RAC Audits: Mounting a Defense
August 2013 Issue
You're walking along and suddenly someone pulls the rug out from under your feet. A curve ball you didn't see coming slams you in the head. You've been playing by the rules and suddenly the rules change.
These scenarios could sum up how many O&P providers and national organizations feel as a wave of Recovery Audit Contractor (RAC) audits has been unleashed across the healthcare spectrum, sweeping up the O&P profession in its wake. (Editor's note: Read O&P providers' stories in "Under Siege: CMS Audits Take Their Toll" in this issue.)
Four regional RACs are currently conducting these audits, and a new nationwide RAC focusing on durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), home health, and hospice claims is expected to become operational in 2014. (Author's note: RACs are now known as Recovery Auditors (RAs); however, this article refers to them as RACs since it is the more familiar term.)
National O&P organizations, including the five-member O&P Alliance and Orthotic and Prosthetic Group of America (OPGA), Waterloo, Iowa, have been working hard to resolve concerns involving RAC audits and related issues, which they feel are crippling the profession, leading to negative impacts on patient care, employee layoffs, and business closings. Although there have been some changes, the Centers for Medicare & Medicaid Services (CMS) has been largely unresponsive to the O&P profession's concerns, according to these organizations.
Focusing more intensely on legislative and regulatory issues, the American Orthotic & Prosthetic Association (AOPA) has spearheaded O&P Alliance efforts to address the RAC audits. Other Alliance members are the National Association for the Advancement of Orthotics and Prosthetics (NAAOP), the American Academy of Orthotists and Prosthetists (the Academy), the American Board for Certification in Orthotics, Prosthetics & Pedorthics (ABC), and the Board of Certification/ Accreditation, International (BOC).
An intense effort led by AOPA, exemplified in its March 2013 Policy Forum, has been undertaken, starting with a series of letters and meetings with the U.S. Department of Health and Human Services (HHS), CMS officials, and members of Congress. This was followed by a joint letter to HHS Secretary Kathleen Sebelius and CMS Administrator Marilyn Tavenner from Rep. Tammy Duckworth (D-IL), Rep. Brett Guthrie (R-KY), and 33 other members of Congress. After these initiatives failed to resolve the RAC audit issues, AOPA took an extreme step on May 13 by filing a lawsuit on behalf of its members against CMS for relief from RAC audits-its first ever lawsuit against the government.
AOPA President Thomas F. Kirk, PhD, was quoted in a press release, posted on the association's website, as saying, "Today, AOPA has stated emphatically that we will not stand by when government acts inappropriately to threaten either the quality of care we provide to our patients or the economic viability of the small businesses and providers that comprise the orthotics and prosthetics profession."
Fellow Associations' Reactions to AOPA's Lawsuit
"NAAOP supports the AOPA lawsuit, and the reason is that CMS has left us with very few choices," Peter Thomas, JD, NAAOP general counsel, says. "There is a certain point when you have to do what the law allows you to do to make your voice heard, and win, lose, or draw on the lawsuit, AOPA has taken a stand that this situation is intolerable for O&P practitioners and patients."
Although ABC does not have an official public position on the lawsuit, "ABC understands all of the circumstances leading up to AOPA taking this action," Stephen Fletcher, CPO, LPO, ABC's director of clinical resources, says. "ABC does believe that current CMS contractor practices have put O&P facilities in peril and that some relief is needed from CMS."
"BOC recognizes the burdens being placed on practitioners and the impact on quality care for patients," Board Chair John P. Kenney, MURP, BOCO, says, adding, "We're hopeful that auditing procedures can be improved and patients will receive the best possible care and devices for the best possible outcomes as a result of measures partner organizations are taking."
The Academy has also not taken an official position on AOPA's lawsuit or on the various issues presented by the RAC audits, according to Academy immediate past president Bruce "Mac" McClellan, CPO, LPO, FISPO, FAAOP. However, McClellan, who is the owner and president of Prosthetic-Orthotic Associates, Tyler, Texas, commented as a private practitioner and as an AOPA member who is active in legislative affairs. "I have heard of practices that have sold out to larger corporations to get under their protective umbrellas. At a meeting in Washington [DC], I heard several private-practice practitioners saying that as a result of audit activity, they had laid off multiple employees. Others said during that meeting that if they didn't get some relief from these audits, they would literally go out of business."
"We're thankful for anyone who is willing to take a stand and try to alleviate the pain these audits are placing on businesses, large and small," says OPGA President Dennis Clark, CPO. "We need to make people aware of this 'guilty before proven innocent' mentality and that it is destroying cash flow especially for small businesses and giving them a death sentence when a majority of these audit denials are overturned on appeal."
National Organization Perspectives: Cash Flow and the "Dear Physician" Letter
Strangling O&P firms' cash flow has been a big issue. There is widespread concern that RACs identifying and recouping overpayments are drastically impacting operating funds, especially in small businesses. Adding to the constriction, some firms are struggling with prepayment audits as well.
AOPA Executive Director Thomas Fise, JD, echoing a common concern voiced by other national O&P organization representatives, says, "Audit contractors have been clawing money back that has already been paid for claims, and prepayment audits keep O&P firms from receiving new money. Both of them strangle cash flow. When cash flow is impeded by payments being recouped or delayed, small businesses can become strapped very quickly. As we have stated to CMS, Congress, and most recently in testimony to the Small Business Administration [SBA], it's been a nightmare for small businesses to be caught in this vise."
What has dramatically exacerbated the impact on O&P providers and thrown the profession into an uproar is a bomb CMS dropped August 11, 2011: the "Dear Physician" letter released by the Durable Medical Equipment Medicare Administrative Contractors (DME MACs). Adding fuel to the fire was the HHS Office of Inspector General (OIG) August 2011 report, "Questionable Billing by Suppliers of Lower Limb Prostheses"-a report that many in the O&P profession have challenged as flawed, containing fallacies and inaccurate conclusions.
RAC Audits: Mounting a Defense
From the perspective of many in the O&P profession, CMS changed the documentation requirement standards without first going through the mandated legal process of public notice and comment. CMS, however, contends that the standard has always been in place, citing Section 1842(p)(4) of the Social Security Act, which states that "in case of an item or service... ordered by a physician or a practitioner...but furnished by another entity, if the Secretary (or fiscal agent of the Secretary) requires the entity furnishing the item or service to provide diagnostic or other medical information in order for payment to be made to the entity, the physician or practitioner shall provide that information to the entity at the time that the item or service is ordered by the physician or practitioner."
The problem for O&P providers is that physicians do not receive financial incentives to supply the needed documentation (as they do in the case of power wheelchair providers, according to Fise) nor do they face any sanctions if they do not. RAC claim audits can go back three years from the date the claim was paid, which would require additional research for the physicians or their staffs, further discouraging them from providing the necessary documentation for the prosthetist.
"When claims are denied based on lack of physician documentation of medical necessity and the payment is recouped from the prosthetist, the prosthetist is left holding the bag," Thomas points out. "Prosthetists have provided care, paid manufacturers or distributors for components, and delivered the prosthesis, and then months later, money paid on claims is recouped." Prosthetic providers then may go through the appeals process, which could take two years or more depending upon the level the appeal reaches. Although Thomas notes that denials are often overturned, especially at the administrative law judge (ALJ) level, which is the third appeal level, he adds, "In the meantime, the prosthetist has to write Medicare a check or have it recouped and offset against current Medicare receipts. This can be very damaging to a small business-or any business- with cash flow needs while the government is essentially holding back those dollars while you fight it out at the ALJ level."
"CMS contends that the rules have not changed, but even if that is so, it has changed the enforcement of the rules in the middle of the game," McClellan comments. "It is not appropriate or fair for CMS to go back prior to August 2011 when the 'Dear Physician letter' was released and say, 'Well, this is how we are doing business now' and then audit previously approved and paid claims."
Organizations point out the inherent unfairness of CMS holding O&P providers accountable for providing documentation over which they have no control and which is being used to deny claims that were previously submitted in good faith, approved, and paid. Small businesses are being hit especially hard, Clark emphasizes. "Large national and regional providers have more resources to sustain their locations through these audits and some have revenue streams besides patient care. However, patient care is the only revenue stream for most small firms, and they often don't have the resources to fight claims denials through the appeals process."
The O&P profession largely maintains that disallowing the notes and records of prosthetists as healthcare professionals to be accepted as a valid part of the parent's medical record violates long-standing practice and the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) section 154(b), which specifically identifies prosthetists and orthotists as healthcare professionals. CMS's Program Integrity Manual states that the medical record comprises not only the physician's records, but the records of other healthcare professionals as well.
Denying claims based on lack of sufficient physician documentation of medical necessity sometimes even countermands previous Medicare audit contractor decisions. According to a 2012 AOPA RAC audits survey, one respondent commented, "We passed many of the initial RAC audits in 2009-2010. Medicare recently change[d] the requirements in regards to physician documentation and re-audited the same 2009-2010 charts and denied them on requirements that did not exist at the time the services were provided."
"Traditionally, prosthetists and orthotists have been considered valuable and relevant to set the context [for treatment], having a real say in what they believe the treatment protocol and care should be," Thomas says. "However, now CMS has said basically that the only files that are relevant to determine medical necessity are the physician's. Not only does that undercut the professionalism of the prosthetist, who has undergone quite a bit of education and training, but it presumes that physicians have considerable knowledge about prosthetics that they simply do not. They're not paid to be professionals in prosthetics; they're paid to be medical doctors." Physicians typically rely on prosthetists to recommend various types of treatments and components, Thomas points out. Whether they accept or modify those recommendations, they use the prosthetist as an expert consultant. "However, what Medicare is basically doing is systematically destroying that."
CMS has slightly modified its stand on prosthetists' notes as an acceptable part of the physician's records, according to Ryan Ball, director of state policy and government relations for VGM & Associates/OPGA. "Prosthetists' notes can be part of the physician record but cannot be used to document medical necessity or matters related to that. This slight change clarified their policy but didn't really give the prosthetist much help in getting claims paid."
CMS is creating a Lower Limb Prosthesis Electronic Clinical Template for possible nationwide use to assist prosthetists with obtaining required physician documentation for claims payments. However, the profession has pointed out flaws in the current version of the proposed template. CMS is hosting a series of Open Door Forum (ODF) calls to allow physicians, prosthetists, and other interested parties to give feedback on the proposed template.
"If we do end up with some type of a physician template, it should be acceptable to CMS, physicians, and prosthetists. If such a template is utilized in conjunction with other documentation and the claim is approved and paid, we would like to see the claim be exempt from any future audits," McClellan says.
Thomas points out, however, "if CMS was to recognize prosthetists and orthotists as healthcare professionals and also implement BIPA 427 [Benefits Improvement and Protection Act of 2000, section 427], which links the qualification of the prosthetics and orthotics provider with Medicare payment, the physician template would be unnecessary."
AOPA Survey Documents Impact on Providers, Patients
The recently released 2013 AOPA RAC audits survey, with a total of 180 respondents, revealed that 45.1 percent had undergone at least one RAC audit in the last three months, while only 19.7 percent had never undergone a RAC audit. The 2012 survey, with 210 respondents, showed that 53.9 percent were audited at least once in the last three months; 22.8 percent had not been audited. In both surveys, the majority of the respondents (in the 70-percentile range) were small businesses with one to three locations.
Comments from the 2012 survey include:
"One of the biggest impacts on my practice is the delay in care. We currently cannot start a prosthesis for Medicare until we have written chart notes from the doctor supporting the needed prosthesis. This has created a four- to eight-week delay in patients' care, often due to the inability to schedule an appointment with the physician."
"Recently, I had to reimburse Medicare on a replacement transtibial socket due to the doctor's notes being totally unreadable. I made several efforts to have the doctor rewrite [the notes] and Medicare even made several attempts, but the doctor did not answer. Why should I be penalized for a doctor's poor handwriting?"
Fletcher notes, "Facility owners are struggling to maintain their businesses while CMS, through its contractors, is withholding funds associated with care that has already been delivered. The biggest frustration ABC hears about is how O&P providers are financially punished for documentation deficiencies of the physician. The main theme we hear is how fundamentally unfair it is to hold one party liable for the lack of compliance of another party.
"ABC does believe that the issuance of the 'Dear Physician' form constituted a new requirement for O&P providers," he adds. "We agree that this new requirement was instituted without any public notice or through established processes [as] identified by the AOPA suit. ABC also believes that it was unfair for CMS contractors to retroactively retrieve funds from O&P providers for claims that predated the issuance of the Dear Physician requirement. Our hope is that CMS recognizes AOPA's claims and takes real steps to correct these issues immediately."
"Many BOC certificants and facility owners have been audited and denied payment on the same claim by two or more sources and for multiple reasons," Kenney says. "Some owners have called to let us know they are unable to continue serving patients as a result of audit and payment issues and are therefore faced with the decision to significantly reduce their workforce or close their doors altogether."
National organizations are continuing their efforts. For instance, AOPA and OPGA have presented their concerns at SBA Regulatory Fairness Hearings and have met with SBA's national ombudsman, Yolanda Swift. The national ombudsman is charged with assisting small businesses when they experience excessive or unfair federal regulatory enforcement actions, such as repetitive audits or investigations, excessive fines, penalties, threats, retaliation, or other unfair enforcement action by a federal agency. Clark does think CMS is listening to O&P concerns and sees some progress but notes that it is often a slow process to work through issues and arrive at solutions. He stresses, "If we don't get something done on this in the next six to nine months, we are going to see a significant number of independent orthotic and prosthetic businesses go out of business."
Miki Fairley is a freelance writer based in southwest Colorado. She can be contacted via e-mail at