By: Dennis Jones

ED. NOTE: Regions C (Connolly Healthcare) and D (HealthDataInsights) have posted CMS issues to their Web sites for the states in which they have completed the required informational town hall meetings. Now nearly half the U.S. is under notice for the seven CMS approved audits. In our four-part series that wraps up today, we have reported on three major audit issues - IV Hydration, Blood Transfusion and Hospital Outpatient Rehab. We conclude our series with an analysis of the physician risk in the RAC process.

Like Sam & Diane, like Oprah and carbohydrates, like a politician and his conscience, the RACs seem to have an on-again-off-again relationship with physicians' issues.

With the publishing of first seven Provider Vulnerabilities in the Approved Issues section of the Connolly Healthcare Web site and six of the seven new issues published on the HealthDataInsights (HDI) Web site I think it's safe to announce that RAC Audits and Physician Issues are back together for good.

You may remember that during the RAC demonstration HDI focused originally on physician issues.  Legend has it that HDI couldn't help but notice the giant contingency fees that Connolly and PRG-Schultz were raking in (RAC'ing in?) Quicker than you can say "Which way is the ED?" HDI abandoned the review of physician accounts and began carpet-bombing Florida hospitals with requests for large volumes of medical records.

Although physicians' issues seemed to be ignored in the latter stages of the RAC demonstration project, the Final RAC Demonstration Status Report stated that one way the permanent RAC program would recover a higher percentage of Medicare billing errors would be to hire more staff, to conduct more reviews, and correct more improper payments (e.g., physician visit claims, home health and hospice claims, etc.)

As the permanent RAC implementation dates grew nearer, the RAC audit strategy regarding physician issues became the focus of industry speculation.  Hospitals and hospital consultants began to speculate that the permanent RAC program audits would link decisions that physicians made regarding appropriate levels of hospital services with the physicians reimbursement.

There was a lot of discussion regarding the physician's liability for inpatient cases that were determined to be appropriate for observation-level outpatient services. There was also a lot of discussion regarding the physician's liability for inpatient surgeries that were determined to be appropriate for outpatient surgery.  But the issue that was discussed more than any other, and subsequently resulted in more misinformation than any other issue, was the link between the three-day acute care stay prior to transfer to a Skilled Nursing Facility (SNF.)

The RACs are somewhat responsible for the confusion.  At the first National RAC Summit in early 2009, all four RACs said they would link physician reimbursement recoupment with hospital medical necessity recoupment.  The problem was there was no indication from the RACs on how they would be linked.  Would there be an automatic recoupment of physician reimbursement after the recoupment of hospital payments for medically unnecessary services or service provided in an improper setting, or would this require a complex review of physicians' records?  This remained unclear.

During a RAC Outreach training session, Region A contractor DCS was asked:

Q:  Will physician payments and nursing home payments be recapped if an acute care admission is denied for medical necessity?

Their concise, although not particularly helpful answer, was:

A:  Possibly.

There you have it, clear as mud.

While participating in a RAC Outreach Webinar for facility providers in Georgia in June 2009, Commander Marie Casey, Deputy Director in the Division of Recovery Audit Operations, was quoted in a RACMonitor article as saying that RACs would not pursue recoupment of physician payments. "Completely not true, " says Cmdr. Casey. "I was making the point that there would be no automatic recoupment of physician payments linked to hospital recoupment."