Friday, August 9, 2013

RAC from HDI

This summer, Ozarks Community Hospital was forced to restructure its inpatient behavioral health services (originally known as OCH Resolutions) due to RAC audits. While the hospital is still actively combating these claims, OCH no longer has the resources to continue providing the service through Resolutions. OCH now provides care to geriatric patients through OCH Inpatient Services.

In light of what happened to Resolutions, our inpatient geriatric psych service, you may be asking yourself:

What is a RAC and who the hell is HDI? 

A RAC is a Recovery Audit Contractor, a private, for-profit company empowered by the federal government to “recover” funds paid by Medicare to healthcare providers in the event the RAC computer or RAC “auditor” (whose last job may have been phone solicitor or bank teller) decides there was something wrong with the claim. The RAC gets to keep a percentage of all the money it recovers. The thing you need to know is that hospitals are winning over 75% of the appeals when reviewed by a neutral administrative law judge—a percentage which might lead one to conclude that the RACs are recovering more money than they should.

HealthDataInsights (When did businesses first start running their names together into one name with interior capital letters? I assume it is an outgrowth of web site naming conventions that eliminate spaces between words. It just looks silly to me and I wish they would stop.) HDI is a wholly owned subsidiary of HMS Holdings Corp. HDI began life as an entrepreneurial venture-backed company. HDI investors included Redhills Ventures, GRP Partners and Ticonderoga Capital. In other words, a bunch of venture capitalists with political connections but ZERO healthcare expertise helped create a company for the sole purpose of getting a government contract to make millions of dollars by “recovering” it from healthcare providers. The “word on the street” back then was getting one of the RAC contracts would be a license to print money—there was literally no way to lose.

Once the venture capitalists got the bid to be a RAC, they got HDI up and running until it was printing money as expected and then they sold it to HMS.

Who the hell is HMS?

HMS Holdings Corp. (NASDAQ: HMSY) operates through its subsidiaries including Health Management Systems, Inc. (HMS), AMG-SIU, IntegriGuard LLC, Reimbursement Services Group, Inc. (RSG) and HealthDataInsights, Inc. (HDI). It is the nation's leader in cost containment, program integrity, and coordination of benefits solutions for government-funded, commercial, and private entities. HMS is focused exclusively on the healthcare industry.

For the first half of 2013, HMS reported revenue of $242.4 million, an increase of 6.6% compared to revenue of $227.4 million for the same period a year ago. Net income for the first half was $17.4 million. You can pretty much double those numbers to see what they make in a year.

As President and Chief Executive Officer at HMS HOLDINGS CORP, William C. Lucia made $1,860,000 in total compensation according to proxy statements filed for the 2012 fiscal year.
It is nice to know we are helping with someone’s bottom line.

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