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September 5, 2013

More Audits, More Appeals: How to Stop the Endless Loop of Inefficiency

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Recently, I was privileged to have worked on a project with RACmonitor. Namely, it was a survey designed to offer a better perspective on the impact that RAC audits have been having on providers and what their experience with the RAC system has been like. Overall, I was a bit surprised that, well, there weren’t any real surprises.

In fact, at first glance, I was nonplussed by how the null hypothesis, if you will, was supported. As always happens after I see the results of one of my surveys, I was living the regret of the questions that I didn’t ask. Hmm. 

Perhaps what was most unexpected to me was how habituated I have become to the devastating impact RAC audits have on healthcare providers. For example, the first question of the survey asked about the number of claims that were deemed medically necessary, yet were still denied because they were delivered in the wrong setting. Sixty-one percent of respondents said “been there, done that, got the T-shirt” (or something like that) and reported a range of values (number of claims) from none to 600,000. So while I am reeling a bit at the high-end number of nearly two thirds of a million claims, I have become desensitized to the fact that, for hospitals, the median value is 120 (like 120 claims doesn’t represent anything significant). But it does! Dealing with 120 claims that have been denied or adjusted requires a lot of time, energy and resources, but it doesn’t create a blip on the graph when compared to 600,000. Do you see where I am going with this? 

This is about the law of large numbers. My dad once told me that if I wanted to create a distraction, just talk in huge numbers. His example was this: if I tell someone that there are 25 visible stars in the sky at night, he or she will want me to name them all. But if I tell that same person that there are 500 billion (an obvious exaggeration, as there are really only around 4,000), he or she will just get a glazed-over look and respond with a wispy “wow.” The point is, we have seen what amounts to carnage among our healthcare providers for so long that we don’t even pay attention to the small stuff anymore. The problem is, it isn’t small stuff; it’s really big stuff, and it’s eating into profits, operating expenses, indigent care budgets, salaries, benefits, and the rest of these really important financial metrics.

For the survey’s second question, respondents were asked to monetize the claims from the first question. While there was a big difference between physician providers and hospitals, for example, the numbers were still staggering. For providers, the median was $2,500, which may not seem like a lot, but this comes from already-stretched-to-the-limit budgets. And for hospitals, the median value was $350,000, which by just about any account is a lot. I think about how $350,000 could be used to improve quality and access, and the number seems even bigger. Heck, for hospitals, the maximum reported was $2 billion; I thought that had to be a mistake until I saw several other responses in which the amount was in excess of $500 million. Are we crazy? That’s obscene! Not the raw amount, but the impact it creates on an already stressed financial system. 

When asked about appealing these denials and/or adjustments, more than 50 percent of respondents said they appeal between 90 and 100 percent of those claims. And from past studies, we know that, on appeal, upward of 80 percent of these are overturned in favor of the provider. This begs the question: where are the other 50 percent of providers? If the rate of reversal is so high (around 43 percent, on average), why aren’t more practices appealing more denials and adjustments? It’s the same old problem: we are so overwhelmed with the size of the process, the magnanimity of the issues, that we lose perspective on the impacts. 

A quick reality check: we all know this. Really. I don’t think that much of what we saw from the survey was a surprise. This isn’t to say the results weren’t noteworthy, but rather it’s the same noteworthiness that we have seen from other surveys in the past (and expect more of in the future). But when I stood back a bit and took a few deep breaths to clear away the wreckage of my experience and expectations, I did notice things that, while maybe not surprising, were in fact very important. I already mentioned a couple: the raw administrative and financial burden laid upon the provider network, the volume of high-end appeals, and the rate of reversal, to name a few.

But look further, like at the tenth question, which asks about how often someone from an organization contacts their elected representative about their concerns. About a third of respondents said that during the past two years, they called, wrote or emailed their elected officials talking about the burdens of the RAC program. A third? Really? These are folks who aren’t just complaining to anyone who will give them an audience, but actually carrying the message to folks who can make a difference. It may be as much therapy as anything else, but who cares! If you can get a job done and feel better, more power to you! 

The real story here is that we are fighting against a Goliath so huge that even herculean efforts (such as what we see every day among the provider community) fall short. The RAC system is a leviathan of rules, regulations, manpower, and what seems like an unlimited well of resources on the government’s side.

For example, as I write this I am taking a sabbatical of sorts in the mountains of upstate New York. In preparation for winter, I have been cutting, chopping, and splitting wood this entire week, trying to get through a pile of logs we cut the prior week. When I look out the window, I still see a massive pile of logs, and it seems like I haven’t made any progress. Not for lack of effort, mind you – I have been living on ibuprofen and ice packs – but because the pile of logs is huge, and, well, I am not! So today I am renting a log splitter, and I am certain that I will have made it through that pile by the end of this day. It still will require a lot of effort and sweat on my part, but at least with the right tools (chain saw and splitter), I will make the progress I need to get the job done. 

So what this survey really says is that we are working hard, but they are working harder. We are in a tug-of-war, but our opponents have both more people and are more skilled at pulling the rope. What we need, besides more involvement, is more training. More articles, more webinars, more seminars, more conferences, etc. that focus on providing practices with the tools, training and experience they need to be more efficient with the efforts they mount. It is definitely a David and Goliath story, but in the end, we know who won.

And while the experience may be a bit different, we certainly can make enough noise so that those in a position to effect a real change will hear us. I really believe that this is not an issue of whether audits are becoming more prevalent or more pervasive; it’s about whether we are doing what is necessary to be prepared. For example, why are there practices that still don’t have a written compliance plan? Why, when money gets tight, do providers cut education budgets first? While this survey is not about the numbers, our success is. And that means way more involvement by providers beyond just appealing claims.

If we are not careful, we will end up just like the star-bellied Sneetches[1] envisioned by famed children’s author Dr. Suess. The character Sylvester McMonkey McBean, through creation of an endless loop of inefficiency, drains Sneetches of their available resources through some sick punitive approach to redistribution of funds. They perform more audits, we file more appeals, which stimulates more audits, which stimulates more appeals, etc. What we need is to see numbers in our favor – not statistical numbers, but more support and involvement from a foundational approach.

About the Author

Frank Cohen is the senior analyst for The Frank Cohen Group, LLC.  He is a healthcare consultant who specializes in data mining, applied statistics, practice analytics, decision support and process improvement.

Contact the Author

frank@frankcohengroup.com

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


[1] The Sneetches and Other Stories by Dr. Seuss; published 1961

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