Somehow, in 1976, word got around that it was possible for slithery snakes to sneak into sewer pipes and wind up in my bathroom.
I didn't sleep for weeks.
Also, I had, ahem, other issues with snakes as a result.
Fortunately, snakes in sewer pipes turned out to be a baseless urban myth and no eight year old boys were harmed in the myth's dissemination.
Medicare RACs and physical therapists
Now, in 2008, physical therapist private practices are worried about Medicare Recovery Audit Contractors.
Maybe we have good reason.
Maybe we don't.
Recently, I was a 'fly-on-the-wall' at the Government Affairs meeting of the Private Practice Section of the American Physical Therapy Association.
Among the agenda items was a short discussion of Medicare RACs and their impact on physical therapist private practices. The Medicare RACs were due to go nationwide in October 2008 but were delayed.
At this point, February 2009 is the expected kickoff date.
Many of the Government Affairs Committee members were from states other than the following...
- Florida
- California
- New York
- South Carolina
- Arizona
- Massachusetts
This list is the states selected in 2006 and 2007 as part of the RAC demonstration project.
Physical therapists in these states should be very familiar with the impact of the RACs.
One of the biggest 'hot buttons' among the PPS Government Affairs Committee members was the contingency fee structure used to pay the Medicare RACs.
The RAC contingency fee is paid based on...
"...detecting and collecting overpayments plus the fees paid for detecting and refunding underpayments."Underpayments! What underpayments?
"As of March 27th 2008, RACs succeeded in correcting more than $1.03 billion in Medicare improper payments. Approximately 96 percent ($992.7 million) of the improper payments were overpayments collected from providers, while the remaining 4 percent ($37.8 million) were underpayments repaid to providers."Regardless of whether you did or did not receive any refunded underpayments I believe the RAC contingency fee structure could be a very good thing for private practice physical therapists.
Contengency payments align risks faced by the provider and the auditor
Right now, if you are audited by a Medicare Administrative Contractor (MAC) your claim is likely read by an employee or a consultant paid a salary or a flat rate.
If you appeal, your appeal is read by that same employee or consultant.
You must appeal to the third level, the Administrative Law Judge, before your appeal gets read by a fresh face.
Meanwhile, the auditor bears no risk.
The MAC auditor gets paid even if you prevail in your appeal.
The RAC auditor does not.
"In the RAC permanent program, CMS will require all RACs to refund any contingency fees they received if an overpayment determination is overturned at any level in the appeals process."Why are RAC contingency payments good for private practice PTs?
Most of the overpayment determinations were made against inpatient hospitals.
Of the $992.7 million in overpayments approximately 85% were made to inpatient hospitals.
| Skilled Nursing | $16.3 | 2% |
| Inpatient Rehab | $59.7 | 6% |
| Outpatient Hospital | $44.0 | 4% |
| Physician (& PT) | $19.9 | 2% |
| Ambulance/Lab/Other | $5.4 | <1% |
| Durable Medical Equipment | $6.3 | 1% |
| Inpatient Hospital | $828.3 | 85% |
"Because the Claim RACs were paid on a contingency fee basis, they establish their claim review strategies to focus on high-dollar improper payments, like inpatient hospital claims, which give then the highest return with regard to the expense of reviewing the claim and/or medical record.My experience in Florida since 2006 has been about $80 in overpayments over the four-year 'look back period' of the demonstration RAC project.
CMS anticipates that the permanent RACs will adopt a similar strategy at first."
The permanent RAC is only allowed a three-year 'look back'.
My overpayments were due to charging multiple units of Traction or Electrical Stimulation (Supervised Modalities) to the same patient on the same day.
Now I know you can't do that.
There is some evidence that the Medicare RAC audit selection process differs from that of the Medicare MACs.
| % denials appealed | % appealed denials in provider's favor | |
| MACs | 4.0% | 59.0% |
| RACs | 14.0% | 33.3% |
The Medicare RACs appear to be more selective (eg: Inpatient Hospitals) thereby improving their percentage of provider unfavorable appeals.
Nevertheless, if you do get denied and you think you have a case, I recommend that you appeal.
Of the $19.9 million in overpayments paid by the 'Physician' category, the majority, 54%, were because of 'Excessive/Multiple Units".
I've made changes to my practice based on what I've learned in the last three years.
Get the RAC Evaluation Report here and get the facts.
If you are a small practice, like mine, you probably understand your business at the 'molecular level', that is, you do most of the work, you know most of your patients and you write or at least review most of your charts.
You are better positioned than Inpatient Hospitals to resist or defend a Medicare audit by a RAC or a MAC.
What about the Snakes?
John F. Kennedy said this...
"The enemy of the truth is not the lie, but the myth."
What you know is always less scary than what you don't know.
Now, I know that snakes won't get me when I go to the bathroom.
Now, I'm ready for the RACs as well.
