Playing Cat and Mouse with RACs: Q&A With eduTrax's Ernie de los Santos

Ernie de los Santos, chief information officer for eduTrax, has written extensively on RAC issues in the RAC Monitor and the Medical Coding Journal. Here he talks about his ongoing efforts to figure out all the riddles of RAC posts on new issues, which the RAC must make before pursuing those issues with hospitals. He focuses, in particular, on the posts of Connolly Consulting, the RAC for 17 states and territories in Region C.

Q: Your RAC writings focus a lot of Connolly Consulting. Why is that?

Ernie de los Santos: Connolly is the most aggressive RAC. They're really good at their work and they're usually out in front of the pack. Connolly was in the original RAC demonstration. They seem to me to have the most experience. And Connolly has been able to get CMS approval for the largest number of issues so far, which would seem to indicate their ability to gather compelling data to convince CMS. Once Connolly opens up the door, the others often appear to follow suit. Connolly has often been the first to post many issues.

Q: You admire Connolly, but isn’t it very frustrating? You often depict them as difficult to fathom and hard to follow.

ES: Yes, the posts by Connolly can be very difficult to follow. In January, for example, Connolly posted 70 DRGs approved for medical necessity review, but only 46 were identified separately and the rest were buried inside lists of DRGs also approved for DRG validation. Other Connolly posts have identified no DRGs whatsoever. The posts only cite disorders, conditions or procedures in somewhat generalized terms. Within those issues, it appears that Connolly intends to go after broad ranges of DRGs, but even Connolly itself can't seem to decide how to list those ranges.

Q: They seem to be a little devious.

I wouldn't use that term. Maybe "hard to get." For instance, Connolly does not organize its postings chronologically. They are alphabetical and previous posts will often be edited without notice. However, eduTrax has software that reads RAC postings every 15 minutes and can tell when a single character changes. We also have staff who do auditing work for the federal government and have a pretty good idea of how the RACs think. I go to them to get clues on what RACs are thinking.

Q: Then you have to be sort of a detective.

Yes, it's a lot like detective work. Here's an example. In March, Connolly posted a whole lot of ICD-9 codes. Since they are just diagnosis codes, you can't really tell what DRGs they are going after. The DRGs will be all over the map. But by analyzing a sampling of claims at one hospital under those ICD-9 codes, we linked them to a variety of fairly expensive DRGs, worth $10,000 to $12,000. Costly DRGs are obvious prey for a RAC, because it can make a lot of money in one fell swoop. In that posting, one particular DRG turned up about 25 percent of the time. It was DRG 314, "other circulatory system diagnoses with major complication and comorbidity." So we can start looking at that more deeply and try to figure out the vulnerabilities of that particular DRG.

Q: The RAC is always looking for easy prey.

ES: Right. They are after the low hanging fruit, if you will. Another example is a DRG linked to only one ICD-9 code that qualifies the claim for its highest possible payment. Now, a hospital can list up to 18 ICD-9 codes on a particular claim, but when it lists just one code, all the RAC has to do is knock down that code down and the payment can be dropped to its lowest payment or possibly even wholly denied. The RAC asks for medical records on the claim and closely reviews them to see if it really supports that one diagnosis code.

Q: I can understand that strategy, but why is Connolly so coy about posts? Why doesn't it clearly identify what it is going after and make it fair?

RACs do not want to show you their hand. They are in business and as such they want to make a profit. They are paid a contingency fee of 9-12 percent only on errors they identify and find themselves and only if the case survives appeal. They put in a lot of hard work into looking for vulnerabilities and detailing errors.

So whenever they can get you off their scent, even for just a few days, they can go about their work. If the hospital finds the error before they do and corrects or re-submits or self-discloses it, the RAC has a smaller pool to fish in. Look at Connolly's posting time. It has usually been Friday evening, when everybody has left for the weekend. A hospital might not even get around to reading the post until later in the week. But they surprised me on St. Patrick's Day, a Thursday evening. While everybody was out celebrating, I was reading through their new post, and it was rather large. They essentially used the holiday to slide a post in under the radar.

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