Spring 2012 issue of Horizons

when it comes time to negotiate a larger share of the ACO payment. With the shift to ACOs, it is unknown what the future will hold for some physician practices. Corporate Compliance Programs An additional requirement of the Affordable Care Act is for providers, including physician practices, to adopt corporate compliance programs. An effective compliance program will consist of appropriate policies and procedures governing the billing process and guidelines for performing ongoing monitoring of claims processed. Attorneys and accountants can work together to ensure the program is established and monitored appropriately. To ensure compliance with the various regulatory requirements, the CMS—collaborating with the Health and Human Services Office Inspector General—has initiated several audit processes to identify incorrect or fraudulent billings to the Medicare and Medicaid programs. The Recovery Audit Contractors (RAC) program is the most notable. Under the RAC program, CMS hires non-governmental auditors who are paid a percentage of claims recovered that are deemed to have been overpaid. The RAC program initially focused on hospitals but most recently the program was extended to other healthcare providers, including physician practices. The RAC auditor process is as follows: • A “probe” letter is sent requesting a small sample (10-50 records). • Based on the error rate in a sample, a much larger sample is selected under an “additional document request.” • Upon completion of the audit, the provider will receive a letter indicating the audit results and action taken by the auditor. • If an overpayment is identified, the provider will receive a demand letter, which is a demand for re-payment.

Association (MGMA), it is estimated that the implementation of ICD-CM-10 will cost a three physician practice approximately $85,000.

Medicare Reimbursement Since 2008, Medicare has threatened to reduce the physician fee schedule payments anywhere from 16% to the latest proposal to cut the fee schedule for 2012 by 29.5%. However, like in prior years, the proposal was not implemented. These reductions would have been disastrous to the financial position of most physician practices. While over the years the physician fee schedule cuts have been avoided, Congress still needs to find a “fix” for the current reimbursement methodology while ensuring that physicians are compensated in an equitable manner. Under the current Medicare payment structure, each provider that provides care to a patient gets paid under a different payment methodology. For example, hospitals get paid based on diagnosis- related groups (DRGs), physicians get reimbursed based on a resource-based relative value scale (RBRVS), skilled nursing facilities receive payment based on a resource utilization groups (RUGs) and so on. Accountable Care Organizations Within the healthcare reform laws, there is a provision that establishes Accountable Care Organizations (ACOs). An ACO is group of healthcare providers in a care delivery system that accepts joint responsibility for the medical care of a patient. Under an ACO arrangement, a single payment for the patient care is shared among the participating providers. Currently, participation in an ACO arrangement is voluntary. However, in anticipation of ACO arrangements being the norm in the future, health systems are actively purchasing physician practices and physicians are reluctantly selling their practices to health systems or merging with other physicians to gain more leverage

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