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

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.