it over, you could have done it right the first time.   When it comes to coding and claims filing, perhaps we could learn from this father’s advice to his son.

Did you know that for just a few bucks per claim, you could be practicing medicine in Florida and have an AAPC coder certified in your specialty do your coding remotely from an office in Ohio?  Or Colorado, or Arizona?   It’s so easy and convenient in this technological age!

Remote Coding Protects You

Why do I mention this?   More and more physicians are looking for ways to maximize their earnings and protect themselves from future recoupments.  In this world of RAC Audits, MIC Audits, ZPIC, the OIG, and continual tightening of compliance requirements, wouldn’t it be great to know that at least your claims are being coded correctly and won’t trigger an audit?

Having your coding done by a certified coder reduces your exposure to the highly sophisticated data-mining software that is being used to audit hospitals now and will be used to examine your claims in the future.

Remote Coding Makes You Money

Did you say makes me money?   Yes, absolutely it does!   If you have thought of outsourcing your coding as just another expense, think again.   It’s a proven fact that certified coders pay for themselves several times over by maximizing claim reimbursements while minimizing claim rejections.  A certified coder will also help you as a physician improve your documentation and compliance, again resulting in more income for you.

Remote Coding Cuts Expenses

Outsourcing your coding eliminates the vulnerability that comes from depending on employees. Never again get “surprised” when your in-house coder is out sick, gets pregnant, or leaves for another job offer.   You can reduce staff or better yet, free her up to work with patients as your practice grows.

I am fortunate to have access to around 250 AAPC certified coders.  If you send me an e-mail, I can put you in touch with one in your specialty.

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

Just last week I spoke with a hospital Utilization Chairman from Indiana who is concerned about ZPIC and its relationship to RAC denials.

In the course of our conversation he mentioned the challenge he is facing in trying to get other physicians to get serious about RAC.    He wants to alert his colleagues to the danger of assuming the RACs won’t affect them.  A lackadaisical attitude toward RAC issues could expose them to ZPIC investigations, which in turn could result in serious consequences up to and including imprisonment.

Our Prediction

It has long been our belief that it’s only a matter of time until the RACs will be coming after physicians.   Mainly it’s an issue of manpower and priorities.   At present, they’re auditing hospitals because they represent big-ticket claims with the highest commissions.   But it won’t always be that way.  Here’s why.

Do the Math

Everybody knows that hospitals receive the lion’s share of Medicare payments.   The figure we hear most often is that 17% of Medicare claims are paid to doctors.   That sounds like such a small, insignificant amount doesn’t it?   Only 17% – surely the RACs won’t bother to audit physicians, right?

Wrong!   Think about it.  Medicare’s budget is about $500 Billion dollars a year.   RACs can look back 3 years.   Three times $500 Billion comes to about $1.5 Trillion, and if about 17% of this is paid to physicians, that figures out to $255,000,000,000.00.   Two Hundred and Fifty-Five Billion dollars is a lot of money!

Now … Just a Little More Math

Did you ever play “What If”?   What if the RACs were able to recoup only say one dollar out of every 25 that was paid out to physicians?   That would be four percent.   Four percent of $255 Billion would come to $10,200,000,000.00.   And while RAC commissions vary from 9% to over 12%, just using a conservative average of 10% would result in $1.2 Billion of commissions paid to RACs.

When the dust settles, will you as a physician be left with 24 out of every 25 dollars you were paid by Medicare?   I can’t answer that – nobody knows.  If you’re honest – like most doctors – I hope you do better than that.

Once you understand the magnitude of the commissions involved, how could any thinking person still believe that RACs won’t audit physicians?    And if they’re going to audit you, wouldn’t it be wise to seek professional help and see what your exposure is?   If you’re concerned, e-mail me and let’s discuss it.

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.

Clay Spencer builds custom rifles that win benchrest shooting matches all over the world, where the winner puts five shots into one hole less than a tenth of an inch over bullet diameter at a distance of 100 yards.   After competing for 35 years, he knows the sport and the big names in it.  Speaking of an upcoming match in Ohio, he said there are nearly 500 competitors, but only about 75 capable of winning – meaning they have both the rifle and the skill needed to win.

He explained that shooters judge wind direction and velocity by observing flags along the side of the shooting range.   It’s called “reading the flags”, and you simply won’t win if you’re not extremely good at it.  In fact, he said the winner of the Ohio match would be the one person who did the best job of reading the flags when it came his turn to shoot.

How does “reading the flags” apply to us?

As our readers know, RACGURU is devoted to physicians, not hospitals.  Recovery Audit Contractors are presently focusing most of their efforts on hospitals, and thus there’s no shortage of hospital-oriented RAC sites.   We have maintained all along that the time is coming when physicians will feel the RAC bite, and when that time comes there will be a panic among doctors who thought RAC was a hospital thing.   We will be here to provide information and assistance when this happens.

Astute physicians are reading the flags, observing the changes taking place in their profession, government, and healthcare – and making corrections accordingly.   We are seeing more and more doctors awakening to the dangers posed by RAC, and our AAPC certified coders who perform Baseline Audits are doing more of them every month.

What can we learn from reading the flags?

Several things come to mind.  For one, have you noticed government getting a lot more aggressive toward recoupment?  Take the implementation of the RAC program itself for instance – turning loose private contractors paid a commission for every dollar they collect.   This is an unprecedented move, yet that’s exactly how RACs are paid.  Very aggressive indeed!   The trend in government is toward aggressive recoupment.  Just read the flags.

The leading edge of 76 million baby boomers starts turning 65 in 2011.  What does this mean?  Are we reading the flags?  Demographics will work against us – less people paying while more people use benefits.  What choice will government have but to tighten the purse strings even more?  Again, read the flags.

Reading the flags also tells us that insurance companies see the effectiveness of government Bounty Hunters, and will invent their own versions.   The rationale is that if providers are miscoding and over-billing Medicare, it’s probably happening to them as well.   We can look for insurance companies to step up their recovery efforts in the future.

How reading the flags should affect our actions

Just as reading the flags tells a shooter how to adjust for wind conditions, physicians who recognize the trend in recovery efforts – especially as related to RAC Audits – will want to arrange for an independent RAC Baseline Audit.  Click HERE for more information or shoot me an e-mail.

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.

Congress has once again delayed implementation of the Red Flag rules.

Now the Red Flag rules do not go into effect until Dec 31, 2010.

For many this is a big sign of relief…one more regulation we can delay worrying about.

Here are the realities:

• Red Flag Rules parallel HIPAA Regulations – that is, it is about privacy and preventing identity theft

• Red Flag Rules make business sense – OK, maybe as Congress write them they don’t make business sense, but the big picture makes sense.

I’m sure you’ve heard of some of these big companies having their credit card processing systems hacked into…you don’t want this to be you.

In our area, a local restaurant recently had to go on the news and announce their credit card processing system had accidentally transmitted card info and all patrons over a certain period should go get new credit cards.

This is BAD PR.

We understand that the acceptance of credit cards, is  not in and of itself, make a business subject to Red Flag rules, but it all falls under the similar philosophy – protect your customer’s information!

Will Red Flag rules help prevent this?

In theory they should, but Congress could blow this effectiveness out of the water.

We’ll follow this up with some “common sense” steps to help you move toward Red Flag compliance without the pain.