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Dane J. Dickson MD President Idaho Society of Clinical Oncology. RAC vs. Oncology A coalition-building Prototype to Quell onerous attacks. Sun Tzu 孫子 – The Art of War. “If you know the enemy and know yourself, you need not fear the result of a hundred battles.” . Know yourself. Remember

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dane j dickson md president idaho society of clinical oncology
Dane J. Dickson MD

President Idaho Society of Clinical Oncology

RAC vs. Oncology A coalition-building Prototype to Quell onerous attacks

sun tzu the art of war
Sun Tzu 孫子 – The Art of War

“If you know the enemy and know yourself, you need not fear the result of a hundred battles.”

know yourself
Know yourself
  • Remember
    • FDA Labels
    • Guidelines (NCCN, ASCO, etc.)
    • Published Literature (not abstracts!!!!)
    • Standard of Care

Payment for an issue doesn’t necessarily mean that the payer agrees with your medical decision

rac demonstration program
RAC Demonstration Program
  • 2003 Medicare Modernization Act (MMA) – Section 306
  • 3-year demonstration program using Recovery Audit Contractors (RACs) to detect and correct improper payments in the Medicare FFS program
  • Initially started in states of New York, Massachusetts, Florida, South Carolina and California
  • Ended on March 27, 2008
results of the 3 year project2
Results of the 3 year project
  • Only 14% of audits appealed
  • (with a 33.3% chance you would win).
  • If you are a RAC you have a 95% success rate.
results of the 3 year project3
Results of the 3 Year Project
  • Lessons Learned:
    • “Claim RACs are able to find a large volume of improper payments.”
    • “Providers do not appeal every overpayment determination.”
    • “Overpayments collected were significantly greater than program costs.”
    • “It is possible to find companies willing to work on a contingency fee basis.”
results of the 3 year project4
Results of the 3 year Project
  • “The RAC demonstration had limited financial impact on most providers. . .those repayments were small in comparison with the providers’ overall income from Medicare.”

“. . .the RAC . . .cost only 20 cents for each dollar collected”

updated statement of work sept 1 2011
Updated Statement of WorkSept 1, 2011
  • Added a 3rd audit category
    • Semi-automated Review
    • “To be used in [cases where] a clear CMS policy does not exist but in most instances the items and services as billed would be clinically unlikely or not consistent with evidence-based medical literature.”
    • Prior to this, only Automated and Complex Reviews
updated statement of work sept 1 20111
Updated Statement of WorkSept 1, 2011

RACK – Medieval Torture Device

RA – Egyptian Sun Deity

rac regions
RAC Regions
  • Follows the DME Regions for Medicare
  • Region A:  Performant Recovery


  • Region B:  CGI Federal, Inc. 


  • Region C:  Connolly, Inc. 


  • Region D:  HealthDataInsights, Inc.



Semi-Automated Review


“This letter is notify you that the Recovery Auditor HDI believes that Medicare has potentially made an overpayment to you. . . .Pegfilgrastim should not be administered during the 24 hours after chemotherapy.”

how racs determine major audits
How RACs Determine Major Audits
  • “Low Hanging Fruit”
  • Proprietary Data Review


  • CMS
  • Audit Item
finding rac audit items
Finding RAC Audit Items
  • Region A


  • Region B


  • Region C


  • Region D


simplifying the rac process
Simplifying the RAC Process

MAC: Medicare Administrative Contractor

QIC: Qualified Independent Contractor

ALJ: Administrative Law Judge

DAB: HHS – Departmental Appeals Board

sun tzu the art of war1
Sun Tzu 孫子 – The Art of War

“. . .in war the victorious . . .only seek battle after the victory has been won, whereas he who is destined to defeat fights first and then looks afterwards for victory.”

objectives strategies


“Overturn RAC”


“Stop Audit”






“Stop Audit”










escalated strategies if needed
Escalated Strategies (If Needed)


“Bad Policy”







Corporate Leadership

“Very bad PR”




Share Holders

Performant: PFMT


Connolly: Private


business of rac
Business of RAC
  • HDI Acquired by HMS Holdings
  • 11/7/2011 Announced
  • 3 month increase of 25% vs. 10% for Dow
  • Approx. increase in market value

$670 Million

why bring a nuclear missile to a knife fight
“Why bring a nuclear missile to a knife fight?”
  • Inherent conflict of interest of the RAC
  • Defining “not consistent with medical literature”
  • Personal Experience/Concerns with RAC
    • Loss of Records
      • Inability of RAC to find records
        • Faxed
        • Certified mail
      • Response not received = automatic denial, and no further work needed to be done by RAC (MAC now does the work)
    • Over 3 year look back on audit item
      • Surprising given complete access to billing and payment records
unified oncology coalition
Unified Oncology Coalition









S. California


State Societies







states state societies
States/State Societies
  • Alaska - Denali Oncology Group
  • Southern California (MOASC)
  • Idaho Society of Clinical Oncology (ISCO)
  • Montana – Frontier Cancer
  • Nebraska Oncology Society (NOS)
  • Oregon Society of Medical Oncology (OSMO)
  • Society of Utah Medical Oncologists (SUMO)
  • Washington State Medical Oncology Society (WSMOS)
coa administrators
  • COA
    • Amazing communication and mobilization
    • Rapid response and focused perspective
    • Involved CMS/PRIT
  • State Administrators
    • Logistic support
    • Communication and direction


american society of clinical oncology
American Society of Clinical Oncology

Although physicians clearly do not like to receive letters from the RACs, the

concerns described below are well beyond such general frustrations and involve very specific, significant flaws with this particular audit. Any one of these concerns warrant suspension of the audit. Especially given the implications when these issues are taken in combination, we urge CMS to intervene and suspend the ongoing RAC audit in Region D and to ensure that the same audit is not pursued in other regions of the United States.

cms prit
  • Physicians Regulatory Issues Team
  • Small group since 1999

“. . . working hard to identify issues, chase them down, and create solutions that are truly tangible to the practicing physician.”

  • CMS Position
  • Suffers from lack of funding and low visibility

William D Rogers MD

Medical Officer CMS and Director Physicians Regulatory Issues Team

mac noridian
MAC - Noridian
  • Medicare Administrative Contractor – Jurisdiction F and Minnesota
  • After receiving information from the State Societies
    • Contacted CMS – halted audit
    • “We are going to overturn them all on appeal any way. . .”

Bernice Hecker MD

Contract Medical Director Parts A&B

Noridian Administrative Services

noridian coverage letter
Noridian – Coverage Letter

“Based on the evidence, the administration of same-day

pegfilgrastim has become an accepted standard of care and in particular, in situations where patients are believed

to be a higher risk of potential non-compliance with day 2 administration.

“. . .the administration of pegfilgrastim before the traditional 14

day window has become an accepted standard of care to maintain dose-density or reduce neutropenic

complications in regimens with substantial myelosuppression.”

final results of audits
? Final Results of Audits
  • RAC contacted our practice saying that our appeal was accepted and no overpayment existed
  • This included the audit that they lost
  • Most practices had all same day pegfilgrastim audits overturned but . . .
  • Nebraska fights on – ? If RAC reviewed, ? If MAC reviewed, ? next steps
coa isco national post payment review survey 1 of 3
COA/ISCO National Post-Payment Review Survey (1 of 3)

Informal, non-scientific survey written by ISCO and sent by COA (thank you Mary Jo Wichers and Bo Gamble) to practice administrators nation wide. Completely voluntary with no follow up.

# of respondents         26

States Represented     19

How Frequent are Post Payment Reviews in the Following Areas:

            Chemotherapy  62%

WBC 31%

RBC 15% 

Anti-emetics 15%

(Note: each area independent – some practices have received audits in multiple areas)

coa isco national post payment review survey 2 of 3
COA/ISCO National Post-Payment Review Survey (2 of 3)

Who is conducting the audits?

Medicare 70%

Medicaid 3%

Private Insurers 27%

How often has the audit been performed even when a pre-authorization was obtained:     34%

How often was the following successful in retaining payment:

Provide Records 64%

Showing guidelines or compendia 27%

Providing clinical trial information 17%

Talking to Medical Director 6%

Legal Action 1%

coa isco national post payment review survey 3 of 3
COA/ISCO National Post-Payment Review Survey (3 of 3)

When a claim had to be repaid, how often was the following the reason for the repayment:

Lack of unbiased review by payer                     35%

Mistake by Billing or Coding 28%

Other                                                                         19%

Use of therapy outside of guidelines or compendia14%

Limited research                                                         5%

Number of man hours spent on post payment review/month             20 hours

Average days until resolution of a single review                                53 days

using an unified oncology coalition to drive policy
Using an Unified Oncology Coalition to Drive Policy

State Societies


Patients and Advocates



National (CMS)

Statewide (Private Insurers)

possible areas to address
Possible Areas to Address
  • Pre-authorization
    • Develop a standardized method of authorization for all insurers
    • Simplify the process – especially with on-label drug usage
  • Quality Measures
    • Develop standard methodology of measuring quality
    • Simplify the process
possible areas to address1
Possible Areas to Address

Establishing National Rules for Drug Audits

Private Insurers:

  • If pre-authorization was given – then this claim shall never be subject to post-payment review. 
  • If pre-authorization becomes even more arduous, then there shall be an expectation that payers will reimburse this administrative burden.
  • Any disputed claim should be subjected to an independent review board.


  • Any RAC audit item that deals with a “standard of care” issue – should be reviewed and agreed upon by an independent society before CMS approves it.


When dealing with the appropriate use of drug:

  • FDA Label trumps everything else, NCCN Drug Formulary/etc. next, NCCN/ASCO Guidelines next.
  • Sequencing of drug shall not be a look-back audit item.  If a payer wants to look at sequencing (i.e. pathway) it should be established and communicated up front.