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?

The RAC Fishing Expedition

The American Medical News recent article about the GAO criticizing the Medicare Payment Audits.

Physicians who had been hit during the initial test phase stated:

the auditors appeared to be going on fishing expeditions to find overpayments, demanding scores of medical records from several years past.

Additionally, the GAO found:

GAO said a Medicare contractor could take several corrective actions if it determined that a RAC-identified vulnerability was widespread in its region. The actions include:

  • Conducting more physician outreach and education to prevent claims errors.
  • Revising local coverage determinations to clarify when certain services are covered.
  • Implementing additional prepayment edits in the local claims-processing system.

In addition, CMS could initiate a nationwide corrective action, such as implementing a national system edit that all contractors must use, GAO said

Essentially what the GAO is saying is, the way the current RAC system is setup, give the RAC’s ZERO incentive to solve any problems.  The only incentive a RAC currently has is to find problems.

The RACs only make money if they recover money.

The GAO is suggesting the RACs be part of the solution as they see trends appear, rather than just collect penalty money.

Will RACs Hurt Physicians?

Should physicians be concerned about Recovery Audit Contractor Audits – or are RACs only going after hospitals?  This question was the focus of an article we posted earlier this year, and today’s writing adds some additional proof to our belief that it’s only a matter of time before doctors will feel the effects.

The RACs have already posted numerous issues that involve Part B providers, and these are already under review.  Right now as we speak, automated reviews of physicians may be underway in your area, depending on where you’re located.   Automated reviews are where the RAC uses highly sophisticated data mining technology which does not require medical records – very useful for cut and dried, all or nothing issues.   Without getting into a long drawn-out article, let’s look at just a few that will affect physicians.

Do Any of These Affect You?

Here are some of the Part B issues that CMS has approved and RACs have posted:

Once in a Lifetime Procedures / NCCI Edits / Pediatric codes exceeding age parameters / Facility vs. Non-Facility Reimbursement (Inpatient) / J2505: Injection, Pegfilgrastim, 6 mg. / Excessive Units – Bronchoscopy / Global vs. TC/PC  / SNF Consolidated Billing / TC of Radiation / Not A New Patient / Hospice Related Services – B / Blood Transfusions / Excessive Units – IV Hydration Therapy / Excessive Units – Untimed Codes / Adenosine – Dose vs. Units Billed / Barium Swallow Studies Units Billed (physicians) / Excessive Units – Blood Transfusions / Medically Unlikely Edit List / CSW During Inpatient /Nebulizer, Demonstration & Evaluation Units Billed.

Notice the Subtle Move Toward E&M Codes?

There is a particularly troubling issue in the above list – “Not A New Patient”.   This represents the crossing of a line that has been opposed by the AMA and over a hundred physician associations – having Evaluation & Management reviews performed by auditors who lack training and expertise in the specialty involved.   It is generally known that even equally qualified physicians can sometimes arrive at different conclusions while dealing with a particular situation due to variations in age, previous health issues, and various other considerations.  To have a physician’s medical decisions challenged by non-qualified persons seems entirely unfair – but the only recourse CMS apparently intends to offer is the appeals process.

What Should I Do?

Doctors in some parts of the country are beginning to take RAC Audits seriously.   Others are still ignoring the danger, waiting for someone they know to get slammed by a recoupment.   RACGuru remains the best source for help when (not if) RAC finally gets to a physician.   We remain ready to assist physicians in preparation.   The very best way to do this is to get an independent audit to identify and fix your vulnerabilities.  We stand ready to help you when you’re ready.

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.