We heard recently that the RACs submitted over 90 issues for CMS aproval, to begin their audits of provider claims going back to October 1, 2007. Before a RAC can officially conduct an audit for any issue, they must have it approved by CMS, and the issue must be posted on a public website. Before December, there were not many posted on the RAC websites. Now, however, as of December 31, 2009, Connolly Healthcare has posted a total of 75 new issues. The issues focus mainly on MS-DRG coding and DRG validation, and not medical necessity.  The list of MS-DRG's included in the issues represent both medical and surgical cases.

Hospitals in Region C have begun receiving records requests for complex reviews. Those are reviews of Medicare claims where a human must read the documentation, as differentiated from a so-called automated review, where no human interaction is required. Hospital RAC teams are responding to these records requests as quickly as they can. We know of one hospital that received just one letter, requesting 24 medical records, one for each of 24 different MS-DRGs. The MS-DRGs were simply listed by number, with no descriptions. We were also told of another facility that received over 40 letters requesting records - each letter requesting records for a single MS-DRG.

Activity by the other RACs has been minimal and all their posted issues appear to be only for Automated Review.  Connolly Healthcare is the only RAC to date to post any issues for Complex Review.

DCS Healthcare, the Region A RAC (northeastern states), posted six new issues for DME Suppliers on December 22, and on December 11, they posted one issue for Clinical Social Worker Service Providers.  CGI Federal, the Region B RAC (north central states), posted no new issues in December, but did change the description of one issue. Health Data Insights, the Region D RAC (western states), only posted four new issues for Automated Review during December.  You can easily access all four RAC New Issues pages and download a RAC Jurisdiction map, here.

Meanwhile, Connolly Healthcare, the RAC for Region C (south & southeast states), has been busy posting a slew of approved issues. During the closing week of 2009, they posted about 40, raising the total number of issues approved for Region C to 75.

Connolly also made some changes to a few issues already posted, sometimes adding more states affected by the issue, and sometimes making changes to the issue descriptions. How can you tell what they changed?  It's not easy, and we'll have more to say about that, below.

Currently, for every DRG Validation issue posted by Connolly the following phrase is included in the issue title: "(At this time, Medical Necessity excluded from review)." So for now, Medical Necessity is off the table. However, since the RAC will have these records anyway, we can assume that the RAC will gather information for later audits awaiting CMS approval for Medical Necessity review issues.

Also, each of these issues has an almost identical description:  "DRG Validation requires that diagnostic and procedural information and the discharge status of the beneficiary, as coded and reported by the hospital on its claim, matches both the attending physician description and the information contained in the beneficiary's medical record.  Reviewers will validate for MS-DRG [XXX], previously DRG [XXX], principal diagnosis, secondary diagnosis, and procedures affecting or potentially affecting the DRG."

Notice that the physician documentation is specifically mentioned and that it must support the facility's claim. While this is not new news, it certainly shows their intent.

We watch this activity with growing concern. The pages posted by each RAC are simply lists of the issues. The issues are not posted in any particular logical, and it is not possible to sort them or display them in different ways. For example, we thought it would be convenient to see all the issues for a single state. To do this, however, we had to make our own list!

For providers then, the burden just became a little more difficult, as it is rather complicated for a provider to track all of the issues and remain current without also making a list. When a RAC posts a new issue, or updates an older one, it's difficult to know what has been added or changed! That is, the RAC simply makes the post or changes it and it's up to you, the provider to figure out what was amended.

To help with that situation, eduTrax developed a database of the issues, and keeps it updated daily. The list can be seen for a single RAC Region, or for a single State, can be sorted, and can be easily searched by DRG number. You can click here to see the lists.

Having the list of issues is one thing, knowing what to do with the list is quite another so we did some analysis.

Earlier in December we analyzed the first 24 new issues posted December 3rd on Connolly's New Issues page. Surprisingly (or not-so-surprisingly), we found that 20 of the DRGs were Transfer DRGs and/or higher weighted DRGS.  That is, they represent significant dollar volumes, even for single claims. Further, looking at the 20 Transfer DRGs, 16 of them are Operating Room (OR) procedures and some of those have whole pages of procedures associated with them.

Why would these be among the first to show up as approved issues for the RAC? Remember that the RACs are essentially "bounty hunters" and as such are motivated by profits. They are reimbursed from 9 and 12 percent of the claims they can deny, so they will no doubt be looking for the highest dollar volume they can generate. Also remember that the Transfer DRG list has continued to grow, from 10 to now almost 300 DRGs (not to mention that CMS has not ruled out making ALL of them Transfer DRGs) and the review of a medical record to determine the discharge disposition can be performed rather quickly for a swift determination and fast recoupment. We can easily name three issues for these DRGs that we think will be commonly found.