RAC audits just don't work, stakeholders say

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Tuesday, November 22, 2011

BALTIMORE

– CMS's assertion that expanding prepay reviews by recovery auditor contractors (RACs) will put an end to its "pay-and-chase" model of collecting improper payments doesn't hold water with HME stakeholders.

"You can't say with a straight face say that the RAC audits are a solution to pay and chase," said John Shirvinsky, executive director of the Pennsylvania Association of Medical Suppliers. "It still isn't nipping the problem in the bud."

CMS on Jan. 1 will roll out a three-year demonstration project in 11 states to identify improper claims before, not after, they’ve been paid. RACs will be paid contingency fees from the money saved by denying improper claims.

Financial incentives for the RACs have been a major bone of contention for stakeholders with CMS’s fraud efforts all along.

"The whole idea of bounty hunters—it only leads to abuse when the auditor has so much discretion," said Walt Gorski, vice president of government affairs for AAHomecare.

Compounding the situation, stakeholders say: CMS's lack of oversight of the RACs.

"The RACs have an incentive to maximize recovery wherever they can justify the decision," said Neil Caesar. "If CMS doesn't police well, they can get away with more."

A report issued in July by CMS would seem to back that up. In an update on the current RAC program, CMS stated that the majority of providers who appeal RAC audits (64.4%) win. However, only 12.7% choose to appeal.

"I have always said fight because they are going to go where the easy pickings are," said Caesar. "If you are going to get audited and pay, you are going to get audited again."

Ultimately, until CMS figures out how to block fraudulent providers from the program in the first place, problems will continue for the agency, taxpayers and providers, say stakeholders.

"They are focusing on the technical failures of companies," said Shirvinsky. "That isn't the solution. The solution is to identify the ne'er do-wells upfront."

 

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Comments

The cost of winning a 3-9 month prepay audit will bankrupt most providers. This is an industry killer. And once they kill the HME industry and voters get upset by the defacto denial of coverage, then these very same policy makers will be the most surprised of anyone. I will never be in another business that relies upon yhe good faith of the government ever again.

I am definitely with you on this one. These people expect you to sit there and fight for a denied claim that will take you 3 - 9 months to win if at all you win. The manufacturer doesn&#39;t not care if your claim got denied they want their, your employees don&#39;t care they want to get paid, your landlord does not care he wants his rent on the 1st. Better yet, the IRS does not care they want their tax money. And we are the only Idiots that sit there and allow Medicare to take advantage of us because some idiots we didn&#39;t enroll in the business committed fraud. In most cases, when the cost of doing business goes up, you raise price of goods. Case in point, manufacturers increase prices all the time when the cost of raw material goes up while at the same time we receive reimbursement cuts.its not like we sit in our offices and service customers, we always have to make trips to homes but CMS does not care and won&#39;t stop until providers are bankrupt. <br />
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Like you I will never get involved in any government business like this. I mean they also act like they are doing these beneficiaries a favor by paying for stuff. We all have to pay into this program. Its disheartening when I hear these things, as small as my business is I don&#39;t have 9 months to wait to collect on payment because the physician forgot to put a full stop at the end of his notes.

I am definitely with you on this one. These people expect you to sit there and fight for a denied claim that will take you 3 - 9 months to win if at all you win. The manufacturer doesn&#39;t not care if your claim got denied they want their, your employees don&#39;t care they want to get paid, your landlord does not care he wants his rent on the 1st. Better yet, the IRS does not care they want their tax money. And we are the only Idiots that sit there and allow Medicare to take advantage of us because some idiots we didn&#39;t enroll in the business committed fraud. In most cases, when the cost of doing business goes up, you raise price of goods. Case in point, manufacturers increase prices all the time when the cost of raw material goes up while at the same time we receive reimbursement cuts.its not like we sit in our offices and service customers, we always have to make trips to homes but CMS does not care and won&#39;t stop until providers are bankrupt. <br />
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Like you I will never get involved in any government business like this. I mean they also act like they are doing these beneficiaries a favor by paying for stuff. We all have to pay into this program. Its disheartening when I hear these things, as small as my business is I don&#39;t have 9 months to wait to collect on payment because the physician forgot to put a full stop at the end of his notes.

The sad thing is that this will hurt the taxpayers. As home medical equipment companies go out of business and CMS effectively denies access to coverage for all mobility devices in large parts of the country, then we are going to see both nursing home utilization and traumatic falls shoot way up. 100 days in a skilled nursing facility costs 12-14 times as much as a K0823 and a fall that results in a broken bone costs several times a powerchair too when you couple hospitalization costs with physical therapy. Penny wise and pound foolish. This isn&#39;t helping anybody. Least of all the patients and the taxpayers.

Now this makes the "Nichole Medical Case" in the Third Circuit Court of Appeals in Philadelphia becomes more important than ever to the industry. A favorable Decision for the Company will at least open the door in the courts for these kinds of auditors to not be so quick on the draw!!!!

The DME industry should get ahead of the "issue" that drives CMS and DMEPOS to audit, i.e. too many fraudulent suppliers let into the system by NSC and DMEPOS paying crooks then closing the barn door after the horses have been stolen. First, the industry gets behind legislation to make NSC buy the surety bond to cover the amounts stolen by crooks they let into the system and to make it where NSC cannot pass on to taxpayers this cost of their surety bond when the cost of bond skyrockets unless they actually do the job NSC is paid to do (let in legitimate suppliers only). Second, legislation that each DMEPOS can set a Line of Credit for each new supplier equal to the amount of their surety bond. If some hotshot new supplier thinks he/she can supply $10 million in the first 90 days of getting a supplier number,let he/she buy a $10mm bond. The bond amount caps the amount the DMEPOS will pay until the claims are proven valid. That way the surety bond company chases the crooks and taxpayers are not hurt. If the industry gets behind the issue of &#39;zero fraudulent suppliers&#39; by legislatively mandating CMS and DMEPOS to act responsibly to solve problems in ways other than auditing, then there would be less need to audit legitimate suppliers. Just a thought.

John, respectfully, this doesn&#39;t feel like it has been about fraud prevention for a very long time. This is about reducing utilization and punishing it whenever it rises too high.

Where is the consequence against CMS for failing massive amounts of items in audits only to have them won on appeal to ALJ judges at great cost to the provider? Where is the consequence against CMS for taking 120-180 days to turn around something they were supposed to address in 90 days?