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The Impact of RACs on Your Medical Practice


Please sit down - this will not be an easy article to digest, no matter how carefully I parse my words. Life under the microscope of Recovery Audit Contractors is going to get tougher for physicians. Three recent developments may impact your practice in the next year.

I have written in the past on RACs and documented their growth from a twinkle in Uncle Sam's eye to the behemoths they have become. Much of the advice offered in prior articles (please see links at the bottom of this article) remains valid and should be heeded.

Audits of Level 5 E&M services

CMS has given approval to Connelly, the Region C RAC, to perform complex medical reviews on level 5, E&M services (e.g., 99215, 99205, and 99255). This is the first time CMS has given any RAC permission to target the coding and documentation of E&M services. One impetus for the focus on level 5 E&M services is a shift in providers' use of level 4 and 5 codes. According to the Center for Public Integrity, the percentage of Medicare services coded as level 4 or level 5 increased from 25 percent to 40 percent between 2001 and 2010. This, of course, has increased CMS's financial outlay for these services and made them a much larger budget item (i.e., target).

Connelly is the RAC for thirteen states: Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia. Take note: the other three RACs are expected to follow suit.

Since early 2009, the Medical Group Management Association, AMA, and 101 state and specialty societies have actively opposed RAC audits. It is unfortunate for all of us that CMS has not heeded their advice.

There is yet another cause for concern with this initiative. Though it has not been officially confirmed, CMS apparently has given Connelly permission to extrapolate the results of their E&M audits. For instance, if a RAC audit determined that six of twenty (30 percent) level 5 services did not meet coding/documentation guidelines, the RAC would have authority to extrapolate this 30 percent failure rate across all level 5 services provided during the review period.

If you provide level 5 services, it is prudent to have several of them copiously reviewed by a certified professional coder.

9th Circuit Court of Appeals verdict

On September 11, 2012, the U.S. Court of Appeals for the Ninth Circuit rendered a dangerous opinion. It affirmed that RACs are not restricted by regulatory deadlines, statutes of limitations, or time limits. Lead plaintiff attorney Ronald S. Connelly, of Power Pyles Sutter & Verville PC, says "The decision leaves providers with absolutely no finality in their payments from the Medicare program. Contractors could reopen claims that are even 10 or 20 years old, and providers would have no right to challenge the timeliness of the audit."

Legal minds will weigh in on this opinion in the weeks and months to follow, but again, a scary precedent has been set. It may mean that Medicare patient and billing records should be maintained indefinitely. At a minimum, it means the past is neither safe nor sacred.

I recommend you contact your medical malpractice insurance carrier to determine if this circuit court opinion will change their recommendations for records retention.

EHR automated notes

Last but not least, the HHS's Office of Inspector General has set its focus on whether providers are using automated note generation appropriately in their EHRs. Also known as "cloned notes," automated notes and templates use copied and pasted data on multiple patients to record standard information such as a normal review of systems or physical exam.

An observer reviewing several such notes would find virtually identical documentation and very little patient-specific information. Herein lies the OIG's concern. They are concerned that cloned notes may lead to over-documentation or a lack of patient-specific information. From a medical malpractice liability perspective, the same concerns apply.

There is a place for structured notes, and many physicians used them prior to the advent of EHRs. These are acceptable, and EHR-generated notes that contain patient specific documentation should be good to go as well. Your risk lies in over-cloning identical text in your patient notes.

In summary

The United States Department of Justice (DOJ) has three top priorities:

• Terrorism
• Violent crimes
• Healthcare fraud

I wish healthcare fraud were not on this list, but it is, and it is not dropping off the list anytime soon. Government oversight and second-guessing are givens for anyone who practices medicine today; expect fraud identification and enforcement initiatives to grow.

To get a head start on audit-proofing your practice, read the following articles that offer advice and practical tips for protecting both yourself and your practice:

Avoid Medicare Fraud Claims by Coding Correctly

Medicare's Fraud and Abuse Program

Nine Things to Know About RACs

Lucien W. Roberts, III, MHA, FACMPE, is vice president of Pulse Systems, Inc., and a former practice administrator. For the past 20 years, he has worked in and consulted with physician practices in areas such as compliance, physician compensation, negotiations, strategic planning, and billing/collections. He can be reached at lroberts@pulseinc.com.

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