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Sitting on stage were some of the true decision-makers for the RACs. Representing their respective organizations were the following:


Region A – Mr. David Yim, Vice President, Project Principal, DCS,


Region B – Mary Hoffman, RHIT, CCS, CPC-H, CGI


Region C – Christine A. Castelli, Principal, Healthcare Division, Connolly Consulting


Region D – Andrea Benko, Founder and President, HDI

The presentation by the RACs was informal and collegial, if not actually friendly. The information presented was useful, but given the “Question & Answer” format of the proceedings, it was far from comprehensive. The RACs where very consistent on most issues, although there were some significant issues where hospitals’ fortunes could vary significantly depending on their region and which RAC they would be dealing with.


Regarding Implementation Schedules:


For Region A, Mr. Yim stated that “Outreach Education will be robust” and will begin in New York state March 30 and 31. Because of the RAC/MAC blackout, New England Part A activities will not begin until August/September, so Part A Outreach Education will be scheduled appropriately via the hospital associations at that time.


Ms. Hoffman stated that in Region B, Outreach Education would begin in Michigan April 2. Region C will begin Outreach Education in South Carolina on March 19, according to Ms. Castelli, with additional sessions scheduled to follow in Florida and Texas. Finally, Ms. Benko said that Region D Outreach Education would begin in Nevada, Utah and Arizona in March.


All Outreach Education will be conducted through state hospital associations. The RACs are forbidden by CMS to provide education directly to providers.


All of the RAC representatives emphasized that there are no set dates when providers will expect initial requests, although all of the RACs agreed that the initial activity of requests will likely begin in May, 2009. “The results of data review and analysis will drive implementation dates” according to Mr. Yim.


Significantly, the RACs were reluctant to say that the initial requests would consist of solely Automated Recoupments as was reported in the RAC Demonstration Final Report of June 2008. Instead it was stated, somewhat ambiguously, that the RACs would initially focus on “established black and white issues to begin with” and that it was to be expected that automated recoupments would be a major part of this.


Regarding Customer Services:


There was complete consensus among the RACs regarding this issue. “Our customer services is excellent,” declared Ms. Hoffman on behalf of CGI. “Exceptional,” avowed Ms. Castelli for Connolly. “Great,” affirmed Ms. Benko for HDI. Although Mr. Yim declined to thumb through his thesaurus for additional adjectives, he did state that DCS planned to overstaff their customer services department in order to provide optimal service to providers with questions and complaints.


Regarding Review of “New Issues”:


All “new issues” must be reviewed by CMS before the RACs can act on them. This oversight was put in place by CMS in response to problems reported by providers during the Demonstration Project. According to the RAC representatives, “All issues, even those that came to light in the Demonstration Project, must go through the “New Issue” review.”

In the “New Issue” review, the RAC conducts a review of a small number of charts (10) related to the specific compliance issues and sends a New Issue Review Request to CMS. CMS has 60 days to review the issues and decide on its value and appropriateness. If approved, the “New Issue” is posted to RAC website and RAC can begin Region-wide reviews.

Regarding Subcontractors:

As announced in the resolution of the RAC Contract Award Protest, Connolly Consulting will utilize Viant as a subcontractor, while the 3 other RACs will use PRG-Schultz as a subcontractor.


In Region A, Mr. Yim stated that DCS will utilize two additional subcontractors. It had been previously announced that DCS will use iHealth Technologies (iHT) to assist with Part B automated reviews and Strategic Health Solutions (SHS) to assist with Part A and B complex reviews.


All of the RAC representatives emphasized that their organizations are responsible for all activities of their subcontractors.

Regarding Customization of Provider Contact Information:


The RAC representatives agreed that all provider contact information was fully customizable by the provider “on Day 1.” Forms will be introduced during outreach education, and eventually be available on the RACs’ websites. The solicitation of any missing or incomplete information will be sent to hospitals’ Compliance Officers.


Regarding RAC Websites:

The “live” dates of the RAC websites are only waiting for CMS approval. As soon as CMS approves the individual websites, the RACs will activate the sites and announce the availability to the provider community. The RAC representatives agreed that CMS approval will probably occur during the summer.

Regarding Medical Necessity Reviews:


The RAC representatives announced that medical necessity decisions will generally be made by nurses. It is not a CMS requirement that a physician be involved in a recoupment decision related to medical necessity.


All of the RACs will self audit their results and review topics through internal review boards. Ms. Benko recommended providers read this section of the Permanent RAC Statement of Work for insight to the review process and requirements. Mr. Yim stated that DCS will employ one medical director, two alternate medical directors and a 35- member physician board to oversee clinical decisions.




Regarding Clinical Screening Tools:

Region A – DCS will use Milliman Care Guidelines,

Region B – CGI will use InterQual Clinical Decision Support Guidelines

Region C -Connolly Consulting HAS NOT DECIDED on a Clinical Screening Tool(s)

Region D – HDI will use both Milliman and InterQual Guidelines


Regarding Coding Decisions:

Although it was noted that coders can disagree on the proper designation of codes, the RAC representative stated that they wish to issue recoupments on “black and white” coding issues. Ms. Castelli from Connolly suggested that providers could limit unnecessary discussions and appeals by making sure that “your hospital your coders are current and certified.” Ms. Benko noted that HDI funnels specialties issues (like orthopedics) to coders in that specialty.


Regarding Linking Hospital Recoupments to Claims of Other Providers:


When asked this question, with specific focus on Short Stay cases that are determined to be suitable for Observation level of care, the RAC representatives answered in unison that physicians’ claims for those same beneficiaries would be reviewed and recouped if appropriate. (CMS has previously stated that although no RACs recouped payments from nursing homes or physicians after 3 day “qualifying stays” were found to be not medically necessary, the Permanent RACs will be free to do just that.)


Regarding Appeals:


A member of the audience asked a final question that provided great insight into the RACs’ strategy for the permanent RAC program. The question was; given the expansion of the RAC to all 50 states, and given the enormous numbers of providers in each RAC region, and given that providers are much more knowledgeable about RAC activities, and given that providers have been advised to appeal recoupments very aggressively; how will the RACs maintain the resources that will enable them to respond to the demands of the Permanent RAC Program in this new environment?


Mr. Yim from DCS stated his company’s position and there was general agreement from the other RAC representatives on the panel. Mr. Yim stated that, although DCS anticipates a high volume of calls and appeals, “Our strategy is to make sure that everything is so “clean” that there won’t be much room to appeal.”


This statement is telling in two ways. One is that it is a hopeful sign that given the experience of the demonstration project, where providers overturned many recoupments for specific types of cases when the RACs were reimbursed regardless of the outcome of 2nd and 3rd level appeals, the RACs are apparently planning to be more conservative in their recoupment decisions in the vast grey areas of clinical coding and medical necessity. Any recoupments that are overturned in the appeal process only add to a RACs administrative cost without adding revenue. This change in financial incentives may have already had an impact on RAC behavior and is good news for providers.


Secondly, this suggests that if the RACs are more prudent in their recoupment of clinical coding and medical necessity cases, the success rates of appeals should drop significantly. The RACs are apparently counting on the proposition that if initial RAC appeals are less successful, providers will be less likely to invest in the time, expense, and headaches inherent in the Medicare 5 step appeal process. Depending on the initial success of this approach, the RACs could adjust their resources and even their RAC targets to maximize their financial margins.


The RACs are indeed coming. Maybe kinder and gentler. Definitely smarter. It’s time to prepare.


About the Author

Dennis Jones is the Director, Revenue Cycle Clinical Support Services with CBIZ KA Consulting Svcs, LLC. His expertise covers a wide variety of topics including managed care, uncompensated care, Medicare compliance, HIPAA, and process improvement. He is a recognized speaker having previously addressed the New Jersey Hospital Association, World Research Group, and various state chapters of HFMA, AAHAM, and AHIMA. His expertise in Medicare compliance has been an integral component of the CBIZ RAC solution. For more information on the RAC, including contact information of the RAC participants, please contact the author, Dennis Jones, at drjones@cbiz.com


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