It was the type of news story that we all see with unfortunate regularity. There was, however, something unique in this case that should concern all providers during the current era of multiple revenue integrity audits.


The U.S. Attorney General pressed this case on improper Medicare payments because, years earlier, the hospital was fined a lesser amount for overpayments from the Medicaid program. A settlement was made with Medicaid on the lab billing issue, and process corrections were made for Medicaid services.


The Silo Effect Poses Risks


Unfortunately, perhaps because of the “silo” mentality common to many hospitals, no one ever asked some important questions, such as “What other hospital departments might be doing the same thing?” or “What other payers might be impacted by this issue?”


Today, hospitals find themselves faced with Medicare RAC audits now that the program has resumed. The RACs will be using data mining techniques to review every payment made to providers since Oct. 1, 2007 in order to seek out improper payments from Medicare.


Here Come the MICs


On the heels of the RACs come the Medicaid Integrity Contractors (MICs). There are recent reports indicating that Blue Cross plans on contracting with recovery auditors to review their commercial accounts. The auditors are coming at hospitals from all angles.


Also, the results of the audits are everywhere. The results of the RAC Demonstration Project have been published and promoted widely by CMS.


CMS urges providers to “Conduct … internal assessment(s) to identify if you are in compliance with Medicare rules.” CMS is conducting “outreach education” on the RAC program through which they urge providers to take note of RAC Demonstration results, CERT audit results and OIG issues. RAC Web sites are required to publish providers’ areas of “vulnerability” and CMS requires the regional RACs to share their audit “targets.”


Information regarding possible improper payments will be swirling around you from internal and external sources alike.


It will be extremely difficult for any provider to claim it was not aware of the possibility of improper payments and other compliance issues without appearing to act in “deliberate ignorance” or “reckless disregard” of these issues.


Some providers have heard the rumblings about RAC and MIC audits and posed the question, “Why would I want to know if those issues impact me before a RAC/MIC auditor says they do?”


These providers need to look in the mirror and ask some other questions, such as:


“What will the OIG and DOJ think are “reasonable efforts” that my hospital should have taken given the availability of compliance-related education and information that has been made available by CMS?”

“What will our ultimate liability be for Medicare compliance issues identified by the RAC, either before or after Oct. 1, 2007?”


“What will our liability be for Medicaid and other payers for compliance issues identified by the RAC?”


And finally, the most important question of all:


“What will I say to the board when they ask me how we ever got in this mess?”



About the Author


Dennis Jones is the Director, Revenue Cycle Clinical Support Services with CBIZ KA Consulting Svcs, LLC. His expertise covers a wide variety of topics including managed care, uncompensated care, Medicare compliance, HIPAA, and process improvement. He is a recognized speaker having previously addressed the New Jersey Hospital Association, World Research Group, and various state chapters of HFMA, AAHAM, and AHIMA. His expertise in Medicare compliance has been an integral component of the CBIZ RAC solution.


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