No more second Demand Letters

“The Centers for Medicare & Medicaid Services (CMS) has made changes to the
Medicare Overpayment Notification Process”

We wouldn’t want anyone to really understand how this process works, would we?

“If an outstanding balance has not been resolved, providers previously received three notification letters regarding Medicare Overpayments, an Initial Demand Letter (1st Letter), a Follow-up-Letter (2nd Letter), and an Intent to Refer Letter (3rd Letter). CMS would send the second demand letter to providers 30 days after the initial notification of an overpayment. Recent review has determined that the majority of providers respond to the initial demand letter and pay the debt”

“Currently recoupment action happens 41 days after the initial letter. The remittance advice which describes this action serves as another notice to providers of the overpayment. Therefore, effective Tuesday, November 1, 2011, the second demand letters are no longer being sent to providers. Provider appeal rights will remain unchanged. If an overpayment is not paid within 90 days of the initial letter,
providers will continue to receive a letter explaining CMS’ intention to refer the debt for collection.”

What this really means is it is another chance for someone in your office to excel.  Now you have fewer notices from the CMS about a RAC issue, which increases the possibility of your office messing up this process.  Help your practice by making it easier to track the RAC process from beginning to end by using the RAC Tracker.

Food for Thought

On July 28th, a report (see REPORT ) was sent to the Centers for Medicare & Medicaid Services (CMS) from the Inspector General’s office that will have widespread attention in the near future.  And it’s without question a physician issue, not a hospital one.   If you’re a doctor it will affect your wallet or purse, so you might want to know this.

The report resulted from a study of coding errors causing overpayments to physicians.  Medicare payments were made for patient encounters at non-facility locations that actually took place at hospital outpatient departments or ambulatory surgical centers (ASCs).   As everyone knows, non-facility encounters reimburse at a higher rate than if the encounter was at a facility such as a hospital in order to help cover the overhead expenses of the physician.

Straight Quotes from the Report

“Physicians are required to identify the place of service on the health insurance claim forms that they submit to Medicare contractors. The correct place-of-service code ensures that Medicare does not incorrectly reimburse the physician for the overhead portion of the payment if the service was performed in a facility setting.”

The report continues.    “Our audit covered 484,218 nonfacility-coded physician services valued at $42,385,710 that were provided in calendar year 2007 and that matched hospital outpatient or ASC claims for the same type of service provided to the same beneficiary on the same day.”

In this study, “Physicians correctly coded the claims for 10 of the 100 services that we sampled. However, physicians incorrectly coded the claims for 90 sampled services by using nonfacility place-of-service codes for services that were actually performed in hospital outpatient departments or ASCs. The incorrect coding resulted in overpayments totaling $4,710.”

“Based on these sample results, we estimated that Medicare contractors nationwide overpaid physicians $13.8 million for incorrectly coded services provided during calendar year 2007. We attribute the overpayments to internal control weaknesses at the physician billing level…”, etc.

But That Was from the Year 2007

Yes it was.  But think about it.   In their random sampling, 90% of the time the place-of-service codes were wrong!   The first thing I’d want to know if I were a physician is whether the coding in my office is being done correctly in 2010.    Am I sure my in-house biller or billing company is doing it right?     If not, could I be setting myself up for a RAC Audit?    Could they discover a “pattern of abuse” that then triggers a ZPIC investigation?

Your RAC Is On Its Way

Trust me when I say this – even if your RAC hasn’t yet audited you or a doctor near you, it’s coming.    Just in the past 30 days, physician audits have increased in pockets all over the country.   In fact, we’ve learned of more physician audits in the past month than the previous six months combined.

If you sense that maybe it would be wise to check into your office’s compliance with Medicare guidelines, you’re probably right.   Help is as close as an email away.

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.

A Report from the Trenches

The annual conference of the American Association of Medical Society Executives (AAMSE) was held this year in Seattle, Washington July 21-24th.   The nearly 300 attending executives represented medical societies with memberships of a few hundred to several thousand physicians each.   Needless to say, these were some very sharp professional people with their fingers on the pulse of physician concerns.

Their Concerns

While there were many interests represented, as my colleagues and I interacted with them during breaks, exhibits and over lunch, several topics seemed to grab the most attention.  When asked “what do you do”, we would mention various services we offer, and more often than not the most interest seemed to center on document management, our web-based EMR, and the RAC Review (baseline audits).

Closely connected with RAC audits of course is the ZPIC threat.  I found that the executives want to educate their physicians regarding the need for strict compliance with Medicare guidelines, thus conserving income and preventing “pattern of abuse” investigations by ZPIC.

Their Sense of Urgency

Regarding RAC Audits, the consensus seemed to be that the time is rapidly approaching when RACs will target physicians, and it may get ugly.   This has been our prediction all along, as regular readers will recognize.   Really in-the-know physicians are taking the necessary steps – RAC baseline independent audits, remote coding services, office staff and physician coding training, etc.

The government’s July 2010 announcement of arrests and prosecution of physicians in Florida and elsewhere – with more to follow – has everyone’s attention.   Several executives I spoke with mentioned that they were not concerned with protecting those involved in deliberate criminal activity.   Their concern is that some physicians, whether through carelessness or otherwise, may be setting themselves up for charges of fraud through a “pattern of abuse”.

No Idle Threat

Their concern was that the “highly sophisticated data mining technology” mentioned by President Obama earlier this year was no idle threat.   The belief was that probably most physicians either don’t know about it or underestimate just how effective it is.   Hospitals are finding out.   Physicians are about to.

We had a number of executives express the desire to have someone come and speak to their membership.   Medical societies are beginning to take the RAC threat seriously, and are concerned that their physician members do likewise.

We do these audits nationwide.  The average practice scores run about 60% compliant.  The lowest score nationwide has been 32%, and the highest so far has been 78%.

If you are reading this article and either know or are a physician who has not had an independent third-party RAC compliance analysis, drop me an e-mail at and let’s talk.

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.