The RAC Law Niche

The what niche?

The RAC Law Niche!

It could represent for you an opportunity to get in on the ground floor of a pretty new phenomena in health law.  Not the complicated part of health law where you have to understand the intricacies of a disease or a treatment type or an injury or risk management procedures.

Can you read and understand laws?  Can you memorize codes and procedures?  Of course you can.  You are lawyers.  That is what you are trained to do.  More importantly, that is what you are trained to train yourself to do.  So, you are golden.

Well okay, it is more difficult than all of that, but then what is not.  If it were easy then everyone would do it.  Or, at least that is what my mother use to tell me.  Sure, it takes work and some dedication, but my overall point is that it is possible even without a medical background.  More importantly at this point most everybody in this law biz is starting out on equal footing.

So, what is the RAC Law Niche?

It is the Medicare Recovery Audit Contractor (RAC) Program, which has just completed its three year demonstration and is about to kick off nationwide in 2010.

Medicare is a fee-for service (FFS) program.  In short, Medicare pays providers such as hospitals, physicians, skilled nursing facilities, labs, ambulance companies and medical equipment providers money for services they render to those covered by Medicare.   The system of services, coding, requesting payment and applying payments can be complicated and difficult, especially for volume medical providers, and undoubtedly it can lead to mistakes in billing.  Worse, it can lead to repeated mistakes in billing.  As a result, improper payments can be made to the Medicare providers.

How big is this process or group of potential clients just from a marketing perspective?  There are one million health care providers in the Medicare network who submit over 1.2 billion claims each year.  Huge!
Although it is impossible to stop or even catch all improper payments for Medicare services, it was estimated that in 2007 these improper payments totaled $10.8 billion due to procedures that did not meet Medicare’s medical necessity criteria, which were incorrectly coded, for failure of providers to submit documentation, and for duplicate payments.

To try and recoup at least part of these payments made under part A or B of the Medicare program the RAC program was created on a demonstration basis just in California, Florida, New York, and later Massachusetts, South Carolina and Arizona.   An open competition was held to select private companies as RACs to perform audits in these states.  As of March 27, 2008 the RACs have corrected more than $1.03 billion in Medicare improper payments, with 96% or $922.7 million in over payments and 4% or $7.8 million in underpayments.  During this time providers decided to appeal 14% of these audits.  As a result of this trial system $693.6 million was returned to the Medicare Trust Funds.

As a result of this success, Congress has made the RAC program permanent and has authorized the expansion of RACs nationwide beginning in January, 2010.

RACs have to follow Medicare rules for audits and collections.  And, if money or recoupment is demanded there is access to administrative due process.  There is even probably room for negotiation.  All of those are legal duties.  All of this does and will increasingly require lawyers.  Well paid lawyers because the dollar figures are often times large.  Medicare audits usually require the providers to provide certain required and randomly selected files.  These are audited and based on these results the recoupment amount is determined by extrapolating up to the number of such procedures performed over a given period of time.

Despite the rules and guidelines, what has to give many Medicare providers heartburn is that RACs get to operate on a contingency fee basis.  This means they are encouraged to aggressively find money because this is how they too are paid, and paid well.  In the demonstration states RACs collected $187.2 million in contingency fees.  Yikes!  This would seem to limit the good graces of the RACs in audits because they have a vested interest going after as much money as possible.  And, having a three year look back period in which to purse these claims it is likely that the amount of money to be demanded nationwide from these audits will be huge.  One could assume that the benefit of the doubt will not be provided to the Medicare providers by the RACs.  That would mean that they would lose money.

It is probably fair to say that the term RACs will be thought and spoken of in the pejorative by Medicare providers in the near future.

Where big money, audits, administrative due process rights and the law are involved, in a highly regulated industry as this, that only spells the need for one thing – ATTORNEYS.  Are you ready?  Could this be something that interests you?

There are other health law attorneys involved and preparing to get involved in this new dynamic area, but certainly this represents a niche practice that can be built nearly paperless, without the need for traditional office space, on a more national basis if necessary, based on referral and network marketing, and in which good size fees could be collected.

Abby Pendleton and Jessica Gustafson of The Health Law Partners are getting ready for the "RAC ATTACK" for example.

Wachler Associates, P.C. has already reserved the URL racattorneys.com.

FindArticles.Com states that Medicare audits raises the specter of IRS-style audits.

Physicians Practice posted an article entitled Who's Afraid of a Medicare Audit?  It advises its readers in the event of notification of an audit to contact their attorneys immediately.

Faegre & Benson call RACs "A New Breed of Medicare Auditors". 

Organizations such as the American Academy of Professional Coders are putting on RAC audit workshops.

Jean Clark has already put out a book entitled "The RAC Survival Guide".

Do you think you could publish an ebook on RAC audits on your blog or website?  Do you think you could put together a 30 minute presentation on surviving a RAC audit to give to all of your local medical boards and groups?  Do you think you can attend your local medical boards and groups and organizations and make yourself known?

It is a niche worth looking into.