Medicare Recovery Audit Contractors RACs

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Medicare Recovery Audit Contractors (RACs)

• Preparing for RAC Audits

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Presentation Outline

• I. Background
• A. What are the RACs?
• B. When are the RACs coming to Georgia?
• C. RAC Focus Areas
• II. Case Studies
• III. How to Prepare for RACs
• IV. GHA Initiatives to Assist Member Hospitals
  with RACs

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What are RACs?

• Medicare Modernization Act of 2003 created a
  3-year demonstration project in NY, FL, CA
• Recover Medicare overpayments and identify
  underpaymentspayment mistakes
• RACs are paid on a contingency fee basis
• During FY 2007, RACs identified and corrected
  371 Million dollars of Medicare improper
  payements in the demonstration states
• Over 96 were overpayments

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Why Congress Believes RACs are Necessary

• The Improper Medicare FFS Payments Report for
  November 2007 estimates that 3.9 of the Medicare
  dollars paid did not comply with one or more
  Medicare coverage, coding, billing, or payment
  rules.
• This equates to 10.8 billion in Medicare FFS
  overpayments and underpayments annually.

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Overpayments by Error Type in Demonstration
Project

• 42 Incorrectly coded
• 32 Medically unnecessary service or setting
• 9 No/Insufficient Documentation
• 17 Other

Source CMS RAC Status Document FY 2007,
February 2008
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Average Overpayment Amounts FY 2007
Source CMS RAC Status Document FY 2007,
February 2008
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Permanent RAC Program

• CMS will announce the 4 permanent regional RACs
  by July 31, 2008
• RACS can review claims for
• Inpatient hospital
• Outpatient hospital
• Skilled nursing facilities
• Physician, ambulance, and lab services
• Durable medical equipment

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Permanent RAC Program

• RACs cannot look for any improper payments on
  claims paid before October 1, 2007
• RACs can review claims during the current fiscal
  year
• Each RAC must use certified coders
• RACs must pay back contingency fee if their
  decision is reversed on any level appeal

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Types of RAC Reviews

• Automated Review
• Proprietary software algorithms used to identify
  clear errors that resulted in improper payments
• Complex Review
• Medical records requested to further review the
  claim
• RACs must use Medicare coverage, coding or
  billing policies in effect at the time when the
  claim was adjudicated

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RAC Focus Areas in Demonstration States

• Excisional Debridement
• Back Pain
• Outpatient vs. Inpatient Surgeries
• Transfer Patients
• Inpatient Rehab, especially knee and hip
  replacements
• Joint replacement patients and patients in
  inpatient rehabilitation facilities that should
  have been treated in a lower intensity setting
  such as a SNF
• Wrong diagnosis or principal procedure codes

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Outpatient Hospital Areas of RAC Focus

• Colonoscopy
• Speech Language Pathology Services
• Infusion Services
• Neulasta (boosts white blood cell counts to
  reduce chance of infection in patients undergoing
  chemotherapy)

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Short Stay Claims

• Validate whether the admissions met Medicares
  medical necessity criteria
• One-day stays by chest pain patients were
  targeted by RACs in demonstration states
• Many three-day stays were denied because they
  were inappropriately extended in order to qualify
  for Medicare Part A coverage of post-acute
  skilled nursing care

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Some Case Examples from the Demonstration States

• (Note These slides are optional depending on
  how the CEO wants to present this information to
  the board members)

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Excisional Debridements

• Hospital coder assigned a procedure code of 86.22
  (excisional debridement of wound, infection, or
  burn)
• In the medical record, the physician writes
  debridement was performed

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Excisional Debridements

• Coding Clinic 1991 Q3 states unless the
  attending physician documents in the medical
  record that an excisional debridement was
  performed (definite cutting away of tissue, not
  the minor scissors removal of loose fragments),
  debridement of the skin that does not meet the
  criteria noted above or is described in the
  medical record as debridement and no other
  information is available should be coded as 82.26
  (ligation of dermal appendage).

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Excisional Debridements

• The RAC determines that the claim was incorrectly
  coded and issues repayment request letter for the
  difference between the payment amount for the
  incorrectly coded procedure and the payment
  amount for the correctly coded procedure.

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Wrong Principal Diagnosis

• Principal diagnosis on claim did not match the
  principal diagnosis in the medical record
• Example Respiratory failure (code 518.81) was
  listed as the principal diagnosis but the medical
  record indicates that sepis (code 038-038.9) was
  the principal diagnosis

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Wrong Principal Diagnosis

• The RAC issued overpayment request letter for the
  difference between the amount for the incorrectly
  coded services and the amount for the correctly
  coded services
• Most common DRGs with this problem
• DRG 475 Respiratory System Diagnoses
• DRG 468 Extensive OR Procedure Unrelated to
  Principal Diagnosis

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Wrong Diagnosis Code

• Hospital reported a principal diagnosis of 03.89
  (septicemia)
• Medical record shows diagnosis of urosepsis, not
  septicemia or sepsis Blood cultures were
  negative
• Did not meet the coding guidelines for
  septicemia. Urinary tract infection causes the
  claim to group to a lower payment DRG

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Wrong Diagnosis Code

• RAC issued a repayment request letter for the
  difference between the payment amount for the
  incorrectly coded procedure and the correctly
  coded procedure

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Colonoscopy

• The hospital billed for multiple colonoscopies
  for the same beneficiary the same day
• Beneficiaries never need more than one
  colonoscopy per day. The excessive services are
  not medically necessary.
• The RAC issued overpayment request letters for
  the difference between the billed number of
  services and 1.

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Outpatient Hospital Speech Therapy

• The outpatient hospital billed for each 15
  minutes of speech therapy
• The code definition specifies that the code is
  per session, not per 15 minutes
• The units billed exceeded the approved number of
  sessions per day. The excessive services billed
  are medically unnecessary
• RAC issued overpayment request letters

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Coping with the RACs

• Comply with RAC medical record requests. If you
  dont submit them on time, the RAC automatically
  classifies the claim as an overpayment and makes
  a recovery.
• Develop an internal tracking system for medical
  records requested for review by the RAC

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Review Your PEPPER Reports

• Program for Evaluating Payment Patterns Report
  (PEPPER)
• Prepared by gmcf
• Identifies claims patterns that are outliers
  relative to other hospitals in the state
• Top 20 list of DRGs that are prone to certain
  billing areas
• Other problem areas which vary by state

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Hospital Next Steps

• Look at potential areas of risk
• Establish single point of contact for RAC
• Establish RAC committeeinclude key hospital
  stakeholders (finance, UR, Case Management,
  compliance, legal, medical records, etc.)
• Review records before sending to RAC
• Support your claim
• Understand the parameters
• For Providers
• For the RAC

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Hospital Next Steps

• Plan to participate in the AHAs RACTrac to
  report your hospitals experience with the RAC
• www.AHARACTrac.org
• Data will provide both the AHA and GHA the data
  they need to advocate on behalf of the hospitals
  and to identify trends in reasons for denials
• Implement a system for charging RACs for copying
  costs of medical records (.12/page)

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GHA Next Steps

• Establish RAC Task Force
• Establish relationship with RAConce RAC is
  announced for our region
• Facilitate information exchange between CMS, RAC,
  and hospitals
• Monitor RAC activities with Georgia providers

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GHA RAC Task Force

• A multi-disciplinary cross-section of GHA members
  including CEOs, CFOs, legal counsel, compliance
  officers, case/utilization managers, medical
  records, and others
• Task Force will provide guidance and feedback to
  GHA as we develop strategies and tools to assist
  members in dealing with RACs

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Questions or Comments?

• Feel Free to Contact GHA Staff for assistance
• Robert E. Boldenrbolden_at_gha.org, [phone]
• Liz Schoen, lschoen_at_gha.org, [phone]
• www.gha.org