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To undertake a complex review, a person must review a medical record with a Medicare claim to determine if services provided were medically necessary in accordance with Medicare guidelines in effect on the date of service. The reason given for this expected delay was that there exists a discrepancy between what the RAC demonstration project reported (32 percent of all claims denials were for medical necessity) and a report produced by the California demonstration RAC alone (yielding a 40 percent error rate in inpatient rehabilitation facilities).

What does the discrepancy mean?

According to the AMA article, Rochelle Archuleta, AHA senior associate director for policy, stated that the discrepancy validates “concerns about the ability of RAC auditors to accurately judge the clinical decisions made by a patient’s treating physician – sometimes three or more years after the care was provided.” RACs can audit claims going back three years, to Oct. 1, 2007, but if RACs can begin complex reviews on these issues after Jan. 1, 2010, they will be cleared to review claims that are more than two years old.

Is CMS giving providers a break? Consider this: the discrepancy noted compares an overall national error rate (32 percent) with a rate for a single type of facility in a single state (40 percent). It is not clear from the example given, nor from the statements published, if this is a statistically valid difference or not. It also is not clear if CMS thinks that the national rate should be higher or lower.

The Bad Omen for Providers

The delay, therefore, could in fact be a bad omen for providers. CMS may be trying to beef up their RAC auditors, not slow them down. It makes sense that CMS would want more denials, rather than fewer; in particular more denials that cannot be overturned, rather than fewer denials overall.

To some, the delay seems more like a public relations tactic. I contacted a certified documentation specialist at a facility in Georgia, and she had this to say after reading the article from AMA:

“In my opinion, this is just a delay tactic by CMS, because the RAC auditors are not trained yet for a complex type of review. Connolly has decided only recently to use Milliman criteria [as guidelines to judge status designations]. The problem during the pilot project was the lack of training and credentialing the RAC auditors had. Milliman is not as widely used as InterQual, and so finding qualified auditors who know Milliman is going to be harder. Also, I remember they are getting lower fees for the permanent program, and they have to give back their fee if an appeal reverses the RACs decision. Perhaps they will be more careful.”

A senior partner at a national CPA firm with a large healthcare provider client list had this to say. “If this delay actually happens, it is not a huge deal. It only delays the reviews, and gives the RACs more time to find auditors who can find denials that are not easily overturned on appeal. It’s not clear if this will mean more or fewer denials.”

The jury is still out, but either way, providers and denials for medical necessity still are squarely in the crosshairs of the RACs.

All the more reason, then, for providers to keep educating their staff via RAC University and RAC University LIVE.


About the Author

Ernie de los Santos has more than 20 years of experience in research and development, mostly centered on the use of computers, the Internet and digital applications for new business models. Over the past 30 years, he has worked on projects as a consultant and as an employee for several Fortune 100 corporations, including Coca-Cola, the National Football League, Adobe, Sony, Panasonic, and the People’s Republic of China’s Ministry of Education. He is the chief technical officer and vice president of business development for eduTrax.


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