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

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What are RACs?

• Medicare Modernization Act of 2003 created a
  3-year demonstration project
• Recover Medicare overpayments and identify
  underpaymentspayment mistakes
• RACs are paid on a contingency fee basis
• 3 states selected for the demonstration project
  based on highest per capita Medicare
  utilizationNY, FL, and CA

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What are RACs?

• The Tax Relief and Health Care Act of 2006
  required DHHS to make the RAC program permanent
  and nationwide by no later than January 1, 2010.
• The RAC program does not detect or correct
  payments for Medicare Advantage plans (Medicare
  Part C) or for the Medicare prescription drug
  benefit (Medicare Part D)

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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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RAC Demonstration

• During FY 2007, RACs identified and corrected
  371 Million dollars of Medicare improper
  payements in the demonstration states
• Over 96 were overpayments
• About 85 of overpayments were from inpatient
  hospital providers
• About 6 of overpayments were from outpatient
  hospital providers

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How Do RACs Choose Cases for Review?

• Data mining techniques
• RACs used the findings of OIG and GAO reports to
  help target their review efforts
• Comprehensive Error Rate Testing (CERT) reports
  http//www.cms.hhs.gov/CERT/CR/list.asp
• Experience and knowledge of RAC staff

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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

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Average Overpayment Amounts FY 2007
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Permanent RAC Program

• 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

• Look back period is 3 years
• 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

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Permanent RAC Program

• Mandatory limits set by CMS on medical record
  requests
• Mandatory discussion with the RAC Medical
  Director regarding claim denials if requested by
  providers
• Frequent problem area reporting is mandatory
• RACs must pay back contingency fee if their
  decision is reversed on any level appeal

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Permanent RAC Program

• Each RAC must have a web-based application that
  allows providers to customize addresses and
  contact information or see the status of cases
• External validation process is mandatory and it
  is a uniform process

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Permanent RAC Program

• CMS will announce the permanent RACs for the four
  regions around July 31, 2008

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RACs Focus on Hospitals

• In the three demonstration states, 89 of
  improper payments were from hospitals

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RAC Review Process

• RACs use proprietary automated software programs
  to identify potential payment errors
• Types of payment review
• Duplicate payments
• FI errors (i.e. claims paid using an outdated fee
  schedule)
• Medical necessity
• Coding errors
• No documentation or insufficient documentation to
  support the claim

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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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Automated Reviews

• Excessive Units Audittwo or more identical
  surgical procedures for the same beneficiary on
  the same day at the same hospital
• Use of incorrect discharge status codes
• Medically unbelievable situations (i.e. prostate
  procedure on a female)

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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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DRGs Scrutinized in Demonstration States

• 079 Respiratory infections and inflammations age
  gt17 w CC
• 416 Septicemia age gt17
• 468 Extensive OR procedure unrelated to principal
  diagnosis
• 475 Respiratory System diagnosis with ventilator
  support
• 477 Non-extensive OR procedure unrelated to
  principal diagnosis
• 483 Tracheostomy with mechanical vent96 hours
• 217 Wound debridement
• 397 Coagulation disorders
• 124 Circulatory disorders except AMI w Card Cath
  Complex Diag
• 076 Other respiratory system OR procedures w CC
• 415 OR Procedures
• 082 Respiratory Neoplasms
• 148 Major Bowel

Note These DRGs are from the version 25
grouper. These are not MS-DRGs.
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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
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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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Inpatient Rehabilitation

• An inpatient rehabilitation facility (IRF)
  submitted a claim for inpatient therapy following
  a single knee replacement
• Medical record indicated that although the
  beneficiary required therapy, the beneficiarys
  condition did not meet Medicares medical
  necessity criteria for IRF care (HCFA Ruling 85-2
  and Medicare Benefit Policy Manual Section 110)

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Inpatient Rehabilitation

• Entire claim was denied by RAC
• The RAC determines that the service was medically
  unnecessary for the inpatient setting and issues
  repayment request letters for the entire claim

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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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Neulasta

• In the past, the billing code for the drug
  Neulasta (Pegfilgrastim) indicated that providers
  should bill 1 unit for each milligram of drug
  delivered
• Several years ago, CMS changed the definition of
  the billing code to indicate that providers
  should bill 1 unit for each vial of drug
  delivered

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Neulasta

• The hospital billed for 6 units of Neulasta
• The RAC determined that 5 units of service were
  medically unnecessary and issued a repayment
  request letter for the difference between the
  payment amount for 5 unnecessary vials

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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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Most Frequent Medically Unnecessary Errors
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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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One-Day Stays

• Develop a system for clarifying unclear admission
  orders prior to admission
• Implement the admit to case management protocol
• Train utilization/case managers on how to
  determine medical necessity through the use of
  screening criteria

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One-Day Stays

• Involve Case Management/Utilization Review staff
  early in the process.
• Provide Case Management/Utilization Review staff
  to perform initial review of medical necessity
  for admission while the patient is in the
  emergency department.
• Place UR staff at every point of entry into the
  hospital (ED, day surgery, centralized admission
  center, etc.)

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One-Day Stays

• Develop condition-specific pre-printed order
  sheets that include the appropriate patient
  status.
• Provide Case Management/Utilization Review
  staffing during weekends and after hours to
  ensure timely review for medical necessity.

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One-Day Stays

• Train hospital staff (nurses, ED staff, unit
  clerks, day surgery staff and CM/UR staff) on
  Medicares requirements for appropriate
  documentation of medical necessity, the use of
  observation, requirements for changing patient
  status and use of Condition Code 44.

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One-Day Stays

• Use documentation prompters, stickers on
  observation charts, and prompters and posters in
  physician dictation areas to remind physicians of
  appropriate use of outpatient observation.
• Provide one-on-one education to physicians who
  consistently write unclear admission orders or
  consistently have inappropriate one-day stays.

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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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RAC Resources

• http//www.cms.hhs.gov/RAC/
• http//www.cms.hhs.gov/CERT/CR/list.asp