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Her statements were made after being asked whether RACs would be pursuing possible overpayments on physicians’ Medicare claims, particularly those related to hospital claims. Attendees were asking about what is commonly known as a “reach-through effect,” referring to what happens when Part A claims filed by hospitals are subsequently denied by a RAC for lack of medical necessity. The effect refers to denials rendered due to a lack of physician-written documentation, an alternative determination about the medical necessity of the service(s) provided or the appropriateness of the setting in which they were provided (inpatient vs. outpatient).


If a hospital’s claim for an inpatient stay is denied for medical necessity, all “downstream” claims such as subsequent SNF stays, ambulance service and even physician services billed for the inpatient stay are liable to be denied as well.


Casey’s statements mark the first time that CMS has made it clear that the agency in fact is not interested in going after physicians, because they simply do not represent enough dollars and are therefore (apparently) unworthy of attention.


In the past, Commander Casey and other CMS officials have stated that these services would be denied if an inpatient stay was denied. At several recent conferences, however, both CMS and Connolly (the RAC for Region C) have been equivocal about when, or even if, they would be pursuing physicians’ fees.


A CPA consultant, Cindy DuPree from Draffin & Tucker in Albany, Ga., said she was sitting in a room where a group from a Georgia hospital had gathered to hear the Webinar. She told us, “we all just sat in the room staring at each other – [Casey’s] statement was very aggravating. We were all very frustrated! How can they not go after the doctors’ fees when the doctors are the ones ordering the services to begin with? It’s just not fair at all.”


During the Webinar, there were some follow-up questions about this issue, to which the reply was that physicians’ fees simply were not a priority because of “limited resources,” a notion which is pretty much covered in the CMS Program Integrity Manual.


In Chapter 3.2, Paragraph B of the manual, there’s nothing about specific kinds of claims or billings, but the text leaves no doubt as to what they are after and how they will set priorities (see page 10, bolded here for emphasis):


“Contractors shall focus administrative resources to achieve the greatest dollars returned to the Medicare program for resources used. This requires establishing a priority setting process to assure MR focuses on areas with the greatest potential for fraud and abuse. Fraud and abuse may be demonstrated by high dollar payments, high volume of services, dramatic changes, or significant risk for negative impact on beneficiaries (e.g., low volume but unnecessary surgery).


Efforts to stem errors shall be targeted to those areas which pose the greatest financial risk to the Medicare program and which represent the best investment of resources. Contractors should focus where the services billed have significant potential to be non-covered, incorrectly coded, or misrepresented. Target areas may be selected because of: High volume; High cost; Dramatic change; Adverse impact on beneficiaries; and/or Problems which, if not addressed, may escalate.


Contractors have the authority to review any claim at any time, however, the claims volume of the Medicare program prohibits review of every claim. Resources dictate that in attempting to make only correct payments, contractors make deliberate decisions on the best uses of limited resources to maximize returns.”


Another attendee, a compliance officer who heard the Webinar from a remote location, said “it’s just not right. We keep getting hit for everything when it’s the physicians who create the problem in the first place. Why should we be the only ones penalized?”


Phase-In Strategy Announced


In another development, CMS on Thursday released its RAC Phase-in strategy – a schedule of reviews by type. The schedule is similar to the one CMS released in an AHA report released May 28, but there appear to be slight variations between the two.


Twenty-seven “blue” states will have a heads-up on automated and complex coding issues in 2009.


“Yellow/green” states will experience the phased-in RAC reviews two months before the “blues.” When medical necessity reviews begin in 2010, it appears that all states will be equal. Providers will have to monitor the vulnerabilities section of the RAC Web sites closely to get an indication of what issues are drawing the RACs’ attention.


Providers should get their HIM Departments prepared to respond to the maximum number of medical record requests this fall. Just because medical necessity is not going to be reviewed until 2010, that does not have a dampening effect on the number of medical record requests the RACs are allowed. DRG validation and coding error issues are numerous, so be prepared for the RACs to request their assigned limit (up to 200 records) every 45 days.


CMS also seems to have adopted the phrase “black & white issues” (first coined at the National RAC Summit in March 2009) as a semi-official category. This classification includes automated recoupment issues (violations of NCDs and LCDs) and MEUs (Medically Unlikely Edits.)


Providers certainly would like to know if there is anything else that fits in that category. And with only five days remaining after the June 25 release date, be sure to watch your mail for automated reviews.



About the Author – Dennis Jones
Revenue Cycle Clinical Support Services
CBIZ KA Consulting

Dennis Jones is a billing and reimbursement consultant who is well known in the northeast region for his active leadership and diversified areas of expertise.

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.

While Dennis is recognized as a leading RAC issues authority, 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.

Mr. Jones is a graduate of the Pennsylvania State University with a degree in Health Planning and Administration.


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