December 05, 2011

All legislation passed by our government has seemingly good intentions, and so it goes with the Affordable Care Act. However, with all legislation comes unintended consequences, and this has proven true with the ACA.

By Dr. Stuart A. Cohen

Tucked into the reams of legislation were provisions for tightening antifraud and abuse efforts in state Medicaid programs via the Recovery Audit Contractor (RAC) program. RACs are independent contractors using professionally trained coders under the authority of the Centers for Medicare and Medicaid Services (CMS). They perform focused chart audits on physician CPT coding outliers in an attempt to identify and recoup improper overpayments and underpayments made to providers. From an audit of charts, a statistical analysis is done to estimate total overpayments and the physician or group is assessed a fine. A contingency fee of up to 10% is paid to the RAC upon recovery of monies.

I have spent many hours at the American Medical Association House of Delegates listening to physicians’ complaints of arbitrary, capricious, and even egregious behavior by these RAC companies preying upon Medicare practices to collect their contingency fees. Lack of timely response to physician grievances, lack of physician oversight of the coders, systematic overestimation of overpayments and underrecognition of underpayments, and lack of due process appeal procedures are just some of the litany of complaints aired.

"If your community codes level 99214s at an average of 24% and you are at 60%, 'you’ve got some [explaining] to do!' "

The RAC is akin to an IRS audit, and the financial consequences – as well as costs to one’s business reputation – are to be avoided at all costs. Modest changes have been made by the CMS in response to concerns, and since 2005, the Medicare Trust Funds have recovered over a billion dollars in overpayments.

Beginning Jan. 1, permanent RAC audits will be implemented in state Medicaid programs as part of routine compliance and audit procedures, thanks to the ACA, so the RAC soon may be coming to your office.

What can you expect, and how can you avoid getting wrecked by RAC?

Based on comments from the Health and Human Services Department Office of Inspector General, (OIG 2012 audit Work Plan) and past Medicare and Medicaid audits, it seems for now the low-hanging fruit is the 99214/99215, and modifier –25 outliers will be likely targeted.

It appears that initial Medicaid RAC audits by states may or may not offer sufficient due process as the auditors stumble out of the starting gates. Rules of engagement, including an appeals mechanism and timely response to physician grievances, have yet to be implemented in most states, even at this late date. Unfamiliarity with state Medicaid rules and regulations may also interfere with a smooth transition of this program into Medicaid.

On an individual level, I recommend immediately becoming familiar with the AMA CPT 2012 manual, which interprets the AMA CPT rules and regulations. Establish office consensus on your coding procedures. Document all the work that you do. Self-audit your level 4 and 5 E & M codes and your modifier –25s to ensure you comply with all the necessary documentation.

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