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