Reading the Enemy’s Mail

Regular readers know by now that is a physician oriented website.   Hospitals already have plenty of help to address RAC issues – we focus on doctors.   So if you’re  a physician, here is something you may find interesting.

On April 16th, Connolly Healthcare (Region C) posted 20 new DRGs to their CMS approved list.   Nothing new here – RACs are posting new issues all the time – right?   Well, yes and no – it’s the kinds of issues here that’s important.

The various DRGs can be classified according to Relative Weight, a number assigned to each procedure which indicates its relative monetary value.  Without getting technical, a low number means lower value.   Many procedures are ones, twos or threes.   A high Relative Weight carries a high dollar value, and if you’re being paid on commission (the more politically correct term would be “contingency fee”) as the RACs are, high Relative Weights mean bigger paychecks!

So What’s Connolly Up To?

Who knows?  They’re not saying, but maybe we can learn something about the enemy’s tactics by reading their mail.

Eight out of Connolly’s 20 new issues carry very high Relative Weights.  Some carry extremely high Relative Weights – at or over 10.0 – such as heart transplants (24.85), Liver or Intestinal Transplants (10.4), Extensive Burns or Full Thickness Burns with Mechanical Ventilation 96+ Hours with Skin Graft (13.74), Lung Transplants (9.45), ECMO or Tracheotomy with Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth and Neck with Major O.R.  (18.27).

Six of the new postings are in the top 25% discharge rates, meaning that Connolly is not only going after high dollar items – they’re also stepping up the volume.

So . . . .  How Does This Affect Me?

As we have said before, it’s only a matter of time before the RACs hit physicians.   Bottom line – if they’re hammering the hospitals (and they are)  and already have the medical records in their possession (and they do), is it reasonable to think they won’t be coming after the surgeons who did the operations and the physicians who admitted the patients?

We can’t emphasize too strongly – the smart thing to do is get compliant now!   If you haven’t arranged to get an outside audit (the first step) you need to.  Once the bleeding starts, you will need help and we will be here for you – but you’ll wish then that you had done something now.

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 for questions or comments.

The CMS Inadequate Process

At the end of last month, the US Government Accountability Office (GAO) released a 52 page report detailing what it sees as a failure by the CMS to establish an adequate process to:

address RAC-identified vulnerabilities that led to improper payments, such as paying duplicate claims for the same service.

Additionally the:

CMS has not yet implemented corrective actions for 60 percent of the most significant RAC-identified vulnerabilities that led to improper payments…


CMS did not address significant vulnerabilities representing $231 million in overpayments identified by the RACs during the demonstration project. For the RAC national program, CMS developed a process to compile identified vulnerabilities and recommend actions to prevent improper payments. However, this corrective action process lacks certain essential procedures and staff with the authority to ensure that these vulnerabilities are resolved promptly and adequately to prevent further improper payments.

What does this mean to you?

Certainly, it appears the CMS plans to operate “business as usual”.

No fixes to the broken system, only the heavy hand of the RACs to swoop in, make the physicians life miserable by creating more overhead in processes and the ever-constant fear of a RAC knocking on the door and wanting money.

As none of this will get fixed in the foreseeable future, you need to cover back-side by ensuring your staff is properly trained in all aspects of medical coding.

Government Lacks the Backbone

In the May 10, 2010 issue of Forbes Magazine, the On My Mind section features resident scholar at the Institute for Policy Innovation Merrill Matthews.

Mr. Matthews primary point is a good one: cut the fraud in Medicare (about 10%) down to the insurance industry “norm” of 1.5%.

Do this and you have about $40 billion a year in savings.

This does make sense, just like it makes sense when a politician says they want to run government like a business.

But why does this never work?

What is it that makes government different from business?

Politics, sure, but come on, businesses have politics teeming through them also.

The real difference is motivation.

In general, government’s prime motivation is power…who is in control of what.

Business is motivated by money.

A perfect example is being played our right now.

Nobody at HHS wants to be the “bad guy”.  So, rather than the HHS coming down hard on physicians, they hire a 3rd party to be the bad guy (RACs).

This is standard government fare: don’t enforce the rules/laws on the books, make a new rule/law…that probably won’t get enforced by the government, but some 3rd party.

What does all of this matter anyway?

When the 3rd party gets involved is when things get real nasty.

That 3rd party is a business, motivated by money.

When commissions are paid on recovered funds (or fines for failed audits on the HIPAA side), these 3rd parties get very motivated to enforce.

This is a “wash, rinse, repeat” cycle.

It will continue.

You better be ready…are you?