NEW CMS REIMBURSEMENT REVIEW ENTITIES

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NEW CMS REIMBURSEMENT REVIEW ENTITIES The Brave
New World of MACs, RACs, PSCs and MICs
2009 AHCA/NCAL Convention
ROLAND G. RAPP EVP, General Counsel, Chief
Administrative Officer rrapp_at_skilledhealthcare.com
Skilled Healthcare, LLC 27442 Portola Parkway,
Suite 200 Foothill Ranch, California
92610 direct 949-282-5822 fax [phone]
MARK E. REAGAN Partner mreagan_at_health-law.com HOOP
ER, LUNDY BOOKMAN, INC. 575 Market Street,
Suite 2300 San Francisco, CA 94105 Tel
415-875-8501 Fax [phone]
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Medicare Administrative Contractors

• The MMA (2003) mandated that a new MAC authority
  replace current Part A FIs and Part B carriers
• This Medicare contracting reform must be
  implemented by 2011
• Prior -- 23 FIs and 17 carriers
• To be replaced by 19 MAC contractors
• 15 PartA/Part B MACs
• 4 specialty MACs for DME

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MAC Benefits(According to CMS)

• Serve as single point of contact for providers
  and suppliers for all claims related business
• Assist providers and suppliers with obtaining
  information on behalf of patients about items or
  services received from another provider or
  supplier that could affect claims payment
• Improved provider education and training
• Role for provider and suppliers in contractor
  evaluation via surveys
• Timeliness on claims processing and payment
• A more even distribution of claims processing
• Creation of a modernized administrate IT platform
  that incorporates the latest technological
  advances and standardization practices

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15 Part A/B MAC Jurisdictions
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Part A/B MAC Jurisdiction States
Jurisdiction States Included in Jurisdiction
1 American Samoa, California, Guam, Hawaii, Nevada, and Northern Mariana Islands
2 Alaska, Idaho, Oregon, and Washington
3 Arizona, Montana, North Dakota, South Dakota, Utah, and Wyoming
4 Colorado, New Mexico, Oklahoma, and Texas
5 Iowa, Kansas, Missouri, and Nebraska
6 Illinois, Minnesota, and Wisconsin
7 Arkansas, Louisiana, and Mississippi
8 Indiana and Michigan
9 Florida, Puerto Rico, and U.S. Virgin Islands
10 Alabama, Georgia, and Tennessee
11 North Carolina, South Carolina, Virginia and West Virginia
12 Delaware, District of Columbia, Maryland, New Jersey, and Pennsylvania
13 Connecticut and New York
14 Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont
15 Kentucky and Ohio
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MAC Part A/B Awards to Date
Award Date Contractor Jurisdiction MAC A/B Cutover Month(s)
July 31, 2006 Noridian 3 done
Aug 2, 2007 Trailblazer 4 3/2008 and 6/2008
Sept 5, 2007 Wisconsin Physicians Services Health Insurance Corp (WPS) 5 3/2008 through 6/2008
Oct 24, 2007 Highmark 12 7/2008 through 12/2008
Oct 25, 2007 Palmetto 1 8/2008 and 9/2008
Mar 17, 2008 National Government Services (NGS) 13 7/2008 through 11/2008
May 6, 2008 National Heritage Insurance Corp (NHIC) 2 not available
Jun 11, 2008 Pinnacle Business Solutions (PBSI) 7 not available
Sept 12, 2008 First Coast 9 not available
Nov 19, 2008 National Heritage 14 not available
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MAC Part A/B Awards to Date
Award Date Contractor Jurisdiction MAC A/B Cutover Month(s)
Jan 7, 2009 Cahaba 10 Not available
Jan 7, 2009 Noridian Protests --Palmetto, NGS, WPSI GAO Decision May 6, 2009 6 Not available
Jan 7, 2009 Palmetto Protest Cigna GAO Decision May 13, 2009 11 Not available
Jan 7, 2009 Highmark 2 Protests Cigna, NGS GAO Decision May 6, 2009 15 Not available
Jan 7, 2009 NGS Protest WPSI GAO Decision May 6, 2009 8 Not available
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DME MAC Awards

• Jurisdiction A National Heritage Insurance
  Company
• Jurisdiction B AdminiStar Federal Inc.
• Jurisdiction C CIGNA
• Jurisdiction D Noridian

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Durable Medical Equipment



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Geographic Assignment Rule

• Providers State -- Providers who are not in a
  special category will be assigned to the MAC that
  covers the state where the provider is located.
  There are two exceptions
• Exception 1 for QCP Home Office State -- A
  qualified chain provider (QCP) may request that
  its members providers be served by a single A/B
  MAC specifically, the A/B MAC that covers the
  state where the QCPs home office is located. QCP
  is defined as (42 CFR 421.404(b)(2)
• Ten or more hospitals, SNFs, and/or critical
  access hospitals, under common ownership or
  control, collectively totaling 500 or more
  certified bedsor
• Five or more hospitals, SNFs, and/or critical
  access hospitals, under common ownership or
  control in three or more contiguous states,
  collectively totaling 300 or more certified beds
• CMS may assign non-QCP providers, as well as ESRD
  providers to an A/B MAC outside of the prevailing
  geographic assignment rule only to support the
  implementation of MACs or to serve some other
  compelling interest of the Medicare program
• Exception 2 for Provider-based Entities --
  Provider-based entities (e.g., hospital-based
  SNF) will be assigned to the MAC that covers the
  state where the main parent provider is
  assigned.

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Local Coverage Determinations

• As is current practice, MACs will be required to
  develop LCDs in accordance with chapter 13 of the
  Program Integrity Manual.
• As the MACs commence operations in their
  jurisdictions, each MAC will consolidate all the
  LCDs for its jurisdiction by selecting the least
  restrictive LCD from the existing LCDs on the
  topic.
• National coverage decisions will continue to be
  issued by CMS.

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Recovery Audit Contractors (RACs)

• Demonstration
• Purpose of the pilot required by the MMA (2003)
• To determine whether use of RACs is
  cost--effective
• Identify and collect Part A and Part B Medicare
  claims overpayments and underpayments that were
  not previously identified by the MACs
• Division of Work
• Medicare Secondary Payer Overpayments
• Non-MSP Claims review
• The Demonstration in 3 States
• California, Florida and New York (with
  responsibility for Arizona, SC and MA)
• Selected because they are the largest states in
  terms of Medicare utilization
• Demonstration ended in March 2008
• Tax Relief and Health Care Act of 2006 Expanded
  program to all states no later than January 1,
  2010

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Payment to RACs

• RAC paid on contingency basis Starting March 1,
  2006, RACs received an equivalent percentage for
  all underpayment and overpayment identifications

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Problems

• Many problems in the California Demonstration
• AHCA and California affiliate went to CMS and the
  Hill
• Changes made for the permanent program

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CMS Improvements to the RAC Permanent Program

• Coding experts
• Physician reviewers
• RAC physician medical director
• Credentials of reviewers provided on request
• Limits on of medical records requested CMS to
  establish limits
• All new issues a RAC wishes to pursue for
  overpayments validated by CMS or an independent
  RAC Validation Contractor
• Contingency fees to be paid back by RACs when an
  improper payment determination is overturned at
  any level of appeal
• Changing from a 4-year look-back period to a
  3-year look-back period
• Maximum look-back date of October 1, 2007
• Web-based application that will allow providers
  to look up the status of medical record reviews
• Reason for review listed on request for records
  letters and overpayment letters
• Public disclosure of RAC contingency fees

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RAC Timetable

• The RACs have already started recovery audits in
  Summer/Fall of 2009
• Likely to be only automated reviews at first
  and complex reviews likely not to start until
  late Fall 2009/early 2010
• Medical necessity complex reviews likely to
  begin early 2010

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October 2008 Award to 4 RACs For Permanent Program

• Region A -- Diversified Collection Services, Inc.
  (DCS) of Livermore, California
• Region B -- CGI Technologies and Solutions, Inc.
  of Fairfax, Virginia
• Region C -- Connolly Consulting Associates, Inc.
  of Wilton, Connecticut
• Region D -- HealthDataInsights, Inc. (HDI) of Las
  Vegas, Nevada

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Contract Protests and Resolution on February 6,
2009

• PRG-Schultz, Inc. will serve as subcontractor to
  HDI, DCS, and CGI in Regions A, B and D (will
  only be doing home health claims in California)
• Viant Payment System, Inc will serve as
  subcontractor to Connolly Consulting in Region C

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RAC Review Process

• RACs review claims on a post payment basis
• RACs use the same Medicare policies as FIs,
  Carriers and MACs
• NCDs, LCDs CMS manuals
• Two types of review
• Automated (no medical record needed)
• Complex (medical record required)
• RACs will NOT be able to review claims paid prior
  to October 1, 2007
• RACs will be able to look back three years from
  the date the claim was paid
• RACs are required to employ a staff consisting of
  nurses, therapists, certified coders a
  physician CMD

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Automated Review Process

• Review claims data data mining
• All potential issues approved by CMS
• Claim determinations made at system level without
  staff intervention
• Library of CMS rules, regulations, guidelines,
  and coding policies maintained and updated

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Complex Review Process

• All potential issues approved by CMS
• Additional documentation requests
• Medical record chart reviews
• CMS record request limits (10 of average
  monthly claims/up to 200 claims per month)
• Review Team
• Coding review determinations (RN, Certified
  Coders, Therapists)
• Medical necessity reviews will be performed by
  RNs who have access to Physician Reviewers as
  necessary.
• MD oversight of reviews
• Complete documentation maintained in automated
  system

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Appeal Issues

• Strategic Appeal Issues - Redetermination
• 30 days to stop recoupment
• 120 days to request redetermination
• 11.375 interest accrues from date of
  determination
• Cash flow can extend repayment for 90 days from
  the date of determination (includes 60 days for
  redetermination decisions to be issued)
• Impact of rebuttal period - up to 30 days

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Appeal Issues (cont.)

• Strategic Appeal Issues - Reconsideration
• 60 days to stop recoupment
• 180 days to request reconsideration
• 11.375 interest accrues from date of
  determination
• Cash flow 906060 210 days (Includes 60 days
  for reconsideration decisions to be issued)

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Appeal Issues (cont.)

• One strategy appeal all claims within 30 days
  at first level and within 60 days at second level
• Advantages
• Cash flow (for a maximum of 210 days from date of
  determination or 330 days, if reconsideration)
• Opportunity to reverse decision without impact
• Disadvantages
• Accrue interest at 11.375
• Frantic timetable to assemble appeals

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Appeal Issues (cont.)

• A Second Strategy appeal some claims within
  recoupment limits
• Based on amount in question?
• Based on review of the merits?
• A Third Strategy appeal claims within appeal
  but not recoupment limits
• ALJ, Medicare Appeals Council and Court Appeals

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Additional Defenses and Issues

• Without Fault (Section 1870)
• Even if overpayment identified provider may still
  be paid if without fault
• Three-year rule for use of presumption but viable
  defense regardless of timeframe (unique counting
  rule, still applies to the three-year RAC window)

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Additional Defenses and Issues

• Waiver of Liability (Section 1879)
• Even if service determined to be not reasonable
  and necessary, payment could be made if provider
  or supplier did not know, and could not
  reasonably have been expected to know that
  payment would not be made

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Additional Defenses and Issues
 

• Timing of Reopening Good Cause 42 C.F.R.
  405.980
• Medicare Appeals Council Decisions involving
  hospitals and skilled nursing facilities
• Decisions by Appeals Council and the ALJ lack
  jurisdiction to decide contested reopenings under
  the Medicare appeals process
• Impact of raising good cause

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Additional Defenses and Issues
 

• Timing of Reopening/Good Cause
• MAC Decision Palomar Medical Center v. Johnson,
  S.D. Cal. No. 309-cv-00605-BEN-NLS (S.D. Cal.
  Complaint filed 3/24/09)
• Challenges RAC reopening of two year old hospital
  claim
• ALJ determined RAC had not shown good cause for
  reopening
• MAC reversed ALJ finding ALJ lacked jurisdiction
  to determine whether reopening was lawful
• Court challenge to jurisdictional argument and
  due process
• CMS Transmittal 1671 (February 16, 2009) RAC
  data analysis is good cause and ALJ has no
  jurisdiction

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Additional Defenses and Issues
 

• Credentials of reviewer
• Can request a copy of credentials
• Medical Director
• Coding Experts

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Additional Defenses and Issues
 

• Review criteria used
• Must be Medicare policy, National Coverage
  Determinations, Local Coverage Determinations
• What was in effect at time
• Is Medicare policy applied correctly
• Can any of the coverage determinations be used as
  a defense?
• Incorrect application of statutes
• Medical records standards
• Physician testimony/declaration
• Standard of care evidence
• Peer-reviewed science

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Additional Defenses and Issues

• Sampling
• Extrapolation PIM (CMS Pub100-08) Chapter 3
• 3.10.1-3.10.11.2
• Challenge statistical analysis

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Provider Preparation
 
 

• Know where previous improper payments have been
  found (OIG, CERT, Demo RAC Reports)
• New issues are posted to the web CMS appeal
  process
• RAC claim status web interface (2010)
• Detailed review results letter and denial letter
  following all complex reviews discussion
  period opportunity/does not impact appeal
  deadlines
• Prepare to respond to RAC medical record requests
  45 day window
• Keep/submit proper documentation point of
  contact/team building/organizational issues
  resolved
• Appeal when necessary - know timelines for appeal
  AND timelines to stop recoupment (e.g., 120 days
  v. 30 days for first level appeal and 180 days v.
  60 days for second level appeal)

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Program Safeguard Contractors

• Like RACs, PSCs are part of the Medicare
  Integrity Program
• Not contingency fee contractors
• Function like RACs in the area of complex
  review
• Requirements for Medical Records 45-day window
• Ability to cause recoupments (like RACs)
• Organize like RAC activities
• Activities have focused on Part A and Part B (MDS
  and therapy)

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Medicare Integrity Program (MIP)

• Created by Deficit Reduction Act (DRA) in 2005
• Establishes the federal governments role in
  combating Medicaid fraud, waste and abuse
• Effective support and assistance to States
• Formation of Medicaid Integrity Group (MIG)
• Creation of Medicaid Integrity Contractors
  (MICs)
• Goal of the MICs
• Identifying and recovering overpayments

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The World of Medicaid Integrity Contractors
(MICs)

• Review MICs - data analysis
• Audit MICs post-payment audits
• Educate MICs educate providers

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MIC Audit Process

• ID of potential audits through data analysis by
  review MICs
• Vetting potential audits with State and law
  enforcement
• Audit MIC receive assignment
• Contact with provider and scheduling of the
  entrance conference
• Currently in 20 states Florida, South Carolina,
  Pennsylvania, Delaware, Georgia, Alabama, North
  Carolina, District of Columbia, Virginia,
  Kentucky, Maryland, Texas, Arkansas, Louisiana,
  New Mexico, Colorado, Oklahoma, California,
  Nevada, Idaho

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Timing of Audits

• Should be at least two weeks notice before audit
  to begin
• Records request/preparation time (all over the
  place - 10 to 45 days)
• Desk or field audit
• Entrance conference (phone or in-person)

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Look-Back Period

• Not set by MIG
• Relates to maximum period under state law
• Not always clear under state law
• Need to know/analyze state law

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Audit Process (cont.)

• Intake questionnaire (work in process)
• Entrance conference
• Audit
• Review of preliminary audit findings and
  tentative conclusions
• Opportunity for provider to comment and provide
  additional information

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Audit Process (cont.)

• Draft audit report to CMS and State for review
  and comments along with provider
• If revised, further review with State
• Draft audit report finalized
• CMS issues final report to State
• State has 60 days to repay federal government for
  its share

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Audit Process (cont.)

• State issues final report to provider and begins
  overpayment recovery process
• Provider rights of appeal are those available
  under State law
• Settlement made complicated by feds recoupment
  from states
• If provider wins, what happens to state loss?

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Relevant Issues

• Standards applied known?
• Audit according to General Accepted Government
  Auditing Standards (GAGAS)
• Adequate time to produce all records
• Ability to stay recoupment
• Payment plan available?
• Timely Appeal Process/Overburdened State Appeal
  Process/Due Process

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MIC PROGRAMNo Record Request Limitations

• No Limits on the Number of Medical Records a MIC
  can Request per Month
• Unlike RAC program
• Basic problem with MIP/MICs no formal structure
  to program
• Compare and contrast to RAC

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MIC Application of Standards

• Uncertain
• Push MIC to identify substantive standards
  utilized

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Identified Audit Process Issues

• Requests for information outside of the scope of
  the audit (intake questionnaire)
• Short timeframe
• Looking back up to 5 years
• Duplicative of other audits
• Federal/State conflicts

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Areas of Focus in LTC

• Accuracy of patient responsibility/share of cost
• Deceased patients
• Duplicative payment issues/impact of retro
  Medicaid rate changes can make it look like
  duplicate claims
• Bed-hold rate limitations

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Prepare for RACs/MICs

• Establish internal team
• Interdisciplinary Team Legal, Finance, Clinical,
  Compliance, IT
• Identify point of contact for internal and
  external communications
• Develop central tracking mechanisms/database for
  all - Incoming and Outgoing
• Coordinate the tracking mechanism with
  communications structure record reviews, and
  appeal of recoupment deadlines

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Prepare for RACs/MICs (cont.)

• Conduct self audits to identify potential
  problems
• Participate in trainings and outreach
• Monitor news sources, CMS, associations, and your
  own reports to stay abreast of trends
• If desired, development of unique forms for
  appeal levels once issues identified

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Responding to Record Requests

• Stamp date and Time Received
• Push for 45 calendar days from date of letter for
  MICs (already established for RACs)
• Can request an extension
• Notify if significant discrepancy between date of
  letter and date of receipt
• Identify any internal issues in expeditiously
  getting the mail for processing

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Responding to Record Requests

• Was the request sent to the right place?
• Notify Contractor of the contact person with
  contact information
• Did the Contractor exceed a reasonable number of
  record requests under the circumstances?

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Responding to Record Requests

• Copying of Record and Others
• Ensure entire record is copied
• Include copies of substantive coverage materials
• Review of all records before they are released
• Permits early identification of issues
• Establishes priority for appeals
• Intensive work

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Responding to Record Requests

• Has the claim already been subject to audit by
  another contractor
• Who is this request from?
• Confusion with so many different contractors

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Responding to Record Requests

• Document Management?
• Stamp number (Bates Stamp) on bottom of each page
  produced
• Scan everything produced
• Include cover letter itemizing contents of box of
  documents or CD
• Send certified mail or, if regular mail, complete
  affidavit of service by mail

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Responding to Record RequestsData Management

• Information about the production
• Patient information
• Status of case
• Reimbursement information
• Contractor/State response
• Status at each level of appeal

• Audit ID Number
• Type of Audit
• Reason for Audit (Issue Specific)
• Date of Record Request
• Date Received
• Next Deadline

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Determinations

• Stamp the date received
• Determine Appeal period

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Additional Defenses and Issues
 

• Review criteria used
• What was it and is it subject to attack?
• What was in effect at time?
• Is Medicaid policy applied correctly?
• Incorrect application
• Medical records standards
• Physician testimony/declaration
• Standard of care evidence
• Peer-reviewed science