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

RAC Recoveries Accelerating, Look Out

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.

Reading the Flags

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.