Wednesday, August 6, 2008

Putting Doctors on the Medicare RAC

Dr. Evan Madianos has alerted me to the next possible Medicare cost-containing measure -- the Recovery Audit Contractor or RAC. Basically, these are people who are given the task of finding overpayments from Medicare to doctors, and was initially implemented in 2005 as a pilot program in three states (California, Florida, and New York), then later expanded in 2007 to include three more states (Massachusetts, South Carolina, and Arizona).

According to this article:
Because the contractors were paid in part based on how many overpayments they found, they were soon referred to as "bounty hunters," a moniker that still persists.

Physicians in California and Florida complained that the contractors used questionable tactics. They say the RACs made medical necessity determinations based on written Medicare coverage guidelines without the input of a single physician. Contractors reviewed claims that Medicare carriers already had adjudicated, misinterpreted coding statutes and went on fishing expeditions by demanding scores of records at a time. For the most part, CMS [Centers for Medicare & Medicaid Services] officials were powerless to review the RACs' work unless a doctor lodged an official appeal.
The article also describes in detail the "Kafka-esque" nightmare of Dr. Jeffrey E. Kaufman, a urologist accused of overbilling for drugs. Only after he spent "countless hours of unpaid work" submitting numerous records and appeals, did he finally clear his good name of the accusations of financial impropriety.

Many physicians don't even bother to dispute the charges but instead just pay the penalty, because "the cost to the practice of retrieving the corresponding record and forwarding the information could be 10 times that amount" of the requested fine.

As this program is implemented nationwide, I expect we'll see large numbers of RAC "bounty hunters" making money by alleging real or imagined billing errors by physicians who are caught in a maze of increasingly-complex Medicare regulations that no one can be reasonably expected to follow.

This will then spawn a new set of RAC consultants who will (for a price of course) tell physicians how to keep clear of the RAC "bounty hunters". As one such consultant promises:
What you'll learn:

* What RAC-stricken physicians and clinics are dealing with now.
* 3 Must-do steps to prepare for RAC audits -- as well as OIG and Medicare contractor visits.
* Can I -- and should I -- appeal RAC decisions? Here's what the experts say.
* Future concerns: projecting problem area identification and the expansion of external audits.
* What types of facilities and specialties RACs are targeting next.
In turn, this will spawn new laws to close the "loopholes" allegedly being "exploited" by "greedy" physicians trying to cheat the government, etc., etc.

The end result will be that the bureaucrats and parasites who create no actual value will make out like bandits, while the producers (i.e., the physicians) get sucked dry.

When doctors are obliged to pay the salaries of their own destroyers, this takes us dangerously close to the nightmare scenario depicted in the classic novel, Atlas Shrugged.

(Of course some doctors have decided to opt of the Medicare altogether and adopt alternative practice models, such as concierge medicine. If Medicare continues to create disincentives for physicians, I expect this trend will accelerate, just as the large numbers of Baby Boomers hit retirement -- in which case things are going to get very interesting very quickly...)