A physical therapist sticks to his knitting

I hang with physical therapists.

I stick to my knitting.

Here at Physical Therapy Diagnosis I try to provide the point of view of a private practice physical therapist trying to understand and cope with the United States health care system in general and Medicare in particular.

Lately, I've blogged a lot about the Medicare Recovery Audit Contractors (RACS).

Sometimes, though, you may want the full story - a comprehensive approach.

I've linked to this timely update on 'news' involving the RACs.

This blog offers a timely update on RACs, primarily on their impact on long-term acute care hospitals.

Keep looking at all the posts on this blog for some in-depth analysis of RACs and their specific impact on physical therapists.

How much do RACs cost private practice physicians and physical therapists?

I've been living under the gun for three and a half years.

The RAC gun.

The Medicare Recovery Audit Contractor (RAC) program is a new permanent federal program expected to 'go live' in February 2009.

The initial roll-out is mainly in the northeast and in the RAC demonstration states.

I live in Florida, a demonstration state since 2005.

Recent conversations I've had with my peers and professional organizations indicate that there is a lot of additional anxiety regarding the RACs.

While I never want to downplay the severity or the possibility of a Medicare audit, MAC or RAC, I want to present some information that can help private practice physical therapists assess the risk of and the damage from the RACs.

	RECOVERED AMOUNT	NUMBER OF PROVIDERS	TOTAL PHYSICIANS AUDITED BY RACS: 2005-2008
My experience: 2005-2008	~$80	7
Average Florida Provider: 2006	$135	21,927
Average California Provider: 2006	$216		50,054

Data for this table is available in this report.

Note that physical therapists are lumped in with physicians in the RAC report from which this data is drawn.

$992.7 million dollars in overpayments were recovered from providers, mainly (85%) inpatient hospitals.

Of the $992.7 million only $19 million came from physician practices (which include physical therapists).

40% ($391.3 million) of the overpayments were for medically unnecessary services.

Services are medically unnecessary when the clinician failed to justify why the services were performed.

For physical therapists this usually means measurements of ROM or strength deficits.

Also, measurements of activity limitations.

Finally, link deficits to activity limitations in the physical therapists' diagnosis.

Bulletproof Compliance

Your current Medicare compliance plan should be sufficient to respond to a RAC audit.

If you have a current Medicare compliance plan.

Mine used to be a dusty manila file folder sitting up on a shelf.

Not anymore.

I got busy and got some basic education - available in this blog and at Bulletproof PT.

Get your own compliance program.

Get Bulletproof.

I live under the gun...

But, I sleep well.

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.