By Dennis Jones

On Thursday, May 28, the AHA News Web site broke the following bit of happy news: "The Centers for Medicare & Medicaid Services does not expect its Medicare recovery audit contractors to conduct complex reviews for medical necessity of hospital services until 2010."

"This is great," you might have thought. "Finally, CMS and the RACs are showing a little common sense and (dare I use the word) empathy. They have recognized the plight of the providers and have cut us all a break by deciding to wait until 2010 to introduce the complex issues involved in medical necessity review, recoupment and appeal."

Although this is indeed good news, let's not get carried away estimating the benevolence of CMS and the RACs. If George Costanza were a spokesperson for CMS, he would assure you, "It's not about you, it's about me."

First, let's note that this also is not exactly news. CMS went on record almost a year ago with the statement that the permanent RACs would begin with automated reviews. In a presentation at the National RAC Summit in Washington D.C. this past February, the RACs stated that they would start with "black and white" issues. Pressed for what that meant, David Yim, vice president of DCS, stated that DCS intended initially to address automated reviews and clearly incorrect coding issues.

What CMS has done in announcing that they do not "expect" the RACs to conduct medical necessity reviews until 2010 is to semi-officially define for us how long the start-up time for the RACs will be. It seems that 2009 will represent the warm-up period, and in 2010 we will get a better idea of what the RAC Audits will be in the long run.

Why Wait until 2010?

So if they aren't simply being considerate to providers, why are the RACs "expected" to wait until 2010 to begin medical necessity reviews?

To begin with, the compressed RAC implementation schedule that was forced by the PRG-Schultz/Viant contract protest has to be putting quite a strain on CMS and the RACs. With each RAC orchestrating a virtually constant implementation between now and the end of 2009, participating in RAC Outreach Education and dealing with MAC/RAC "blackouts,"
they will be hard-pressed to meet the January 1, 2010 implementation date required by the Tax Relief and Healthcare Act of 2006. Automated reviews require only the understanding of Medicare and related guidelines (no 10-account samples are required to be approved by Provider Resources, Inc. (PRI), the RAC Validation Contractor) and some good old-fashioned data mining. Then the demand letters go out and the revenue (around 9 percent to 12 percent, anyway) comes rolling in: simple, clean, and most importantly, with very few opportunities for appeal.

This is critical for the RACs. Did you ever wonder how in name of Gregory House, M.D. the RACs' medical directors are going to be able to handle the "discussion" calls and appeals from the seven to 17 states in their RAC regions? Well, so have they. And in the early stages of RAC implementation, they have decided to stick with the practically undeniable "black and white" recoupment issues. Payment for three colonoscopies in one day? That will be on the list. Line sepsis coded as anything other than the principle diagnosis? That's on the list. A 67-year-old named Stanley giving birth via caesarian section? That's definitely on the list (with the rest of the medically unlikely edits.)

Even assuming that most communications in the "discussion" process will not be carried out by the RAC's medical director (they won't, because they can't), the RACs and their subcontractors will be hiring nurses and certified coders for quite some time to handle complex reviews and "discussions."  But now they have until 2010 to get fully staffed and operational.