Updated on: August 23, 2012

Hospital Calls for Moratorium on Connolly as Congressman Urges Investigation into RACs’ Methods

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Original story posted on: August 22, 2012

By now plenty of healthcare providers have heard about U.S. Rep. Dan Boren’s call for an investigation into the methods used by Connolly Inc. and the other Recovery Audit Contractors charged by the federal government with the task of coordinating oversight and audit operations.

Fewer, however, have heard about the man who helped prompt that action. Mark E. Rogers, CEO of Pushmataha Hospital and Home Health in Antlers, Okla., even is calling for a moratorium on recovery efforts being undertaken by Connolly, the RAC for Region C, on rural hospitals such as his.

Rogers, in an interview with RACmonitor, said the “cookie-cutter approach” used by the RACs doesn’t work under such circumstances.

“Allowing these folks (Connolly) to do what they’re doing will, in effect, close us down,” Rogers said. “There needs to be a limit or a cap on what the RACs can pull back from rural hospitals. We’re going to be out of business.”

Rogers said that his hospital is using a county sales tax to pay back Medicare because operational cash flow has been deleted due to the RAC's recoupment of "overpayments". He said that for the first six years of his seven years the hospital was in the black, with a $300,000 to $500,000 positive cash flow – but now the cash flow has been interrupted as well as placing them in a negative situation.

“Congress didn’t intend to close rural hospitals,” Rogers said. “(But) you can’t pull out this kind of money and expect (them) to survive.”

Rogers, a major in the Air Force Reserve and hospital administrator at Tinker Air Force Base, has been with the hospital for seven years. He said his hospital has provided between $4.4 million and $5.5 million a year for the past 10 years in uncompensated care during the last 10 years.

“We (are) the last line of hope for people,” Rogers said. “We’re like an ecosystem — the first organisms that die are the most fragile; the bears and other large animals are the last to go.”

Citing other rural hospitals that are facing the same plight, Rogers simply asked, “Why are rural hospitals being more aggressively pursed than others?”

He quickly answered his own question.

“(Because) we’re low-hanging fruit,” he said.

Congressional Support

But Rogers is expecting some help at the federal level. He recently contacted Boren and explained the situation facing his hospital, sending along some talking points, including this pronouncement:

“A moratorium on the amount of funds recouped from rural hospitals is necessary in order for these hospitals to heal from the negative effects of this predatory program upon rural providers and provide the rural communities in which they serve some hope of future survival that is not guaranteed now at this juncture.”

Boren, son of former U.S. Sen. and Oklahoma Gov. David Boren (now the president of the University of Oklahoma), took the matter seriously, and has called for a federal investigation into Connolly’s tactics.

In letters to Secretary of Health and Human Services Kathleen Sebelius, U.S. Rep. Dave Camp, chairman of the House Ways and Means Committee, and U.S. Rep. Fred Upton, chairman of the House Energy and Commerce Committee, Boren urged “the examination of the methods imposed by Connolly, Inc., and other Centers for Medicare and Medicaid Services (CMS) Recovery Audit Contractors (RACs).”
  


In an Aug. 15 news release posted to Boren’s website, the congressman wrote that Connolly and other RACs are “causing significant survival choices for rural hospitals by impacting operational cash flow, cash reserves, and any other publicly approved support in the form of city or county taxes.”

Acknowledging that he supports the “need to protect taxpayer money and prevent wasteful government spending,” Boren said he disagrees with the “extreme practices under which Connolly, Inc. operates.”

“I urge policy-makers to closely examine the debilitating practices imposed by Connolly, Inc. and other RACs and consider placing a moratorium on the amount of funds recouped from rural hospitals,”
 Boren concluded.

Looking for Trouble

But Rogers and Boren aren’t the only ones expressing concerns. Over at Choctaw Memorial Hospital in Hugo, Okla., about 20 miles from Antlers, Chief Executive Marcia O’Conner, RT, ARRT, explained her issue with Connolly.

“Once they come in, they find something,” O’Conner said. “They’ve been targeting observation versus short stays, and there was so much confusion at first.”

The 62-year old, 34-bed hospital serves an elderly population, explained O’Conner, who has been with the hospital for 27 years, first as its director of radiology before accepting the position of CEO three years ago. 

“They’ve been targeting certain diagnoses, like syncope,” she said. “An elderly woman shows up. She’s 85 and complains of chest pains, and has a weakness on one side. We do two CT scans and serial blood work. You can’t send them home because there’s no one there to take care of them. If you do…they die.”


 

Rural Hospitals: Like Arctic Tundra

The National Rural Hospital Association (NRHA) estimates the number of the nation’s Critical Access Hospitals (CAHs) to be 1,329. Prospective payment system (PPS) hospitals with less than 100 beds account for 632 facilities.

“Rural hospitals are at risk,” NRHA senior national vice president Brock Slabach told RACmonitor. “The entire rural (hospital) infrastructure is beginning to deteriorate. Like the Arctic tundra, once it’s gone, it’s gone.”

“It’s very unfortunate,” O’Conner added. “They’re going to put us out of business, and not because we have huge salaries. We’re trying to keep the doors open. My biggest fear is that they’ll succeed in closing all of us down, and then we’ll have to re-open – but where are you going to find the licensed personnel?”

While CAHs are not necessarily immune from the RACs, Slabach explained that CAH reimbursement is cost-based and not based on the prospective payment system (PPS).

“The PPS system depends on high volumes to work,” he said. “You have winners and losers, but in a small-volume environment, a few outliers could bankrupt you.”

It’s part of the reason Slabach is another who’s applauding Boren’s stance.

“We’re delighted with the Congressman’s action,” he said.

“They (rural hospitals) are being (run) roughshod because nobody is looking after them.”

On a brighter note, Tina Schwartz, RHIA, manager of health information services and hospital billing for Northwood Deaconess Health Center in Northwood, N.D., said her facility has experienced no RAC activity this year. HDI is the RAC for her 12-bed facility, located 35 miles southwest of Grand Forks, N.D. 

“Great life and good healthcare,” Schwartz told RACmonitor. “You call the nurses’ center and you get a nurse who could be your friend or neighbor…these are people you know.”

Not Without Controversy

This week hasn’t marked the first time the RAC program has generated controversy, as Nancy Beckley, president and CEO of Nancy Beckley & Associates, recalls.

“During the RAC demonstration in California, a groundswell of providers, associations and elected officials expressed their concern over PRG Shultz’s (the California RAC in the demonstration) denial of nearly all inpatient claims for those with joint replacement procedures at IRFs (inpatient rehabilitation facilities),” Beckley said in a written statement to RACmonitor. “This eventually led to a CMS decision to stop PRG Shultz’s evaluation of IRF claims. CMS had another contractor perform an independent review of PRG Schultz IRF denials that found a 40 percent error rate.” 

Beckley said that, as a result, claims reviews of IRFs were suspended in the demonstration, and CMS indicated that changes would be implemented in the permanent RAC program. 

“PRG Schultz was not selected as one of the permanent RACs,” Beckley noted. “They withdrew a bid, …  eventually obtaining subcontracts with three of the four RACs.”

Guilty Until Proven Innocent

“From my experience and research, the RACs, like other government auditing entities, operate on a ‘guilty until proven innocent’ basis, which can place an untenable and un-survivable burden on any practice, hospital or other medical facility, rural or not,” Frank Cohen, MPA, senior healthcare analyst for the Frank Cohen Group, said in a written statement to RACmonitor. 

“The fact that, based on our studies, nearly 50 percent of findings are overturned on appeal in the initial stages – and around 80 percent at the ALJ level – indicates that not only are the RACs ‘overzealous,’ but potentially fraudulent in that at least half of their findings are not based in any factual evidence.”

Echoing Boren’s position about protecting taxpayer money and preventing government waste, fraud and abuse, Cohen wrote that “I too believe it is important to protect taxpayer moneys against fraudulent billing on the part of medical providers, but since true fraud likely accounts for less than 1 percent of all overpayment findings, maybe the focus should be on simplifying the claims process rather than trying to interpret payer rules a posteori.”

“Small, rural hospitals, both those that are PPS hospitals or critical access hospitals, may be a ‘bonus’ target for the RACs,” Beckley added. “At least one administrator has indicated that they receive the maximum allowable records requests every period, and they cannot keep up with the paperwork.”

Unintended Consequences

“Congress clearly did not intend for the RAC program to close rural hospitals or destabilize them to a point of financial collapse, leaving their communities without a hospital and the taxpayers potentially paying the freight for the RAC recoupments,” Beckley concluded.

Summing up the plight of rural hospitals was Darrel Bertsch, the CEO for Sakakawea Medical Center in Hazen, N.D. (pop. 2,411).

“Most of the CAHs are small, rural facilities just trying to do the right thing,” Bertsch said. “If there are errors, it’s innocent; coding can be very complicated.”

About the Author

Chuck Buck is publisher of RACmonitor and the host of Monitor Monday.

Contact the Author

cbuck@racmonitor.com

To comment on this article please go to editor@racmonitor.com

EDITOR’S NOTE: U.S. Rep. Dan Boren and Mark Rogers, CEO of Pushmataha Hospital and Home Health in Antlers, Okla., will be guests on Monitor Monday, August 27 at 10 AM ET, along with Steven J. Meyerson, MD, and regulars Nancy Beckley and J. Paul Spencer.

Under the Hood of the Three-Day (One-Day) Payment Window

Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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