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Baseball is “the American pastime” and the quintessential team sport. Individual efforts are important in winning, however individuals do not win the game — the team does!


Healthcare provision is an American necessity, and achieving success for physical, mental and financial health can be achieved only when a team is focused on the goal of winning. That’s how great baseball teams win, so perhaps we need the same approach to this new game that CMS has created.


One thing is for sure: the RACs are certainly focused on winning, after having racked up over $1.3 billion in returned overpayments. In the current fiscal environment in Washington, DC, Congress evidently considers that a lot of home runs!


RACs as Home Run King: Documentation of Medical Necessity


“Most overpayments occur when providers submit claims that do not comply with Medicare’s coding or medical necessity policies.” (source: June 2008 CMS report)


Some observers are under the impression that there are arguments taking place over the validity of the medical necessity – questioning the clinical decisions of the MDs. No doubt, this is bound to happen.


During the RAC demonstration (the “exhibition game,” if you will), one the most prevalent problems found by RAC auditors was a lack of documentation for medical necessity or the misapplication of accepted guidelines concerning medical necessity. While there are no published statistics that show the exact nature of what the problems were, in our experience in recent audits of acute care facilities in several states, the plain lack of sufficient or appropriate documentation of medical necessity was likely the major issue. Just think about it – the lack of something is much easier to argue than any subjective measure. And remember the old rule of thumb – “Not documented = Not done.” They don’t need to argue about it if it’s not even in the record.


And now, in the permanent RAC program, a new and more subtle issue arises. I have talked to countless physicians now who are under the mistaken impression that the RACs are mostly concerned with hospitals, not physicians. During the demonstration project, it’s true that the RACs did not audit E&M service claims. That is not true any longer, however. So if you are a provider who files Medicare claims, you are subject to RAC scrutiny, even now, as you read this.


Now at Bat: All Medicare Fee-for-Service Physicians


Physicians are the starting point for all patient related service provisions; they meet, diagnose, treat, counsel, and charge for the care they direct. Like it or not, they are in the center of the documentation, coding and reimbursement game for themselves and all other provider types.

As mentioned already, physicians were not targeted during the RAC demonstration, however they as well as all other Medicare fee for service providers will be targeted under the permanent RAC program; and as a group they are the least informed on the changing game.

Some Player Stats: Providers vs. RACs

So in this new game, how is everyone doing? In the table below, we can see the published “stats” for the RAC demonstration project, the exhibition game used to show Congress what these new players could do. The table is taken from the June 2008 RAC Progress Report.

Notice in particular that the “Medically Unnecessary” Error Type provided over 40% of all Overpayments Collected.



The RACs have A Deep Bullpen:


A team with a deep bullpen has a lot of different weapons they can throw at you. The RACs certainly have many weapons (denials) that they can use. The next set of charts show the top types of denials made based on errors found by the RACs for the various provider types, during the demonstration project.


Some of these, we would just consider to be “base hits.” That is, the RAC did recoup at least part of the claim (they got on base), but the provider still got to keep some of the monies paid to them. A wrong diagnosis denial simply recoups the difference between the right and the wrong code’s payment. Likewise, Excessive or Multiple Units billed improperly only recoups the difference from what should have been billed and paid.


But then there’s the Medically Unnecessary Service or Setting error – these we consider to be “home runs.” Why? Because for that type of “hit” the RAC recoups the entire reimbursement amount for every DRG and procedure filed with the claim. Plus, like a ball that’s hit out of the park, you don’t even have a chance to lay a glove on it – if a claim is denied for Medical Necessity, it will not be overturned on appeal.


Physicians need to realize (and most don’t) that these Medical Necessity denials “reach through” to their own claims as well. If a physician files a claim for a patient, and the RAC denies the hospital’s claim for that patient as Medically Unnecessary, then the denial will “reach through” to all other claims for that case, regardless of provider type.





Defining The Strike Zone: CMS limits on requested Medical Records


There is one bit of good news in the RAC permanent program rulebook: CMS has placed real limits on the number of Medical Records that a RAC can demand during a given time frame. The time frame is the same in all cases – 45 days. The number of records that can be requested depends on the type of provider you are.


Inpatient Hospital / IRF / SNF / Hospice
• 10% of avg monthly Medicare claims, up to a max of 200, per 45 days.

Other Part A Billers: Outpatient Hospital / HHA
• 1% of avg monthly Medicare services, up to a max of 200, per 45 days.

Other Part B Billers: DME / Lab
• 1% of avg monthly Medicare services, per 45 days.


The limits on the number of records that can be requested from physicians are different: according to a November 2008 Open Door Forum by CMS, limits are calculated by NPI number.


For a Solo Practitioner with a single NPI number
• 10 medical records per 45 days

Partnership of 2-5 individuals
• 20 medical records per 45 days

Group of 6-15 individuals
• 30 medical records per 45 days

Large Group 16+ individuals
• 50 medical records per 45 days


That may not sound too bad, but you should do some “trial runs” and see what it takes. How long does it take and what does it really cost to copy 10 or 50 or 200 medical records, every 45 days?


After that, consider that the RAC batting average is 860 – so only 14 percent of their “hits” (denials) are caught (overturned on appeal). How confident are you that your documentation of just Medical Necessity will pass muster with a RAC?


CMS Loves the Game:


How much does CMS think there is to gain from playing this “new game?” Here is an excerpt from a recent (June 2008) report (interview) from CMS:


“Despite actions to prevent or recoup improper payments, it is impractical to prevent all improper payments.


A January 2008 report by the Office of Management and Budget (OMB) indicated that Medicare is among the top three Federal programs with improper payments, totaling an estimated $10.8 billion in 2007.

Improper payments on claims can occur for the following reasons:

• Payments are made for services that do not meet Medicare’s medical necessity criteria.
• Payments are made for services that are incorrectly coded.
• Providers fail to submit documentation when requested, or fail to submit enough documentation to support the claim.
• Other reasons, such as basing claim payments on outdated fee schedules, or the provider is paid twice because duplicate claims were submitted.”
(Source: The Medicare RAC Program: an Evaluation of the 3-Year Demonstration, June 2008)


Their strategy is pretty obvious. What worked in the exhibition game is going to keep on working. They have no intention of changing their lineup. The RACs are permanent, and you are certainly on the season schedule, regardless of what kind of provider you might be.


Playing To Win At This New Game

Despite the RAC batting average and their bevy of weapons, physicians, hospitals and other healthcare providers can ‘win’ at this new game by examining their internal processes. And they will have to do this, just to stay in the game, period. Physicians won’t want to do this because they are, rightly so, focused on providing proper care for their patients. But they have to properly bill with the proper codes or they, at the least, won’t be allowed to provide care for Medicare patients. Facilities have to do the same thing, but on a larger scale. All providers need both an offense and a defense, to stay in the game.

Your offense is how you do the billing in the first place. Education is the key – and unfortunately, the rules keep changing, so ongoing education is crucial. That’s why RAC University, powered by eduTrax® was created – to provide an affordable and convenient vehicle to keep your staff aware and educated on the RAC attack.

You need a defense, too: how you respond to RAC demands for copies of medical records, and the subsequent denials. You must review where your records are kept for quick response to RAC demands. Write out a process, define roles and expectations, educate your staff and make sure they understand the critical role they play in this changing game of Federal and State reimbursements for their services.

Ultimately we can all win, but not without a team approach, a winning attitude, practice and communication.


The RACs are coming to your ballpark, and you need to bring your “A” game!

Batter Up!


RAC University powered by eduTrax® offers in-depth practical education for areas that the RACs are currently known to target, via online courses, made available on a very affordable subscription basis. Group discounts are also available.


RAC University is the only provider in the country with such a complete library of detailed, targeted education available. Come see for yourself: for previews of all currently posted courses, visit www.RACmonitor.com.


You can even get season’s tickets at RACmonitor.com, so you won’t miss a single game!




Patricia Dear is Chief Executive Officer and President of eduTrax®

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