Stuart A. Cohen, MD

All legislation passed by our government has seemingly good intentions, and so it goes with the Affordable Care Act. However, with all legislation comes unintended consequences, and this has proven true with the ACA.

Tucked into the reams of legislation were provisions for tightening antifraud and abuse efforts in state Medicaid programs via the Recovery Audit Contractor (RAC) program. RACs are independent contractors using professionally trained coders under the authority of the Centers for Medicare and Medicaid Services (CMS) who perform focused chart audits on physician CPT coding outliers in an attempt to identify and recoup improper overpayments and underpayments made to providers. From an audit of charts, a statistical analysis is done to estimate total overpayments and the physician or group is assessed a fine. A contingency fee of up to 10% is paid to the RAC upon recovery of monies.

I have spent many hours at the American Medical Association House of Delegates listening to physicians’ complaints of arbitrary, capricious, and even egregious behavior by these RAC companies preying upon Medicare practices to collect their contingency fees. Lack of timely response to physician grievances, lack of physician oversight of the coders, systematic overestimation of overpayments and underrecognition of underpayments, and lack of due process appeal procedures are just some of the litany of complaints aired.

The RAC is akin to an IRS audit, and the financial consequences, as well as costs to one’s business reputation, are to be avoided at all costs. Modest changes have been made by the CMS in response to concerns, and since 2005, the Medicare trust funds have recovered over a billion dollars in overpayments.

Beginning Jan. 1, permanent RAC audits will be implemented in state Medicaid programs as part of routine compliance and audit procedures, thanks to the ACA, so the RAC soon may be coming to your office.

What can you expect, and how can you avoid getting wrecked by RAC?

Based on comments from the Health and Human Services Department Office of Inspector General, (OIG 2012 audit Work Plan) and past Medicare and Medicaid audits, it seems for now the low-hanging fruit is the 99214/99215, and modifier –25 outliers will be likely targeted.

It appears that initial Medicaid RAC audits by states may or may not offer sufficient due process as the auditors stumble out of the starting gates. Rules of engagement, including an appeals mechanism and timely response to physician grievances, have yet to be implemented in most states, even at this late date. Unfamiliarity with state Medicaid rules and regulations, and in particular pediatric workflow and procedures, may also interfere with a smooth transition of this program into Medicaid.

On an individual level, I recommend becoming immediately familiar with the AMA CPT 2012 manual, which interprets the AMA CPT rules and regulations. Establish office consensus on your coding procedures. Document all the work that you do. Self audit your level 4 and 5 E & M codes and your modifier –25s to ensure you comply with all the necessary documentation.

If you have EMR, make sure your code level, despite enough documentation, is appropriate for the level of medical decision making. If you are in a large group, establish a coding and compliance committee that routinely does chart audits, sets group policy, and implements yearly group education on CPT coding, along with a group policy manual.

Remember, if your community codes level 99214s at an average of 24% and you are at 60%, "you’ve got some ’splainin’ to do!"

If the community average for modifier 25s is 4% of health supervision visits and you are at 25%, you will be audited. The cost to your practice and the mental anguish to you and your staff may not be worthwhile, so consider taking a hard look at your internal billing and coding practices now.

On a macro level, I suggest several actions. First, work with your state medical society general council to monitor state implementation of the RAC. Ensure appropriate procedures, due process including a formal appeals mechanism, professional coders under physician oversight, timely response to provider concerns, and avoidance of flawed statistical analysis, as well as overlooking of underpayments.

Second, have your state medical society advocate for a managed care Medicaid waiver for RAC - the managed care plans already have extensive compliance and audit procedures that need not be duplicated by the RAC.

Finally, monitor the audit and compliance procedures of the commercial health plan you work with. They often copycat Medicare and could perhaps view fraud and abuse recovery as a way to enhance their revenue, so implement all the above tactics with your commercial health plan patients as well.

We are entering a new milieu of CPT coding and compliance. Higher coding may not be as desirable as ‘more accurate’ coding. Hiding below the radar by not entering CPT outlier territory may be more preferable than being a well-reimbursed CPT outlier with your office serving as a bull’s eye for target practice by your friendly neighborhood state RAC auditor.

Dr. Cohen is is vice chair of the American Academy of Pediatrics, District 9 and president of the San Diego County Medical Society Foundation. He has represented the American Academy of Pediatrics at the American Medical Association for many years. He said he had no relevant financial disclosures.

All legislation passed by our government has seemingly good intentions, and so it goes with the Affordable Care Act. However, with all legislation comes unintended consequences, and this has proven true with the ACA.

Tucked into the reams of legislation were provisions for tightening antifraud and abuse efforts in state Medicaid programs via the Recovery Audit Contractor (RAC) program. RACs are independent contractors using professionally trained coders under the authority of the Centers for Medicare and Medicaid Services (CMS) who perform focused chart audits on physician CPT coding outliers in an attempt to identify and recoup improper overpayments and underpayments made to providers. From an audit of charts, a statistical analysis is done to estimate total overpayments and the physician or group is assessed a fine. A contingency fee of up to 10% is paid to the RAC upon recovery of monies.

I have spent many hours at the American Medical Association House of Delegates listening to physicians’ complaints of arbitrary, capricious, and even egregious behavior by these RAC companies preying upon Medicare practices to collect their contingency fees. Lack of timely response to physician grievances, lack of physician oversight of the coders, systematic overestimation of overpayments and underrecognition of underpayments, and lack of due process appeal procedures are just some of the litany of complaints aired.

The RAC is akin to an IRS audit, and the financial consequences, as well as costs to one’s business reputation, are to be avoided at all costs. Modest changes have been made by the CMS in response to concerns, and since 2005, the Medicare trust funds have recovered over a billion dollars in overpayments.

Beginning Jan. 1, permanent RAC audits will be implemented in state Medicaid programs as part of routine compliance and audit procedures, thanks to the ACA, so the RAC soon may be coming to your office.

What can you expect, and how can you avoid getting wrecked by RAC?

Based on comments from the Health and Human Services Department Office of Inspector General, (OIG 2012 audit Work Plan) and past Medicare and Medicaid audits, it seems for now the low-hanging fruit is the 99214/99215, and modifier –25 outliers will be likely targeted.

It appears that initial Medicaid RAC audits by states may or may not offer sufficient due process as the auditors stumble out of the starting gates. Rules of engagement, including an appeals mechanism and timely response to physician grievances, have yet to be implemented in most states, even at this late date. Unfamiliarity with state Medicaid rules and regulations, and in particular pediatric workflow and procedures, may also interfere with a smooth transition of this program into Medicaid.

On an individual level, I recommend becoming immediately familiar with the AMA CPT 2012 manual, which interprets the AMA CPT rules and regulations. Establish office consensus on your coding procedures. Document all the work that you do. Self audit your level 4 and 5 E & M codes and your modifier –25s to ensure you comply with all the necessary documentation.

If you have EMR, make sure your code level, despite enough documentation, is appropriate for the level of medical decision making. If you are in a large group, establish a coding and compliance committee that routinely does chart audits, sets group policy, and implements yearly group education on CPT coding, along with a group policy manual.

Remember, if your community codes level 99214s at an average of 24% and you are at 60%, "you’ve got some ’splainin’ to do!"

If the community average for modifier 25s is 4% of health supervision visits and you are at 25%, you will be audited. The cost to your practice and the mental anguish to you and your staff may not be worthwhile, so consider taking a hard look at your internal billing and coding practices now.

On a macro level, I suggest several actions. First, work with your state medical society general council to monitor state implementation of the RAC. Ensure appropriate procedures, due process including a formal appeals mechanism, professional coders under physician oversight, timely response to provider concerns, and avoidance of flawed statistical analysis, as well as overlooking of underpayments.

Second, have your state medical society advocate for a managed care Medicaid waiver for RAC - the managed care plans already have extensive compliance and audit procedures that need not be duplicated by the RAC.

Finally, monitor the audit and compliance procedures of the commercial health plan you work with. They often copycat Medicare and could perhaps view fraud and abuse recovery as a way to enhance their revenue, so implement all the above tactics with your commercial health plan patients as well.

We are entering a new milieu of CPT coding and compliance. Higher coding may not be as desirable as ‘more accurate’ coding. Hiding below the radar by not entering CPT outlier territory may be more preferable than being a well-reimbursed CPT outlier with your office serving as a bull’s eye for target practice by your friendly neighborhood state RAC auditor.

Dr. Cohen is is vice chair of the American Academy of Pediatrics, District 9 and president of the San Diego County Medical Society Foundation. He has represented the American Academy of Pediatrics at the American Medical Association for many years. He said he had no relevant financial disclosures.

All legislation passed by our government has seemingly good intentions, and so it goes with the Affordable Care Act. However, with all legislation comes unintended consequences, and this has proven true with the ACA.

Tucked into the reams of legislation were provisions for tightening antifraud and abuse efforts in state Medicaid programs via the Recovery Audit Contractor (RAC) program. RACs are independent contractors using professionally trained coders under the authority of the Centers for Medicare and Medicaid Services (CMS) who perform focused chart audits on physician CPT coding outliers in an attempt to identify and recoup improper overpayments and underpayments made to providers. From an audit of charts, a statistical analysis is done to estimate total overpayments and the physician or group is assessed a fine. A contingency fee of up to 10% is paid to the RAC upon recovery of monies.

I have spent many hours at the American Medical Association House of Delegates listening to physicians’ complaints of arbitrary, capricious, and even egregious behavior by these RAC companies preying upon Medicare practices to collect their contingency fees. Lack of timely response to physician grievances, lack of physician oversight of the coders, systematic overestimation of overpayments and underrecognition of underpayments, and lack of due process appeal procedures are just some of the litany of complaints aired.

The RAC is akin to an IRS audit, and the financial consequences, as well as costs to one’s business reputation, are to be avoided at all costs. Modest changes have been made by the CMS in response to concerns, and since 2005, the Medicare trust funds have recovered over a billion dollars in overpayments.

Beginning Jan. 1, permanent RAC audits will be implemented in state Medicaid programs as part of routine compliance and audit procedures, thanks to the ACA, so the RAC soon may be coming to your office.

What can you expect, and how can you avoid getting wrecked by RAC?

Based on comments from the Health and Human Services Department Office of Inspector General, (OIG 2012 audit Work Plan) and past Medicare and Medicaid audits, it seems for now the low-hanging fruit is the 99214/99215, and modifier –25 outliers will be likely targeted.

It appears that initial Medicaid RAC audits by states may or may not offer sufficient due process as the auditors stumble out of the starting gates. Rules of engagement, including an appeals mechanism and timely response to physician grievances, have yet to be implemented in most states, even at this late date. Unfamiliarity with state Medicaid rules and regulations, and in particular pediatric workflow and procedures, may also interfere with a smooth transition of this program into Medicaid.

On an individual level, I recommend becoming immediately familiar with the AMA CPT 2012 manual, which interprets the AMA CPT rules and regulations. Establish office consensus on your coding procedures. Document all the work that you do. Self audit your level 4 and 5 E & M codes and your modifier –25s to ensure you comply with all the necessary documentation.

If you have EMR, make sure your code level, despite enough documentation, is appropriate for the level of medical decision making. If you are in a large group, establish a coding and compliance committee that routinely does chart audits, sets group policy, and implements yearly group education on CPT coding, along with a group policy manual.

Remember, if your community codes level 99214s at an average of 24% and you are at 60%, "you’ve got some ’splainin’ to do!"

If the community average for modifier 25s is 4% of health supervision visits and you are at 25%, you will be audited. The cost to your practice and the mental anguish to you and your staff may not be worthwhile, so consider taking a hard look at your internal billing and coding practices now.

On a macro level, I suggest several actions. First, work with your state medical society general council to monitor state implementation of the RAC. Ensure appropriate procedures, due process including a formal appeals mechanism, professional coders under physician oversight, timely response to provider concerns, and avoidance of flawed statistical analysis, as well as overlooking of underpayments.

Second, have your state medical society advocate for a managed care Medicaid waiver for RAC - the managed care plans already have extensive compliance and audit procedures that need not be duplicated by the RAC.

Finally, monitor the audit and compliance procedures of the commercial health plan you work with. They often copycat Medicare and could perhaps view fraud and abuse recovery as a way to enhance their revenue, so implement all the above tactics with your commercial health plan patients as well.

We are entering a new milieu of CPT coding and compliance. Higher coding may not be as desirable as ‘more accurate’ coding. Hiding below the radar by not entering CPT outlier territory may be more preferable than being a well-reimbursed CPT outlier with your office serving as a bull’s eye for target practice by your friendly neighborhood state RAC auditor.

Dr. Cohen is is vice chair of the American Academy of Pediatrics, District 9 and president of the San Diego County Medical Society Foundation. He has represented the American Academy of Pediatrics at the American Medical Association for many years. He said he had no relevant financial disclosures.