While supplies last! Free 2022 Coding Essentials for Infusion & Injection Therapy Services book with every RACmonitor webcast order. No code required. Order now >

In our four-part series that wraps up today, we have reported on three major audit issues – IV Hydration, Blood Transfusion and Hospital Outpatient Rehab. We conclude our series with an analysis of the physician risk in the RAC process.

Like Sam & Diane, like Oprah and carbohydrates, like a politician and his conscience, the RACs seem to have an on-again-off-again relationship with physicians’ issues.

With the publishing of first seven Provider Vulnerabilities in the Approved Issues section of the Connolly Healthcare Web site and six of the seven new issues published on the HealthDataInsights (HDI) Web site I think it’s safe to announce that RAC Audits and Physician Issues are back together for good.

You may remember that during the RAC demonstration HDI focused originally on physician issues.  Legend has it that HDI couldn’t help but notice the giant contingency fees that Connolly and PRG-Schultz were raking in (RAC’ing in?) Quicker than you can say “Which way is the ED?” HDI abandoned the review of physician accounts and began carpet-bombing Florida hospitals with requests for large volumes of medical records.

Although physicians’ issues seemed to be ignored in the latter stages of the RAC demonstration project, the Final RAC Demonstration Status Report stated that one way the permanent RAC program would recover a higher percentage of Medicare billing errors would be to hire more staff, to conduct more reviews, and correct more improper payments (e.g., physician visit claims, home health and hospice claims, etc.)

As the permanent RAC implementation dates grew nearer, the RAC audit strategy regarding physician issues became the focus of industry speculation.  Hospitals and hospital consultants began to speculate that the permanent RAC program audits would link decisions that physicians made regarding appropriate levels of hospital services with the physicians reimbursement.

There was a lot of discussion regarding the physician’s liability for inpatient cases that were determined to be appropriate for observation-level outpatient services. There was also a lot of discussion regarding the physician’s liability for inpatient surgeries that were determined to be appropriate for outpatient surgery.  But the issue that was discussed more than any other, and subsequently resulted in more misinformation than any other issue, was the link between the three-day acute care stay prior to transfer to a Skilled Nursing Facility (SNF.)

The RACs are somewhat responsible for the confusion.  At the first National RAC Summit in early 2009, all four RACs said they would link physician reimbursement recoupment with hospital medical necessity recoupment.  The problem was there was no indication from the RACs on how they would be linked.  Would there be an automatic recoupment of physician reimbursement after the recoupment of hospital payments for medically unnecessary services or service provided in an improper setting, or would this require a complex review of physicians’ records?  This remained unclear.

During a RAC Outreach training session, Region A contractor DCS was asked:

    Q:  Will physician payments and nursing home payments be recapped if an acute care admission is denied for medical necessity?

Their concise, although not particularly helpful answer, was:

A:  Possibly.

There you have it, clear as mud.

While participating in a RAC Outreach Webinar for facility providers in Georgia in June 2009, Commander Marie Casey, Deputy Director in the Division of Recovery Audit Operations, was quoted in a RACMonitor article as saying that RACs would not pursue recoupment of physician payments. “Completely not true, ” says Cmdr. Casey. “I was making the point that there would be no automatic recoupment of physician payments linked to hospital recoupment.”


The clarification of this issue became so important to CMS that it became part of the lead on the home page of the CMS RAC Web site.

    “CMS is often asked about other claim types that may be affected by a full inpatient denial and if the RACs will deny other claim types associated with the inpatient stay, such as physician evaluation and management services. At this time the RAC will not automatically deny claims that are associated with a full inpatient denial. However, these claims may be reviewed individually and there may be a need to fully/partially adjust the claim based on the documentation submitted.”

Clearly CMS is leaving the door open for RACs to conduct complex reviews of physician reimbursement linked to disallowed hospital inpatient cases.  But hospital medical necessity cases will not be audited until 2010 and in the RAC universe that is a long way away.  A lot of things have been known to change over a couple of financial quarters.  That’s why it was so significant to see the words “Outpatient Hospital and Physicians” included in those initial seven approved issues from Connolly Healthcare.

The permanent RAC is here and it includes physicians.

In the short term, look for more automated recoupment issues to target physicians’ reimbursement.  A recent audit by the OIG showed an 86 percent error rate (that’s not a typo) in the coding of “Place of Service” for physician services provided in outpatient hospital and ASC settings.

How did the OIG discover this issue?  Easy, they compared bills submitted by hospitals to bills submitted by doctors. The OIG projects that $20.2 million could be recouped from physicians for the two-year subject period of their audit.  This would be almost as much as was recouped from physicians for all issues during the RAC demonstration project.

“We have a lot of things that we want to look at regarding physician’s issues,” says Cmdr. Casey.  It may not be a match made in heaven, but for once it looks like the RACs and physicians’ issues have a long and expanding relationship ahead of them.

Sam and Diane should have been so lucky.

About the Author

Dennis Jones is the Director of Compliance Services at CBIZ KA Consulting, LLC. While Dennis is recognized as a leading RAC issues expert, his expertise covers a wide variety of topics including Managed Care, Uncompensated Care, Medicare and Medicaid Compliance, HIPAA, and Process Improvement. As a result he has spoken previously for NJHA, World Research Group, and various state chapters of HFMA, AAHAM, and AHIMA. Dennis is a past-president of the New Jersey Chapter of AAHAM and has held senior management positions in provider, IT vendor and reimbursement consultant arenas. He is a graduate of the Pennsylvania State University with a degree in Health Planning and Administration and hopes to be able to afford season football tickets some day.

Contact the Author



You May Also Like

Leave a Reply

Your Name(Required)
Your Email(Required)