Let's Help Each Other

Physical therapy is changing rapidly. As a PT with more than thirty years of experience, the changes observed in the last ten years triple those of the first twenty years. The pace of change is not slowing down. The Medigraph Blog will serve as a forum that will enable us to exchange ideas and assist each other. This blog will be used to share billing, documentation, and any other ideas to improve any aspects of our profession. If we share what we have learned, we can develop a resource that enables our collective understanding to advance our careers.

As profit margins grow smaller and expenses grow larger, we need to assist each other to survive and prosper. If we share our experiences we can help each other to grow professionally, administratively, and financially. Our professional lives, our livelihood, and our personal lives are intertwined. Our resources individually are limited. Together we can accomplish more than we can individually. Let's help each other


Tom Kane, PT
MediGraph Software

CMS Defines Overpayment Process
9/15/2011 10:04:00 PM

In July 2011,  CMS issued a fact sheet to  define the collection process as related to overpayments. At the end of this post a link to CMS that provides the info is available.  Therapists who have not yet gone through this process may find this post and the link useful.

A Medicare overpayment is a payment received in excess of amounts due and payable under Medicare statute and regulations. When an overpayment has been discovered the overpayment is now a debt owed to the federal government.   Federal law requires that CMS recover all identified overpayments.

The main reasons for overpayments include:

  • Payment for excluded or medically unnecessary services (the greatest PT threat)
  • Duplicate submission of the same service or claim
  • Payment to the incorrect payee;
  • A pattern of billing for excessive or non-covered services.

Consider this sad fact; an overpayment of only $10 or more launches the recovery process.  A "Demand letter" is sent to the therapist requesting payment. Interest begins to accrue from the day the letter is sent.  If the overpayment is not received within 31 days (calender days) from the date of the letter a second demand letter will be sent with the expectation that payment will be received with 40 days of the first demand letter.

If payment isn't received, no collection call will be forthcoming.  Instead, the recoupment process is put in motion.  Recoupment  means that the overpayment will be recovered from current payments due or from future claims submitted to Medicare.  If the debt remains unpaid and you have not filed an appeal the therapist will receive  an "Intent to Refer" letter within 120 days. The "Intent to Refer" letter means that the feds can refer the therapist to the Department of Treasury for offset or collection.

In the link to CMS,  the details of the rebuttals and appeals, including a redetermination request for reconsideration is presented when you do not agree with the overpayment declaration.

To view the CMS fact sheet visit:  https://www.cms.gov/MLNProducts/downloads/OverpaymentBrochure508-09.pdf


Tom Kane, PT

RACS: The Worst is Yet to Come
9/6/2011 7:25:00 PM
I regularly speak with physical therapists in private practice, hospitals, and administrators who erroneously believe the Recovery Audit Contractor (RAC) program is not a threat and that the risk of recoupment ( refunding fees) is minimal.   Many well intentioned people believe this myth because they assume that RAC and CMS are only looking at blatant fraud, not at those making errors.   They are dead wrong.  Even simple errors that cause improper payments and can be considered fraud. 
As stated in previous emails and blog posts,  faulty charges (which may be a simple error) creating an  imbalance pattern is considered fraud. Why?  Because CMS, RACs, etc. have no way of determining if this repeated behavior was a mistake or intentional.  (Remember, this is the government and you are guilty until proven innocent).  Exacerbating this issue is the fact that simple provider errors are the most easily detected by a RAC automated review (data mining). 

From speaking with many of you, it appears that many physical therapists believe that the RACs are not as active as feared.  Many have not yet received a requests.   Do not be confuse a lack of record requests with a change in RAC focus.  As RACs gain more experience they are shifting their focus from complex reviews to automated reviews (reviews that take place without submission of a medical record). Medical record requests have slowed down because of RAC greater dependence on data mining, giving many PTs a false sense of security.  RACs can run automated reviews at little additional cost, while complex reviews (which involve record requests) are much more daunting in terms of labor and CMS guidelines.  The RACS are garnering smaller recoupments rather than the larger recoupments associated with a total claim denial.   This volume approach is adding up to big dollars and it makes sense from the RACs point of view.  Basically the racks are chipping away at providers with automated claims.  When the RAC discovers a blatant pattern, they go for the throat and perform a complex review where records are requested and the RAC denies the entire claim.   According to AHA the RACTrac program, the average recoupment for automated reviews was $399 per claim, and the average recoupment for complex reviews was $5,281 per claim.(1)  The RACs are having it both ways!  Why?  To date only 23% of RACs judgements have been appealed.  As stated in a prior post, the appeal costs more than the refund.  Another report also showed that  90% of the audits were automated.(2)

So in summary, RACs are taking advantage of their ability to run automated reviews around the clock at a much lower cost than complex reviews. Automated reviews are easier to perform.  Just because you are not getting record requests, do not think that you are not being audited and are not at risk for recoupments from the RACs. Couple the RACs'''' proficiency at automated reviews with new pressure from CMS for fourth-quarter results, providers will see more activity on complex reviews and medical record requests in addition to automated reviews.

To mitigate RAC risk, every PT facility (inpatient and outpatient) needs a coordinated and comprehensive approach between billing and clinical documentation.  The finance and clinical departments must work together. This is a clinical and financial compliance issue. You cannot change prior errors, but you can write your own future.  MediGraph is here to assist with this process.


Tom Kane, PT

(1) CMS, "Medicare Fee-for-Service Recovery Audit Program as of June 2011." Retrieved Aug. 31 from http://www.cms.gov/Recovery-Audit-Program/Downloads/NatProg.pdf.

(2)   AHA RACTrac Survey, Fourth Quarter 2010, Feb. 24, 2011. Retrieved July 26 from http://www.aha.org/aha/content/2011/pdf/Q4-2010-RACTrac-results-chartpk.pdf.

RACs Exploit Technology to Reveal Potential Audits
9/2/2011 1:38:00 PM

The Centers for Medicare & Medicaid Services (CMS) are focused on preventing and detecting Medicare fraud and abuse.  The methods employed to accomplish this goal have become increasingly more organized and targeted. The screenings use technology to increase efficiency  and more easily discover improper claims submitted to Medicare. The most prevalent method used by RACs is data mining (allowing software to screen records enables many more audits to be performed).

CMS has an extensive database of services billed to Medicare by all providers, including physical therapy. This database is employed by RACs, ZPICs and other audit contractors to analyze coding, billing, and volume of claims.  The RAC contractors identify  the most frequently billed codes, practice locations, number of visits per diagnosis, etc. and use this information to create physical therapy profiles.  

The  PT profiles are  compared against your coding and billing submissions in an attempt to identify unusual  patterns and identify you as an outlier.  If billing abnormalities or outliers are discovered the auditors take action and request an audit of your services, the purpose of which is to retrieve an overpayments issued by Medicare.   When an offense is discovered auditors will send an overpayment demand letter.   Once they find an error, like a shark drawn to blood in the water,  they request a complex review of medical records and further reviews of other claims are requested.   The auditors, who only are compensated when they extract a refund from you, naturally assume that ''Where there''s smoke there''s fire''.  If one record is bad, other records must be also be bad.  Unfortunately the RACs assume correctly, which is why they are scheduled to retrieve more than $1Billion dollars in 2011.

If and when an audit occurs, you are may be faced with significant overpayment return demands.  If you decide to appeal, the appeal  is a five-step Medicare appeals process. This is an ominous, time-consuming, and expensive process (lawyers fees).   It is imperative that we PTs proactively prepare to prevent these audits.  By having supportive documentation that defends clinical behavior, an audit can be prevented  If you are forced to defend claims without proper clinical documentation you have no defense.

All the tools you need to support your clinical actions are in MediGraph.  Outcome instruments (OPTIMAL, Oswestry, etc.) and tests that establish impairments, disablements, and medically necessary are in the program.  Please use them. 

Be well,

Tom Kane, PT 

Medicare Increases RAC Records Request Volume
8/24/2011 10:54:00 AM
Effective August 22, 2011, Medicare has given RAC auditors the authority to increase the number of  records they may request for audit.   The rules are defined at:
One of the areas affected by these changes are the rules governing records requests are now defined in a ''Per Campus'' framework.  A campus is described as one or more facilities with the same Tax Identification Number (TIN) that is located in the same area.  The ''area'' is defined by the first three numbers of your Zip Code.  For example, if you have two offices (A & B)  with the same TIN, and office A is in zip code 12345, but office B is located in zip code 23456,   these two offices (with the same TIN) will be considered two campuses.  Therfore, RACs will have the abilty to double their record requests because the offices are not in the same area.  The limits for the number of records requested are now based on volume instead of the older method which was limited by an arbitray number. 
Tom Kane, PT
Medicare Anti-Fraud Act Denies Medicare Providers Future Access
8/19/2011 4:10:00 PM
A recent bill introduced to Congress under the name of the "Strengthening Medicare Anti-Fraud Measures Act of 2011 (the "Act"), increases DHHS'' existing powers.  (Reminder;  coding errors can be treated the same as fraud).   Instead of paying a fine (prior restitution for fraud), the bill allows DHHS to exclude owners, officers, and mangers of companies that are convicted of health care fraud from participating in federal healthcare programs.  According to the DOJ (Department of Justice) and HHS, new aggressive initiatives to combat health care fraud also allows for the criminal prosecution of owners and executives.  According to the Act, the exclusion and/or prosecution may proceed even if the owners and executives were not complicit in the fraud, but could have stopped the fraud if they had known that fraud was occurring.   Stated more colloquially, if you did not know that fraud was occurring, but you were in a position to stop the fraud if you did know, you will be prosecuted as though you committed the fraud.  To avoid criminal prosecution (and the legal costs to defend yourself),  you could just surrender your ability to accept Federal insurance, and agree not to work in a facility that accepts federal insurance. (Where could you work?). You may be thinking, "Are we talking about the USA?"  Sadly,  our run amok government considers us criminals even if we did not commit the fraud, but would have prevented the fraud if we did know about it.  (Sounds like ''''Minority Report'''' starring Tom Cruise!).  Therefore, if your billing clerk or agency submits an improper code by mistake (and this code is repeated multiple times), you committed Medicare Fraud.  If your documentation clearly identifies the content and context of your treatment, your documentation may serve as mitigating factors that weigh in your favor.  However, improper documentation could be used against you to substantiate the fraudulent intent (though none existed).  Please understand that having proper documentation is not a guarantee that your error will be dismissed.  But having improper documentation almost guaranties that you will be prey for a government bureaucrat that understands you can be excluded from all Federal healthcare programs or undergo prosecution.   As mentioned previously on this blog, CMS has re-characterized physical therapists in the Moderate risk category for fraud.   Has fraud occurred?  Yes it has.  Are the vast majority of our colleagues honest?  Yes they are.  These overreaching rules and classification of PT in the Moderate fraud risk categories should serve as a warning. Everyone is vulnerable.   
Be well,
Tom Kane, PT
MediGraph Software
RACs, MACs, and Demand Letters Rules Changes
8/10/2011 11:48:00 AM
Beginning January 1, 2012, Recovery Audit Contractors (RACs) that identify ''overpayment'' will be submitting their demand letters through Medicare Administrative Contractors (MACs).  MACs will be responsible for administrating  the refund from targeted medical providers, and  CMS will require MACs to establish time frames for the refund of your fees.  To complicate matters and make it more difficult to appeal an audit,  MACs will also manage the appeal process.  The RACs will remain responsible for audit specific communications, including questions regarding a reviver''s rationale for demanding a refund. 
The August 4, 2011 Provider Compliance Newsletter released by CMS once again revealed that the main vehicle for RAC refund requests are based upon the medical provider''s failure to prove that treatment was  "Medically Necessary"  There are many examples presented on this blog that provide guidance for PT in this matter.  Please review them, implement them,  and prevent your facility from becoming a RAC victim.   As always Dave Naples (ext. 211) and I are availble to discuss this matter with you.    
Tom Kane, PT
800-804-6334 ext. 210
The ‘Disablement’ Model Progress Note: A RAC Auditor’s Nightmare
7/30/2011 11:47:00 AM

Dear Subscribers:

We at MediGraph continue to emphasize the importance of RAC sensitive documentation.  Our preventative approach is designed to protect you from the RAC auditors’ goal of extracting a refund from you.   RACs do not care if the patient got better!  RACs only care if your documentation meets their standards.  You could be the best therapist in the world and it would not matter to an auditor.  Unless we understand that the RACs purpose is to obtain a refund for past services rendered we are missing the boat.  Please consider these SOAP Note suggestions to emphasize disablement (loss of function):

Subjective:  When using the MediGraph Daily Note Editor, the third choice in the Subjective menu is ‘Functional Complaints’.  Functional complaints are also listed in the “Area Specific” drop down menu. The ‘Subjective’ entry of your progress notes should include personalized patient functional complaints.  For example: Mr. Smith states, “He has pain and weakness in his knee (impairments).  He also states that he cannot get up from a chair independently, and that he cannot walk more than 10 feet once standing (functional disablement).”   If Mr. Smith had pain and weakness, but did not have decreased function, the medically necessary component of your treatments will be challenged and you may be forced to refund the fees for Mr. Smith’s treatment (all of the fees).   

Objective:  Please Measure Something!   MediGraph is the only program available that integrates hundreds of standardized and peer reviewed measurements of impairment and function within the documentation program.  Use these objective tools to substantiate the patients impairments and  functional deficits.  For example, Mr Smith has knee complaints of weakness, pain, inability to transfer, inability to ambulate more than 10 feet.   Measure Mr. Smith’s loss of strength (an impairment), preferably with a hand held dynamometer (HHD).*    However, impairment measurements are not sufficient to satisfy the need for intervention.  To justify treatment, a functional deficit must be present (inability to transfer, inability to walk).  Use a functional test to reveal Mr. Smith''''s disablement-functional deficit.  Have Mr. Smith perform the Tinnetti (balance and initial gait testing), the TUG, or any functional test to demonstrate that his functional ability has been objectively assessed.   Also, employ the functional outcome questionnaires in MediGraph (OPTIMAL, Lysholm Knee Rating, Musculoskeletal Function Assessment, etc.).  

Assessment: Obviously, the assessment portion of the note will address the patient goals.  However, many therapists do not use the assessment portion of the SOAP to update the diagnosis, and to link the updated diagnosis to the patients’ functional improvements.   For example, “Mr. Smith HHD reveals strength gains of 20% (impairment improvement), which has translated into increased ambulation from 10 feet to 20 feet (functional improvement).  Mr Smiths performance on the TUG test reflects a functional improvement of 25%.”

Plan: The Plan portion of the SOAP note is primarily employed to alter the treatment plan.  The plan should be updated when new findings are discovered, expected, and to revise goals as the result of these findings.  The Plan portion of the note does not need to be completed on a daily basis. 

All the tools to outsmart the RACs are at your disposal in MediGraph.  All of the components mentioned above are included in your subscription.  Our goal is to assist you with using the software to protect you from those predators that are only rewarded by obtaining a refund from you.   Please call with any questions.

Be well,

Tom Kane, PT

Second Quarter RACs Capture $592.5 million
7/18/2011 6:13:00 PM
The June report from The Centers for Medicare & Medicaid Services (CMS) has been released.  In the first half of 2011 RAC audits have captured $592. 5 million in refunds from medical providers.   At this pace , RACs will collect $1,850 billion in refunds for 2011.   Realisitcally, the $1.850 billion is a low estimate because RACS are gaining efficiency from their experience.  The greater efficiencies have resulted in a steady increase in refunds.  In each quarter reported, the RACs collect more than the prior quarter. The most problematic area for providers remains proving medical necessity for the treatment rendered (http://www.cms.gov/Recovery-Audit-Program/Downloads/FFSUpdate.pdf).
Throughout the MediGraph blog and in occasional emails, we have continued to emphasize the importance of establishing the medical necessity of treatment.   We have stressed the importance of using the impairment model of physical therapy to support the disablement model.  The impairment model (ROM, strength, pain, etc.) will not stand alone as justification for intervention.   The disablement model must demonstrate that the patient has a functional loss that is verified by objective assessments (functional tests like the 6 Minute Walk, Timed Up and Go, and peer reviewed outcome questionnaires such as OPTIMAL, Lysholm Knee Index, etc.).   All of the tools that you need to prevent a RAC from picking your pocket are contained in MediGraph.  These procedures consume time but they are not difficult to perform.  If you are not using these tools, start today.  If you need assistance or would like to discuss this matter, please call.  
Tom Kane, PT
MediGraph Software 
Tools used by RACs to Audit Records
7/7/2011 12:22:00 PM
Understanding the resources available to Medicare Random Audit Contractors (RACs) allows physical therapists to initiate measures that will assist with preventing audits and respond properly when an audit occurs.  The number of acronyms for the tools available to RACs is large and growing.  The current list includes:    
  • Raw data - RAC databases, routine CMS RAC Data Warehouse downloads, industry trends;
  • Outcome reports - CERTs(1), OIG(2), PEPPER(3), GAO(4), QIOs(5);
  • Industry experience and information - AAHAM, AHA, AMA, AAASC, JCAHO, JCAHACO;
  • Policy/rules and regulations(7) - LCDs, NCDs, CRs(8), IOMs, MLN; and
  • CMS programs - ZPICS(9), DOJ(10), vulnerabilities reports(11), carriers, FIs, MACs.
What does all this mean?  It means that RACs have become an unbridled extension of government bureaucracy that has one goal; obtaining a refund from medical providers.   These tools give RACs the ability to design criteria that can change on an ongoing basis.  For physical therapists there is good news and bad news in relation to this process. 
The good news for physical therapy is that on a comparison basis, PT will face fewer variations in the criteria used by RACs when compared to other disciplines (multi-discipline medical practices, out patient surgical units, private outpatient surgical suites) that will be forced to anticipate audits on numerous intervention levels.  The bad news is that auditing PT records is easier for a RAC because they can focus on the blatant omissions that currently occupy many therapists'''' documentation. 
Many of the MediGraph subscribers that I speak with do not utilize the RAC prevention tools in the software. The vast majority of therapists searching for documentation software are not currently using the proper documentation measures.   Most PTs continue to emphasize and document the impairment model instead of integrating the impairment model into the disablement model.  Many therapist fail to measure impairments.  Those that do measure impairments fail to demonstrate/measure that the impairment results in a functional disability (gait or balance problems, self care disability, etc.).   Many therapist do not use the published outcome questionnaires (72 of these instruments are in MediGraph).  All of these RAC prevention tools are at your disposal at no cost. With proper billing they are your defense against  a RAC refund. 
If you have any questions regarding how to implement these tools, please contact Dave Naples at extension 211, or Tom Kane at extension 210.  As always, the education and customer support are included as part of your subscription  at no cost.
Be well,
Tom Kane, PT
MediGraph Software
How Are RAC Audits and IRS Audits Similar?
6/7/2011 5:52:00 PM
Have you ever been the subject of an IRS Audit?  If you have, then you should do well in a RAC Audit.  RAC Audits and IRS Audits share many traits:
  1. Both audits are based upon clearly defined standards that are open to interpretation.
  2. Both audits are examples of government overreaching.
  3. Both audits have the goal of extracting money from you. 
  4. Both audits cause anxiety to those that are being audited.
There are other similar characteristics to RAC and IRS Audits, but the above examples are sufficient for our purposes.  Fortunately, preventing a RAC audit is much easier than preventing an IRS audit.  Preventing a RAC Audit is partially accomplished by providing the following:
  1. Using the disability/functional model instead of the impairment model to establish the medical necessity of intervention.
  2. Using pre-established functional measurements (outcome questionnaires and testing like the Tinneti, 6 minute walk, etc.) to measure functional deficits and record improvement.
  3. Proper coding of interventions.
If these three components are properly managed, the data mining that precedes a RAC auditors'' records request can be prevented.  Why?  RACs are only paid when they obtain a refund from you.  If you have satisfied the above requirements, the RACs prefer to move on and seek easier prey.  RACs are looking for the fast and easy money that can be obtained from those that violate the measures outlined above.  All the tools to prevent you from being the taget of a RAC Audit are contained in MediGraph?  Are you employing the software to protect yourself from the RAC predators?   If not, start today.  If I can be of assistance while your are transitioning to becoming RAC Medicare compliant, do not hesitate to contact me.
Best regards,
Tom Kane, PT
MediGraph Software