Home Health & Hospice Week

Contractors have huge incentive to recoup.

Recovery Audit Contractors could be more than just a costly annoyance to home care providers - they could be a death blow to smaller organizations, one industry veteran claims.
 
A pilot project mandated by the Medicare Modernization Act will have five newly named RACs scrutinizing claims from all provider types in California, Florida and New York over the next three years (see Eli's HCW, Vol. XIV, No. 13, p. 102), according to a recent release from the Centers for Medicare & Medicaid Services.
 
RACs will keep a percentage of the overpayments they identify, CMS confirms.
 
The RACs are a "nasty" development, warns consultant Tom Boyd with Boyd & Nicholas in Rohnert Park, CA. Boyd, who formerly worked in a regional home health intermediary audit department, compared the new contractors to Operation Restore Trust - the intense medical review-based initiative that put many home health agencies out of business in the late 1990s.

Are RAC Reviewers Insufficiently Trained?

The RACs "have experience performing recovery audit work with Medicaid state agencies, private insurers, healthcare providers or health plans," CMS says in the release. "To avoid any conflict of interest, current Medicare contractors were not eligible to bid on these contracts."
 
But choosing contractors who aren't current intermediaries means the staff will have insufficient training in reviewing Medicare claims, Boyd argues. Because the home care benefit is complex and often has gray areas, reviewers may find denying claims easy.
 
And Boyd expects to see instances where intermediaries tell home health agencies one thing, but RACs deny the claims under their own interpretation of the rules.
 
Providers can appeal claims denied by the RAC to their usual intermediary or carrier, CMS notes.
 
But with many new appeals system changes coming up (see Eli's HCW, Vol. XIV, No. 10, p. 74), the already-slow appeals process is bound to get even slower for at least a while, Boyd predicts. That means providers could have to wait up to two years to get money back on claims they successfully appeal, he expects.

Extrapolation Could Doom Providers

Home care providers will feel a major impact from the RACs if the contractors, or a provider's usual intermediary or carrier, use statistical sampling and extrapolation to apply RAC denials to the provider's universe of claims for the time period, Boyd warns. That's the tactic that led to many agency closures under ORT, even though the HHAs and their owners were never accused of any crime.
 
"[Extrapolation] will drive providers out of business," Boyd forecasts. "The expense will be too much for a lot of agencies" under the prospective payment system.
 
HHAs have hoped that RAC reviews may largely pass them by in favor of larger providers, like hospitals, with pricier claims. "I'm inclined to think that most of the focus may be on providers other than home health," says consultant M. Aaron Little with BKD in Springfield, MO. For example, the latest CMS release uses a hospital example of downcoding.
 
But home care providers may actually be the ideal targets for the RACs, Boyd suggests. Small to medium-sized HHAs have few resources to fight a legal battle over denials, while larger providers like hospitals have plenty of legal help already at their disposal to oppose adverse medical review findings.