Can We #SolvePT Medicare Audits Using Data Drilling to Fight Fraud?

Excellent webcast describes data-drilling for healthcare fraud by Thompson Reuters and XL Health.

Log-in here.

Complex, computer driven algorithms described in this webinar scan Medicare and Medicaid databases to look for "patterns of suspicious behavior".

For instance, the famous "ambulance trips to nowhere" are described here.

The take-home message is that fraudsters are finding it MORE difficult to use the healthcare system's inherent complexity to their advantage.

The data-drilling maps the healthcare providers referral patterns

What should be apparent after watching this webinar is that the typical physical therapist in private practice is NOT your typical fraudster.

Despite having a these documentation characteristics:

• low adoption rate of Electronic Health Records (EHR) of about 7%
• moderate rate of electronic documentation of 64%

...most physical therapists should not be on the list of "high-risk providers".

I wonder how we can #SolvePT when we're talking about Medicare Audits?

Physical Therapy Services Billed by Physicians in Florida Have a High Error Rate

Services billed by physician specialties represented 70% of the dollars incorrectly paid for physical therapy services in the November 2011 Comprehensive Error Rate Testing (CERT) Report.

Additionally, past medical review experience has identified high claim error rates when therapy services are billed by physicians.

The most common reasons for an error to be assigned are the following:

• insufficient documentation
• failure to meet Medicare’s documentation requirements specific to physical therapy services
• failure to meet medical necessity guidelines.

Therefore, based on high error rates validated through CERT findings and FCSO’s data analysis, a prepayment medical review edit for physical therapy claims billed by physicians in Florida will be implemented on March 19, 2012.

This prepayment edit will require submission of medical records to support physical therapy services billed by physicians.

More information can be found at the First Coast Service Options web site.

We discussed Medicare Audits here and the high CERT error rate for Chiropractors here.

Medicare Uses "Inaccurate and Inconsistent Data" to Audit Providers

The Washington Post reported today that...

"Medicare contractors are paid tens of millions of taxpayer dollars to detect fraudulent Medicare claims are using inaccurate and inconsistent data..."

The Washington Post is reporting on an unreleased report by the Office of the Inspector General (OIG)...

"The U.S. Department of Health and Human Services inspector general’s report — obtained by The Associated Press before its official release — found repeated problems among the fraud contractors over a decade and systemic failures by federal health officials to adequately supervise them."

The Recovery Audit Contractors (RAC) auditors were implemented in 2007 in Florida, California and Texas to solve these problems.

"CMS has repeatedly said the latest system of fraud contractors was designed to fix the problems with earlier contractors and allow the agency to better monitor them."

These RAC auditors are currently auditing physical therapists, physicians and hospitals.

"The same issues were identified 10 years ago by inspector general investigators, and dozens of reports in the past decade also have found problems.

In 2001, acting Inspector General Michael Mangano testified that the Centers for Medicare Medicaid Services (CMS) wasn’t doing a good job of holding contractors accountable."

I hope someone is auditing the auditors.

Stark Loophole not the only bright light in the new MedPAC report

The new MedPAC Report to the Congress: Aligning Incentives in Medicare is gaining attention amongst physical therapists primarily for its recommendation to close the "Stark Loophole" but also should be credited for emphasizing the collection of clinical data as a condition of payment.


MedPAC suggested in its recent report that the US Congress remove outpatient therapy from its list of services qualifying for the "in-office ancillary services exception" because physicians are not using the exception for its intended purpose and because costs are climbing too quickly.

MedPAC also suggested collecting clinical data as a condition of payment, called Coverage with Evidence Development (CED).

I propose Medicare could deliver better OUTCOMES, save more MONEY and get better VALUE for beneficiaries and taxpayers if collection of clinical data is in place of burdensome, centrally-mandated process measures that waste time, generate excess paperwork and distract highly-paid and well-educated physical therapists from face-to-face interactions with their patients.

Asking physical therapists to examine, evaluate and record patient data is 100% in line with the Guide to Physical Therapist patient management model.

Coverage with Evidence Development could be a positive force leading to a change in physical therapist culture: a shift to a culture of measurement.

If CED were in place of arbitrary process measures as a condition of payment then we could reduce Medicare audits by accountants and lawyers.

However, if CED is just one more centrally-mandated and administrated process measure then we'll all just be working harder.

Improper Payments the Focus of Obama's Speech

President Obama, in his Wednesday, March 10th, 2010 speech in St. Louis, Missouri, unfortunately chose to focus on Medicare inefficiencies and the estimated $100 billion dollars in 2009 improper payments as the main means to cost control and a way to pay for his proposed reform efforts.




Worse, he chose to laud the Recovery Audit Contractors (RACs) as potential saviors of healthcare and a major source of cost savings in his healthcare reform proposals.

The Improper Payments Elimination and Recovery Act (originally introduced in 2009) is designed to introduce RAC-style auditors to other, high-cost areas of government spending, like military defense and education.

When, in fact, the problem is not mainly inefficiencies in payment but the system itself: fee-for-service creates incentives to overutilize, overspend and overtreat.

Obama's health care reform has been appropriately criticized as health care financing reform.

An outcomes-based system for medical payments is years away and the transition is likely to be gradual and phased-in.

America has the highest health care 'unit prices' in the world but a middling rank in total outcomes (#34).

Rather than cast auditors as heroes (which, by contrast, paints doctors, hospitals and physical therapists as villains) let's put our efforts into accelerating the transition to real health care reform - outcomes.

Physical Therapy Process Beats Outcome

The current tally of officially recognized 'process' vs. 'outcome' measures in health care from the National Quality Measures Clearinghouse (NQMC) favors 'Process' over 'Outcome' by 997 to 368.

If physical therapists define quality by 'how' we deliver care over 'how much better' our patients get - then our patients are in trouble.


click image to view larger size

Why is this important?

Outcomes-based care is where the United States health care system is going.

Physical therapists can be leaders in this transition. The adoption of outcome measurement by our profession will the the 'speedometer' by which that transition is gauged and will ultimately decide the winner.

Unfortunately, the adoption of evidence-based outcomes tools is slowed by the burden of 'process-based' measures in physical therapists' clinics.

A partial list of some 'un-official' process measures in physical therapy:

• Therapy cap exceptions process (-kx modifier)
• ‘Skilled therapy’
• 10th visit progress note
• 90-day certification of the plan of care
• Physician signature of the plan of care
• AMA definition of physical therapy practice (via 15-min CPT codes)
• Automatic CPT coding edits
• 1-on-1 procedure codes
• time-in & time-out
• Medicare Minimal Documentation Requirements
• ‘8-min. rule’
• Discharge from physical therapy

These process measures, that dictate 'how' physical therapy is provided, all but eliminate the time, energy and money required for investments in true quality.

Where does all the time and money go?

Physical therapists nationwide (~177,000), especially those working in outpatient therapy clinics (~65,000) are burdened by excessive documentation of uncertain value - the primary reason for documentation seems to be to protect ourselves from Medicare audits.

Witness this description of the 'process-oriented' note that is supposed to accompany the billing of one, single code for Therapeutic Exercise (CPT 97110):

"Quadriceps strengthening into last 20 degrees of extension with mild manual resistance and proprioceptive cueing, 30 reps to fatigue, continues to decrease current extension lag and improve quality and duration of gait"

This description was made by Medicare auditor and former private practice physical therapist Steve Levine, DPT in a February 3rd, 2010 webinar called "Will Your Documentation Trigger an Audit?"

Dr. Levine's recommendation to over 400 members of the webinar cast a chilling pall over the prospects for improvements in the rate of physical therapists' adoption of outcome measures in the short-run.

The very last question in the webinar was posed by a physical therapist clearly non-plussed by the idea that every 1-on-1 procedure code need to be accompanied by this lengthy, narrative description.

Dr. Levine did not relent, implying that we need to spend as much time writing justifications for our care as we spend providing our care.

Some Process Measures are not statutorily based

Keep in mind that Dr. Levine's recommendations are just that - recommendations.

The Medicare Minimal Documentation requirements do not specifically require this level of narrative:

"...a therapist’s skills may be documented, for example, by the clinician’s descriptions of their skilled treatment, the changes made to the treatment due to a clinician’s assessment of the patient’s needs on a particular treatment day or changes due to progress the clinician judged sufficient to modify the treatment toward the next more complex or difficult task...

Documentation should establish the variables that influence the patient’s condition, especially those factors that influence the clinician’s decision to provide more services than are typical for the individual’s condition...

...Documentation should establish through objective measurements that the patient is making progress toward goals...

...It is recommended that the reasons for lack of progress be noted and the justification for continued treatment be documented if treatment continues after regression or plateaus." (Transmittal 88, page 25-26)

I could have written Dr. Levine's narrative description in 1992 - the year I graduated from PT school. Why should I write it now, in 2010?

Are we all crooks?

Is physical therapy still practiced the way they taught me then? I don't think so - today we have evidence-based physical therapy (the term was only invented in 1991).

Surely the profession could come to a consensus on what constitutes 'skilled physical therapy' that incorporated the best, up-to-date evidence on screening for pathology, treatment based classification and interventions supported by grade 'A' or 'B' trials rather than case studies or anecdote.

Right now we are abdicating our profession to self-serving, ex-clinicians with out-of-date treatment paradigms.

Why couldn't Federally mandated evidence-based outcome measures supercede process-based time-wasters? Let's bring Medicare audits (and Medicare auditors) into the 21st century.

Let's reverse the score: 997 to 368 Outcomes over Process.

The RAC Demand Letter No Physical Therapist EVER wants to get

Save yourself some time and money.

Take this sample RAC demand letter to your physical therapist in private practice (PTPP) office manager and let them know this is TOP PRIORITY - if you get a demand for return of overpayment you have 15 days to respond.



That's 15 days from the date in the upper left hand corner of the demand letter - not the date you find the letter in your mailbox. Here is the 4-page .pdf for download.

Why the rush?

According to Belinda Holmes, CPC/CCP of Kerkering/Barberio, an accounting and medical audit firm in Sarasota Florida, many demand letters wind up in the back office, on a 'to do' pile for several days before any action is taken.

Often, the person opening the mail is not even aware of the seriousness and potential financial liability of an automated RAC audit to a PTPP.

Offsets start on Day 41

Offsets are a 'bubble' in your Medicare cash flow pipeline. Offsets take money you would ordinarily collect in your bi-weekly Medicare check. The offset will continue until the entire amount of the overpayment is satisfied.

The demand letter has instructions for appeal - you should appeal since there is evidence that Medicare Recovery Audit Contractors are inappropriately interpreting Medicare guidelines.

Connolly Healthcare is the Florida RAC. They are only auditing automatic edits of PT un-timed codes in 2009,like...

• 97001 (PT evaluation),
• 97002 (PT re-evaluation),
• 971012 (Traction),
• etc (get the full list here).

In 2010 (almost here!), RACs may begin complex medical reviews of providers like PTPPs which means...

• requests for medical records,
• chart reviews and
• denials based on medical necessity,
• skilled physical therapy,
• insufficient documentation,
• no documentation,
• etc.

As I've said, the RACs currently only perform automatic edits on PT un-timed codes.

Private Practice Physical Therapists will get RAC data from Belinda Holmes

Belinda Holmes, BS, CPC, CCP-P will share her physical therapy RAC 'war stories' and tips to protect yourself from physical therapy automated claims review for 'untimed codes' in 2010.

Belinda will present

"Medicare Defense Strategies"

in Palmetto at Medical Arts Rehabilitation, Inc from 9am to 3pm - Belinda's part begins at 10:30am -11:30am on Saturday, November 7th, 2009.

Belinda works for Kerkering Barberio, a large Sarasota accounting firm with expertise in defending physical therapy clinic owners from Medicare audits.

Belinda is usually called in after the audit letter is received by the physical therapist and by then her job is usually 'damage control'.

At her seminar, Belinda would like to share with you ways to prevent that audit letter from ever reaching you.

Belinda's talk will focus on real-world, 'boots-on-the-ground' tactics you can use in your daily practice to prevent and defend your notes and charts from a Medicare audit.

1. RACs: What are they and how to avoid them
2. OIG 2010 Work Plan
3. Real life accounts of physical therapy audits
4. The new focus on medical necessity

Recent RAC missteps

RACs have not been putting up the kind of stellar numbers recently that earned their Demonstration Project permanent status in 2008.

The latest update of the three year Demonstration project in Florida, California and New York reveals that providers are right to have concerns about RAC improper application of Medicare guidelines.

Type of Reviewer	% of improper payment denials appealed by provider	% of appealed claims overturned in favor of provider	% of all improper payment denials overturned in favor of provider
Claims Processing Contractors	4%	59%	2.3%
Recovery Audit Contractors	22.5%	34%	7.6%

Since the percent of all 'improper payment denials' for RACs is almost three times the rate of MACs the data lend credence to the belief that RACs are not correctly interpreting Medicare guidelines.

Since RACs return overpayments successfully overturned at any level of the appeals process what can providers do to create a strong disincentive for RACs to incorrectly deny your claim?

Appeal!

Call 941.729.1800 to RSVP for Saturday's seminar.

You can get more information at www.BulletproofPT.com

Heads Up! Physical Therapists in Private Practice (PTPP)

The annual issuance of the Office of the Inspector General's (OIG) 2010 Work Plan sets the tempo for all subsequent Medicare audits - since the OIG is the agency that actually audits Medicare (CMS).

Here is what the Work Plan actually says about physical therapists in private practice:

"Outpatient Physical Therapy Services Provided by Independent Therapists

We will review outpatient physical therapy services provided by independent therapists to determine whether they are in compliance with Medicare reimbursement regulations.

The Social Security Act, § 1862(a)(1)(A), provides that Medicare will not pay for items or services that are “not reasonable and necessary for the diagnosis and treatment of illness or injury or to improve the functioning of a malformed body member.”

CMS’s “Medicare Benefit Policy Manual,” Pub. No. 100-02, ch. 15, § 220.3, contains documentation requirements for therapy services.

Previous OIG work has identified claims for therapy services provided by independent physical therapists that were not reasonable, medically necessary, or properly documented.

Focusing on independent therapists who have a high utilization rate for outpatient physical therapy services, we will determine whether the services that they billed to Medicare were in accordance with Federal requirements.

(OAS; W-00-10-35220; various reviews; expected issue date: FY 2010; new start)"
(page 29)

Physical therapists in Private practice should focus their attention on two areas to make sure that their compliance plan meets Medicare requirements:

Process Measures such as the following:

• 8-minute rule
  
  
• -kx modifiers and the arbitrary PT caps
  
  
• PT/PTA supervision requirements
  
  
• Medicare Minimal Documentation requirements
  
  
• ‘Skilled physical therapy’
  
  
• One-on-one procedure codes
  
  
• Untimed modality codes
  
  
• -59 modifiers and CPT code edits
  
  
• Physician certification of the physical therapy plan of care

Evidence-based physical therapists who truly care about their patients and about the job we do will also want to direct their attention to Outcome Measures such as the following:

• Patient self-report outcomes and questionnaires (eg: OPTIMAL, LEFS, etc.)
  
  
• Therapist-administered performance tests (eg: Gait Velocity, TUG Test, etc.)
  
  
• Impairment-level tests and measures (eg: SLR, neck rotation, etc.)

Finally, one self-administered process measure is Treatment Based Classification (TBC), which has the potential to...

• save costs,
  
  
• improve outcomes and
  
  
• elevate physical therapist decision making

TBC can show Medical Necessity and Skilled Therapy - two important areas of Medicare Minimal Documentation requirements.

To learn more about TBC and Medicare compliance you can attend one of the Classification Seminars in Palmetto, Florida on November 7th or 21st at the Medical Arts Rehabilitation physical therapy clinic from 9am to 4pm.

You can sign-up online at BulletproofPT.com

An open letter to the American Physical Therapy Association

This letter was sent to a contact at the APTA on September 21, 2009.

This letter is intended to initiate a discussion and propose a course of action that is in the best interests of Medicare physical therapy beneficiaries, the American healthcare system and physical therapists everywhere.

Why do Medicare auditors assess 'skilled therapy' as a criteria of payment? Because they lack an alternative measure of value.

Evidence based physical therapy, such as classification decision rules, have been shown to improve outcomes, decrease expensive testing, medication use and invasive procedures.

Can physical therapists avoid arbitrary, punitive Medicare audit denials by documenting the use of classification predictor variables and decision rules in the plan of care, daily notes and discharge?

Couldn't a commitment from Medicare to "immunize" physical therapists who document evidence based therapy from the 'skilled therapy' criteria of Medicare audits prompt a sea-change in clinician behavior to adopt evidence-based methods more quickly?

Medical doctors and legislators have sought a similar immunization, based on evidence based care, from the current administration as regards defensive medicine.

Why couldn't physical therapists, the only doctoring profession subject to time-based CPT codes, put forth similar argument as regards Medicare audits?

Thank you for your consideration,

Tim Richardson, PT

Can Evidence Based Medicine Save Physical Therapy From 'Skilled Therapy'?

Can powerful new tools used by physical therapists prevent a Medicare audit?

If you write in your note tests that predict the outcome of treatment could that note be exempt from a "partial denial of a therapy claim" that requires oodles of handwritten narrative "trumpeting clinicians' concerns"?


Rather than trumpeting your concern in writing wouldn't you prefer to spend time thinking about how to get your patient better?

What new ways could you think of to provide 'value' to America's struggling healthcare marketplace?

Sources of Value in Physical Therapy
Old	New
Osteokinematics	Manipulation predictor variables
Gait analysis	Gait Velocity measurements
Narrative descriptors of "assistance"	Self-report scales (eg: ABC test)
Falls history for predicting future falls risk	Testing specified populations with known pre-test probabilities of falling down using tests with known likelihood ratios
Pathology model	Biopsychosocial model
Physicians' diagnosis	Physical Therapy Diagnosis

Much as physicians inflate health care costs with defensive medicine so to are physical therapists forced to waste precious time, money and energy with defensive documentation. Most would agree that documentation doesn't add 'value' to healthcare.

Even if you get your patient better in a reasonable time frame using evidence based physical therapy Medicare can come in and retroactively snatch away your payment dollars if you haven't trumpeted your concern in your notes and charts that each and every intervention is 'skilled' - nevermind that no uniform definition of 'skilled therapy' exists.

Defensive Documentation and Defensive Medicine

The American Medical Association as gone on record saying it will support legislation aiming to shave costs on defensive medicine by providing immunity from lawsuits for physicians who practice evidence based medicine. Health and Human Services Department economists estimate America could save $60-108 billion per year with malpractice reform.

The Health Care OverUse Reform Today Act (HealthCOURT Act - H.R. 3372) contains language that provides immunity from lawsuits to physicians who practice evidence-based medicine. It's purpose is to

"...establish an affirmative defense in medical malpractice actions based on compliance with best practices guidelines"

The HealthCOURT Act may not make it out of committee but Democrats seem willing to trade some aspect of malpractice reform for passage of a larger health care reform package.

The Medical Group Management Association (MGMA) sent this letter to Congress in May 2009 outlining their position on the use of evidence based guidelines and malpractice reform:

"Allow use of evidence-based guidelines to provide mitigating protection in professional liability cases.

In some circumstances allow these guideless to offer immunity."

How does Defensive Medicine relate to "Skilled Therapy"?

Why did Medicare chose to use a 'skilled therapy' criteria to evaluate your notes and charts? Because they had no alternative source of value!

Today, in 2009, physical therapists create value by assigning patients to classification treatment groups based on the presence or absence of statistically determined predictor variables. Physical therapy evidence is much better today than it was 15-20 years ago when Medicare auditors first began scrutinizing PT charts and notes, en masse.

One of my blog readers asked me not long ago...

"If a physical therapist is performing the therapy then isn't it, by definition, skilled therapy?"

I wasn't sure whether I should cry or laugh at the innocence, the naiveté displayed by this statement.

Over 40% of PT charges are reported to lack documentation supporting 'skilled therapy' - the result is 'maintenance therapy' unbillable to Medicare or most third party payers.

Skilled therapy has been in the Medicare Manuals since at least 1988, according to my research. The enforcement of skilled therapy, however, by the self-appointed police of documentation, those ghosts of past PT professors professing to know, from your notes, the level of your intent, skill, intelligence, care and effort that went into getting your patient better has only emerged since the early part of the 21st century.

Skilled therapy emerged from skilled nursing facilities where many people went following an acute hospitalization. Medicare began in 1965 as a program for treating acute, short-term medical problems for which a cure could be expected. For those persons, with 2-5 chronic conditions like...

• congestive heart failure
• obstructive pulmonary disease
• diabetes
• hypertension
• mental disorders

...the costs are many times higher than average and the expected improvement is less than average.

Often, there is no 'cure' for these conditions so Medicare mandated 'skilled therapy' as a way to ensure that certified professionals provided services and that patient safety was maintained.

Skilled Therapy and 'Progress'

Progress, the "improvement standard" so often unattainable in skilled nursing, is required in outpatient physical therapy. Getting and keeping people living independently keeps them in the lowest cost healthcare setting in America, their homes.

Nevertheless, local contractors have been criticized for applying an "improvement standard" as a way to deny needed care and save money...

"...for certain services, such as outpatient therapy services, Medicare's policies impose improvement standards that are inconsistent with the statute.

The Medicare statute does not demand a showing of improvement to find services medically necessary or to cover treatment of an illness or an injury.

The statutory criterion for treatment of an illness or injury applies regardless of where the covered service is provided, be it in a skilled nursing facility, at home, or as an outpatient."

An improvement standard in outpatient therapy clinics is less problematic today than it was when those words were written (2003). Today, about 48% of physical therapists use outcome measures - most of those are probably self-report measures like the...

• OPTIMAL scale
• Oswestry scale
• Fear-Avoidance Beliefs scale
• Lower Extremity Functional scale
• Shoulder Pain and Disability scale

Self report measures are the the main component in computerized patient assessments designed to replace Medicare fee-for-service within the next five years. One of their benefits is their ability to show need (medical necessity) and progress (improvement).

But, skilled therapy remains problematic.

Today, the search for 'skilled therapy' in PT notes and charts is an arbitrary scavenger hunt - paying off for auditors in daily notes when the PT is tired, busy, brief or vague.

Why not use specific evidence-based criteria: numbers, valid tests & measures, standardized outcomes and daily measurements centered on patient function?

I recommend physical therapists trade our allegiance to our 'old' practice patterns, based on observation and experience, for 'new' evidence based predictive models in exchange for immunity from the scourge of skilled therapy denials in Medicare audits.

Medicare RAC nightmare

I woke last night, sweating and afraid.

I felt my heartbeat pounding in my chest.

I had a nightmare.

I think I cried out because my wife woke, mumbled something and reached out to pat my leg.

In my nightmare, Medicare Recovery Audit Contractors (RAC) were in my PT clinic threatening hefty fines and jail time.

Paper lay in piles all over my office. Charts were open and strewn about on desks.

Copy machines hummed and glowing lights illuminated stern-faced auditors with green eyeshades.

"You're in a lot of trouble Mr. Richardson, did you know that?"

Of course, it was just a nightmare.

I wasn't actually being audited by Medicare RACs.

Some private practice physical therapists may share my anxiety.

For us, the threat of a RAC audit looms large as the expected February 2009 nationwide RAC roll-out approaches.

So what, in the bright light of day, are the known risks of a physical therapist RAC audit?

Here are some of the resources I have compiled to help physical therapists understand RACs.

Hint: It's not all bad.

Outliers

Medical Necessity

Who gets caught?

Advance Beneficiary Notice

Patient Case

RAC expansion schedule

RAC Fact Sheet

OIG Work Plan

Bulletproof Physical Therapy Notes and Charts

Medicare RACs, snakes in the toilet and other urban myths

Snakes, swimming in your toilet bowl, are the sorts of things that keep eight year old boys awake at night.

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.

Overpayments Collected by Provider Type (in millions)

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.

CMS anticipates that the permanent RACs will adopt a similar strategy at first."

My experience in Florida since 2006 has been about $80 in overpayments over the four-year 'look back period' of the demonstration RAC project.

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.