September 6, 2012

Unintended Consequences: RACs Hurting Small Rural Hospitals

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Editor’s Note: The following article is based on the Monitor Monday broadcast of Aug. 27 featuring U.S. Rep. Dan Boren (D-Okla.) and Mark E. Rogers, CEO of Pushmataha Hospital and Home Health in Antlers, Okla.

Saying that there are some “unintended consequences” of how the Recovery Audit Contractor program came to be, U.S. Rep. Dan Boren (D-Okla.) told Monitor Monday listeners that the program needs to be looked at more closely –- adding that in small-town America, if there isn’t a nearby hospital, it could be a life-and-death situation.

“The problem here is that (in) these small rural hospitals, you may have a very small compliance team, and I think that most us are saying as members of Congress and hospital administrators that absolutely, if there’s been a problem of overbilling, we want to make sure taxpayer dollars are taken care of,” Boren said. “(But) sometimes, when there is no cap and these RACs are getting a third of the overcharges, there’s an incentive here to really go beyond the scope of where they (the RACs) should be going.”

Boren, son of former U.S. Sen. and Oklahoma Gov. David Boren (who now is the president of the University of Oklahoma), was referring to his recent call for a federal investigation into the methods used by Connolly Inc., the RAC in Region C, and the other Recovery Audit Contractors charged by the federal government with the task of coordinating oversight and audit operations. Mark E. Rogers, the embattled CEO of Pushmataha Hospital and Home Health in Antlers, Okla., contacted Boren for his help interceding with what he described as predatory tactics used by Connolly.

At Rogers’s urging, Boren sent letters to U.S. 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 called for “the examination of the methods imposed by Connolly, Inc., and other Centers for Medicare & 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.”

“I look forward to visiting with these chairmen (Camp and Upton) and see if we can schedule something,” Boren told Monitor Monday listeners. “We’re pushed up against an election deadline and we’re only going to be in session for a few weeks before we go into a lame-duck session between November and January.”

In the meantime, there has been some action at Pushmataha, according to Rogers, who also was on the Monday broadcast. Since contacting Boren about the situation at his hospital, other lawmakers are starting to become involved.

“U.S. Sen. James Inhofe (R-Okla.) did a site visit here to Antlers that was unrelated to healthcare, and my team and representatives from other hospitals met with him and were in contact with his staff,” Rogers told Monitor Monday listeners. “We asked them to partner with Congressman Boren and his effort. We had the representatives from Sen. (Tom) Coburn’s (R-Okla.) office; they’re also very concerned, and I know they’ve made initial contacts to Congressman Boren’s office, again concerned about this issue and how it’s impacting rural hospitals.”

Boren told listeners that this issue isn’t going away because it affects so many people and so many hospitals -- and not just in his district, which borders Texas, Kansas, Missouri and Arkansas.

“All hospitals are suffering under the RACs,” wrote Sandy, a listener, during the broadcast. “The smaller "mid-size" hospitals are also very vulnerable to … operating in the red due to the excessive and relentless denials. I believe that this pertains to all of the RAC regions, nationwide.”

Boren said that there are several large hospitals that are facing fines. However, he added, they have big staffs and are able to appeal these fines and beat them.

“It's not just rural hospitals that are getting the max request every 45 days,” Mike Jamrog, the compliance and privacy officer for McLaren Bay Region, wrote in during the broadcast. “Here at McLaren Bay Region we get a request for 350 records (max 400 records) every 45 days. I have $3.5 million in appeals, with about $2.5 (million) already taken back. It's a burden for everyone, not just rural (hospitals).”

“Nobody can absorb these kinds of takebacks,” wrote another listener, Kimberly, during the broadcast. “We are now over $1.5 million and growing every 45 days.”

In describing the “tipping point” of his situation that caused him to contact Boren, Rogers told audience members that he tried to contact Connolly for two and a half months. He said he worked with other local hospitals and discovered that they too were struggling with the same issues -- and that they also believed that Connolly was being so aggressive that it was going to foster the failure of his hospital and others.

“I felt like rural hospitals were being exploited for monetary incentives,” Rogers said, “especially after talking to my peers.”

When asked by Monitor Monday panelist Nancy Beckley, president and CEO for Nancy Beckley and Associates, if the intent of Congress in creating the RACs was to put rural hospitals out of business, Boren responded in the negative.

“I did not believe that Congress’ intention was ever to have any of these hospitals be closed because of the recovery auditor process,” Rogers said. “And also I felt like rural hospitals were the low-hanging fruit, as far as these incentivized RACs were concerned.”

“I feel that they (Connolly) have found a honeypot,” Rogers told the audience. “That’s what they’re digging at, and they’re going to keep digging … until there are no rural hospitals left. And that’s what I’m lobbying against.”


 

Any further delay in addressing just that issue, several said, could mean that help comes too late for some small-scale providers.

“How long can that last before the rating agencies and banks start downgrading?” listener Jamrog posted during the broadcast. “It's going to be a big problem, real soon.”

Rogers said this continuing action could begin to affect patient care because the hospital is spending more time auditing charts than taking care of patients. He told audience members that the situation has “gotten out of control.”

In explaining the difference between a Critical Access Hospital (CAH) and Prospective Patient System (PPS) hospital, Rogers argues that a rural hospital (his is not a CAH) should have a different criteria.

“Rural hospitals that are not CAH but are PPS, and are in markets (rural) similar to what a CAH would be, should be shielded from this onslaught,” Rogers told the audience. “Why should we have the same criteria that OU Med (Oklahoma University Medical School) or any other large hospital would be subject to, just because we’re a PPS?”

Another argument Rogers made during the broadcast was that RACs take 100 percent of the Diagnostic-Related Group (DRG). He believes that’s downright immoral.

“It ought to be where they (RACs) can’t take more than 20 percent of the DRG,” Rogers explained. “We have doctors to be paid, employees to be paid, electric and water bills and insurance.”

“I agree with Mark,” Jamrog wrote. “If (the) I/P (inpatient) is denied, we should be able to get full O/P (outpatient) reimbursement.”

Summing up the prevailing sentiment from listeners during the broadcast was a posting by Kimberly.

“Hospitals are bombarded with changing rules and excessive reviews and still have to keep patient care in the forefront while fighting to get (and keep) payments so the care can continue to be available,” she wrote.

About the Author

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

Contact the Author

cbuck@racmonitor.com

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

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Chuck Buck

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