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

How You Can Help the RAC GURU

We appreciate the interest of our readers, and all the comments they send in.  Thank you for your support.

A question we get from time to time concerns attorneys – specifically, do we want more attorneys to add to our list of RAC lawyers?    The answer is – maybe yes and maybe no.

Allow us to explain.

The whole RAC program is new, and consequently few attorneys have experience with it.   Especially when it comes to RAC physician audits, few doctors have experience with RAC up until now.    The focus has been on hospitals, where the largest claims have been paid.

When the RAC sends a Demand Letter – or even a Request Letter – the clock is already ticking.   It’s crucial that physicians take immediate action.   Every doctor has an attorney, but what will be needed is specialized legal help from someone already familiar with the RAC appeal process and time frames.   What they won’t need is an attorney who has to start from scratch.

So if anyone knows an attorney with RAC experience – such as representing a hospital or other provider in the RAC appeal process – send us an e-mail with contact information and we will get in touch with him or her.    Also, we would be open to talking with attorneys experienced in appealing Medicare denials coming from audits other than RAC, as they can be brought up to speed with regard to the RAC differences.

Don’t Forget Accountants!

A physician looks to his or her CPA for financial advice, and certainly one area where a CPA should be knowledgeable is the RAC program.   When RAC starts attacking their earnings, we think a lot of physicians will be disappointed that their CPAs didn’t warn them ahead of time.

If you know an accountant or CPA, point them to RacGuru.com so they can educate themselves quickly and help their doctor clients.  Encourage them to contact us and help get the message out to physicians.

Thank you in advance for your help.

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.

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.