RAC Auditor Profits

When your business revolves around what the government has created…you end up being the tail that is wagged.

HMS Holdings, one of the largest RAC auditing companies profits drop from $9.82 million to $7.04 million dollars.

Let me hear all the docs in unison: boo hoo, we feel so sorry for you!

There are not too many better business models that can be built.

The government has you scour the books, and for every mistake you find, you get a percentage of what is recovered.

This “plummet” in profits is blamed on “…challenges faced by our clients and carriers in adopting several new CMS-mandated claim transaction formats.”  Once again I know there are many docs out there feeling sorry for these guys.

Note that total revenue increased from $82.5 million to $107.3 million!

These guys are just printing money, on the back of physicians.

You better have a defense plan in place when the RACs really start coming after physicians

Medicare Fraud Not Acted on?

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


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.

Why Wait?

When it comes to preparing for RAC audits, timing is everything.  A common misconception among physicians is that once the RACs begin auditing doctors, there will be time enough to prepare then.

There are probably several reasons for this kind of thinking, but two that stand out will be addressed in today’s article.

First, nobody wants to be the first among his peers to get serious about RAC.  After all, only hospitals are being audited right now.  Getting all hot and bothered about RAC might seem reminiscent of some of the Y2K doomsday predictions in the late 1990s.  Nobody wants to be seen as over-reacting.

A second reason is that most physicians don’t yet understand the look-back period.  RAC can only go back 3 years, but not earlier than October 1, 2007.

Perhaps you’re thinking “what’s so great about that?”

Let’s say Doctor A got a baseline audit in late 2009 – think AAPC certified coder, your specialty, auditing exactly the way RACs do.  He then used this information to get into compliance by the first of 2010.

Doctor A would have only 27 months of non-compliant exposure – October 1, 2007 to January 1, 2010.

His golfing buddy – Doctor B – procrastinates.  Let’s say he keeps procrastinating until after October 1, 2010.   Doctor B will have a full 36 months of exposure.  Who gets the last laugh?

Nobody knows when RACs will focus on physicians.  We actually heard a rumor that it will be two years before Connolly gets to physicians.  Certainly Connolly hasn’t announced that!

But what if physician audits didn’t get rolling for another two years?    Doctor A would then have only 12 months of exposure.  Doctor B would have about twice the exposure.

QUESTION:  Are you more like Doctor A or Doctor B?   Why wait?   If you’re Doctor A, click HERE for more information.   (Doctor B?   Your Tee Time is at 2 – don’t be late!)