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New York providers were present along with Tracy Phillips from the Maryland Hospital Association and provider organization representatives from New Jersey, Massachusetts and Pennsylvania. Stewart Presser of GNYHA moderated questions for CMS Commander Marie Casey, Lt. Lori Wiggins, MPT of Region A’s new RAC, Diversified Collection Services, Inc. [DCS], as well as representatives from the MAC and NGS.


Providers were for the most part quiet and expectant through the CMS introduction and PowerPoint. Slides included a review of the basics such as “What is a RAC?” and “What does a RAC do?” While such basics did not cause heads to roll, when Katherine Till of DSC opened with nearly 10 to 15 minutes of biographies, provider frustration was clearly evident.


DCS explained they would work with providers and accept medical records via CD or DVD.  For records received on disk they still will reimburse  $0.12 per page (for PPS and non PPS Part A claims only), and will pay for copies monthly or quarterly depending on provider request, but they are still working on Medical Record Request limits.


Provider Reaction


“They are saying all the right things,” said one provider who spoke on the condition of anonymity during a post-conference interview. “But at the end of the day, it’s about how it will work out in practical application. I take everything with a grain of salt. It looks like they are doing the right thing: they are reinforcing that they will talk with providers and it’s the right thing to say and promise that they will work with providers on extensions for deadlines to receive medical records. Hopefully that is the case. ”



As for some practical applications announced by CMS and DCS, providers in Region A can expect to see medical record requests submitted in May yield collections beginning in June. Demand letters will come from the RAC this time and the Remittance Advice will have a remark code N432, signifying “adjustment based on recovery audit.” Also, all issues must be approved by CMS, and providers can expect to receive up to 10 record requests from the RAC as early as April for DCS to review as a “test” issue. DCS will be using these claims to highlight an issue and have the issue “approved” for auditing by CMS. The issues that are approved for auditing will be posted on the Web site- “soon.”


Primarily, provider questions generated the most significant information on record from CMS and DCS. Providers continuously directed questions to Chief Medical Director Eugene Winter, M.D. with respect to what criteria would be used to audit claims. CMS remained guarded on the issue, saying that medical necessity denials will not exist at the onset of the permanent program and that providers will see straight coding issues at first.


Providers, however, insisted on clarity with respect to this issue. Dr. Winter explained they would use InterQual and possibly Milliman for screening purposes to determine overpayments but that the regulatory guidelines will be based on Medicare guidelines.


Little Reassurance


Despite many detailed questions being asked, providers generally were not reassured.


“I really don’t think people truly understand the implications of the permanent project with regards to these medical necessity denials,” one provider said, speaking anonymously.  “The response I received from CMS bothers me since it requires something to be written by legislation to be addressed and that isn’t going to happen unless people demand it.”


Clarifying this issue further, another provider remarked, “As far as the RAC goes, one of my concerns is that CMS has not given any rebilling direction for those interventional cardiac inpatient stays where the RAC denies. All charges except those for the ancillary services can be rebilled-but-there is no method right now to recoup the money for the stents/devices. Hospitals stand to lose significant money as they have already paid for those medical supplies.”


Mum on Appeals


CMS and DSC were unwilling to discuss the appeal process during the outreach meeting. They did explain that the Rebuttal Period is now called the Discussion Period, but did not have a clear timeframe for the Discussion Period except to state that “the RACs are required to respond to provider questions regarding claims within 24 hours.”


“There has to be a better way to obtain results to see if payment was reversed again,” said another provider, emphasizing the need for RAC responsiveness. “DCS and CMS were not very forthcoming with detail and overall, I was disappointed with the meeting. We didn’t want to hear 40 minutes of bios, but I am looking forward to the open forum because as it stands, we are not anywhere closer than when we walked in that door.”


Concerned About Experience


Several providers questioned DCS’s experience after the meeting.


“Although DCS has experience with MSP audits in California, the focus of the RAC audits is very different and requires staff with extensive clinical and patient care knowledge,” one provider said. “Let’s hope that they’re up to the task.”


Continuing on the same theme, another provider suggested that they [DSC] were probably learning the statutes “as we speak, so I leave the door open for communication.”


Open Communication


CMS appeared to be open to communication. In response to one provider’s question, a CMS representative stated that “it was unfortunate and surprising that the demonstration RACs didn’t discover more underpayments, given that the RACs would still have received their fee, but all of the systems are designed to find overpayments and they are open to provider suggestions.”


Provider questions and comments in the question-and-answer period revealed additional concerns.


“I have a full-time physician advisor working on RAC which has become a FULL-TIME job,” complained one provider. “We haven’t received a demand letter from Connolly (the former RAC in the demonstration project) since last December and yet we still have 18 cases in the appeal process. And this is the same team that’s contending with Managed Care concurrent/retrospective reviews, OMIG, the OIG, of course the RAC and the MACs.”


Explaining the problem, the provider went on to say, “it’s a resource nightmare; there are multiple agencies trying to dig into my pocket.  New York’s facilities bared a tremendous burden while operating with a ‘do more with less’ mindset.”


“The rest of the country is in for a big surprise and now look, we have a new RAC that’s starting from scratch,” the provider added “In the 935 there are appeal requirements within the guidelines CMS doesn’t plan on following. There is supposed to be a response from the RAC that they have received my appeal, but at the meeting they said they wouldn’t be holding them to that, and InterQual criterion is very loose. Some criteria may be stringent, but physician advisors’ medical judgment is not always in writing on page one, paragraph three!”


In describing the RAC experience during the demonstration, the provider went on to say: “My smaller facilities didn’t fair as well during the demonstration period and they can’t sustain these types of losses. With all of these audits, what little profit margin they have, if any, will GO AWAY. So from a New York standpoint I have a tremendous level of concern. Unless this is managed as they claim they will, this will put facilities out.”


Echoing the concern, another provider had this advice: “Go to the system, pull that Statement of Work (SOW) and know it better than the RAC. Know it better than they do. Ignorance is not an option.”



ED. NOTE: For more information on the RAC program, including contact information of the RAC participants, please contact the author, Megan Jones, at m.jones@washingtonwest.com.


About the Author

Megan Jones, is a professional relations representative for Washington & West, LLC. The company focuses exclusively on denial and underpayment recovery as it relates to Medicare Appeals and the Recovery Audit Contractor program as well as Third Party Payer Denials. The firm has been serving providers since 2002. In her capacity, Ms. Jones works to ensure that the company’s goals of advocating on behalf of hospitals are being achieved, thus ensuring that they receive payment for the care and services that have provided.


Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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