RAC Expands to Oregon

1
RAC Expands to Oregon Washington In Jan. 2009
or 2010

• The RAC Demonstration Project Produced Big in
  NY, FL CA for both the RAC Contractors the
  Medicare Trust Fund

2
RAC Recovery Audit Contractors

• CMS purpose for Recovery Audit Contractors
  There is a growing concern that the Medicare
  Trust Funds may not be adequately protected
  against erroneous payment through current
  administrative procedures. Section 306 of the
  Medicare Prescription Drug, Improvement, and
  Modernization Act of 2003 (MMA) (see Appendix A)
  directs the Secretary of the U.S. Department of
  Health and Human Services (HHS) to demonstrate
  the use of Recovery Audit Contractors (RACs) in
• 1. Identifying Medicare underpayments and
  overpayments and
• 2. Recouping Medicare overpayments.

3
RAC Audit Companies

• In 2003, CMS selected three consulting firms,
  known as Recovery Audit Contractors (RAC), to
  review Medicare Part A and Part B claims for over
  and under payments from 2001 through 2005.
• The consulting companies had no interaction in
  the adjudication of the claims. Six consulting
  companies were selected for the project.
• Three of the companies worked on claims with
  Medicare as the primary payer and three
  additional companies focused on Medicare
  secondary claims.

4
CLAIMS SELECTION

• The reviewed claims were all paid by CMS as
  clean, or not needing any further review. The
  RACs report of findings published Nov-06 covers
  their findings between October 1, 2005 and
  September 30, 2006. The RACs were each assigned
  one of the following states California, Florida
  or New York. These states were selected because
  of the high Medicare claims volume. The claims
  reviewed were from October 1, 2001 and September
  30, 2005.

5
TYPES OF CLAIMS

• I. Some of the paid claims were compared against
  the patients medical record.
• II. RACs used their own Proprietary Software to
  identify overpayments underpayments without the
  use of medical records.
• Improper payments included
• Services Not Medically Necessary. (Includes
  inpatient treatments that should have been done
  as outpatients.)
• Excessive or insufficient payment for incorrectly
  coded services.
• Duplicate payments
• Payments for which another insurance company was
  responsible. (Three additional RACs focused on
  Medicare Secondary Payments only.)

6
HOW RAC CONTRACTORS ARE PAID

• The RAC Contractors are paid on a contingency
  basis (e.g. More denials more money for the
  RACs.)
• The RAC Contractors are not answerable to anyone
  or held accountable for errors made.
• Mid way through the 3 year demonstration project,
  303.5 million improper payment dollars had been
  identified.
• RACs were paid 12.0 million, with costs of 2.5
  million.
• For every 0.22 spent, 1.00 was returned to the
  Medicare Trust Fund.

7
IT WORKED, SO WHAT IS NEXT?

• The RAC Demonstration Project ends March 27,
  2008.
• Arizona, North Carolina Massachusetts have been
  added to California, Florida New York.
• Section 302 of the Tax Relief and Health Care Act
  of 2006 makes the RAC Program permanent and
  requires the Secretary to expand to all 50 states
  by no later than 2010.
• Oregon and Washington are on the schedule for
  2009 or later for the RAC audits to investigate
  hospitals, outpatient facilities and physicians.

8
1 Billion Claims Reviewed By 10-06

• Both diagnostic and procedural codes were
  considered. A total of 1 billion claims,
  accounting for 1.67 billion dollars, were
  reviewed within the three states.
• The RAC auditors started with no more than 35
  patient chart requests per month then it went to
  50, and in 2008 as the Demonstration Project
  winds down, more charts are being requested. All
  this requires hospital personnel time.
• If requested charts are NOT turned over within 45
  days, the entire amount of the Medicare payment
  is taken back. The hospital has no appeal rights.

9
RAC 2006 Inpatient Errors - First

• Patients from SNFs for a three day inpatient
  stay, (this is done to reactivate the 100 days of
  covered SNF benefits), that were not medically
  necessary. RACs focused on the SNF patients
  with diagnoses indicating back problems that
  could be treated as outpatients, rather than
  inpatients.

10
Not Medically Necessary 3 Day Inpatient Stays
from Skilled Nursing Facilities(SNF)

• Work with Patient Financial Service team member
  and IT Support to create a list of patients from
  SNF with 3 day stays. (Medicare patients have a
  100 day limit of SNF benefits. To renew the 100
  day benefit, the patient must have a 3 day
  inpatient stay in an acute care hospital.)
• In Field 14 of the UB04, look for type 5
  Transfer from a SNF
• In Field 6, Statement Covers Period
  From-Through the number of days would be
  three.
• In Field 22- STAT look for -03, Transferred to
  SNF with expectation of Medicare covered skilled
  care.
• In Fields 67 Diagnoses, look for one of the
  following indicating back problems on the next
  page.

11
Possible ICD-9 Diagnostic Codes for SNF Patients
with Back Problems

• In Field 66, 67 a-h, Principal Diagnostic Code
  Field 68 i-j Other Diagnoses
• Degenerative Intervertebral Disc Disease 722.6
  Site Unspecified
• Degenerative Disc Disease, Cervical 722.4
• Degenerative Disc Disease, Thoracic 722.51
• Degenerative Disc Disease, Lumbar 722.52
• Spondylitis 720.0
• Spondylitis with and without Myelopathy ICD-9
  Category 721
• Pain in Neck (Cervicalgia) 723.1
• Spinal Stenosis, Cathegory 724
• Have HIM Coder and possibly the Utilization
  Review Nurse review the patients chart to
  determine if the 3 day stay was medically
  necessary. Education of physicians review of
  admissions criteria careful review by UR nurse
  of each SNF patient being admitted with back
  problems may be necessary.

12
RAC 2006 Inpatient Errors Second Third

• 2. Skin graft and/or debridement for skin ulcer,
  (such as a bed sore), or cellulitis as the
  surgical procedure performed. HIM coders
  assigned an excisional debridement, but the
  medical record did not support the excising of
  the problem area.
• 3. Wound debridement and skin grafts were also
  coded as excisional, but not supported by the
  documentation by the physician in the patients
  medical record.

13
Excisional Definition RACs Issue with
Medical Record

• Excision is defined as full-thickness (through
  the dermis) removal of a lesion, including
  margins, and includes simple (non-layered)
  closure when performed. As stated in the CPT
  book.
• If the word excisional was not included in the
  medical record, the claim was denied.

14
Find Excisional Procedure Patients By

• Possible ICD-9 Procedure codes the UB04, Field
  74 a-e, could be
• 86.22 - Excisional debridement of wound,
  infection or burn
• 86.60 Free Skin Graft, Not otherwise specified
  (The other excisional procedures listed in 86.2
  would normally be performed in an outpatient
  setting, rather than supporting an inpatient
  stay.)
• A few other procedures in the 86.3 thru 86.4 may
  require an inpatient stay and should be included
  to support excisional debridement.

15
ICD-9 Diagnositic Codes to Locate Excisional
Procedures

• From Box 67 a-q of the UB04 Claim Form, Look for
  ICD-9 Diagnostic Codes of
• Decubitus Ulcer 707.00
• Decubitus Ulcer with Gangrene 707.00
  Underlying cause of 785.4
• Back Decubitus Ulcers 707.02 707.5
• Cellulitis 682.9 Also by body site
  682.0-682.8

16
2006 RAC Outpatient Errors

• Providing Neulasta J2505 pegfilgrastim 6 mg.
  Providers were billing in 1 mg. units instead of
  6 mg. per unit.
• Speech Therapy 92507 billed as one unit
  equaling 15 minutes, instead of 1 unit equaling
  one session, regardless of the amount of time
  services were provided.
• Blood transfusions 36430. Providers were
  billing transfusion administration for each unit
  of blood provided, instead of one 36430 charge
  for the session, regardless of the number of
  units given.

17
Over-reporting of Drug Quantities

• Many of the drug listed in the Pharmacy portion
  of the hospital charge master will be listed with
  the strength / quantity supplied by the drug
  company.
• The HCPCS Level II code used by Medicare often
  has a different strength / quantity than the one
  listed in the charge master. At some point there
  must be a conversion to report the accurate
  number of units to Medicare and and any other
  insurance company that requires reporting of
  drugs using the HCPCS Level II coding system.
• The example drug from the 2006 RAC report was
  Neulasta (pegfilgrastim) J2505 is defined with a
  quantity of 6 mg. Providers were billing in 1
  mg. per unit instead of 6 mg. per unit.

18
IDENTIFYING DRUGS WITH OVER REPORTING POTENTIAL

• Obtain the Pharmacy portion of the charge master,
  with description, codes and price.
• The drugs are usually listed by their generic
  names, rather than brand names.
• The drugs will have the total quantity being
  dispensed in the description, without
  consideration for a quantity defined in HCPCS
  Level II drug codes.
• In a separate column or field, the J code
  should have been assigned for all the drug items
  that have a HCPCS Level II code. (All drugs will
  not have a HCPCS code available.)

19
Example Fentanyl Injection As Listed in a
Hospital Charge Master

• If the computer can not report the appropriate
  quantity or someone manually alters the units to
  match the units dispensed, then the hospital will
  be underpaid or overpaid. (In this example, the
  more common error would be under-reporting
  whenever 500 mg or 1 gram was dispensed.) The
  RAC auditors identified very little under
  reporting due to their inexperience.

20
RAC Identified Neulasta in the 2006 Interim Report

• Without the quantity identified, the nurse would
  order the number of milligrams (mg.), the doctor
  ordered assume that the charge master
  description equaled 1 mg. If the doctor ordered
  6 mg. (a common dosage), 6 units would be
  reported RAC would deny the claim.

21
Identifying Reporting Errors in Your Pharmacy

• Have Charge Master Coordinator and Pharmacist
  obtain a copy of all active Pharmacy items. The
  2008 HCPCS Level II book is necessary.
• Although very labor intensive, have Pharmacist
  assign the HCPCS Level II code or review each
  drug for the correct code.
• Translate the charge master descriptions into the
  appropriate number of J, C or Q code
  units.
• Identify how, when or possibly who must alter the
  unit of 1 in the charge master to the appropriate
  number of units of HCPCS Level II descriptions on
  the claim forms.
• Review a sampling of outpatient claims. Medical
  Oncology claims are a good source for the review.
  The drugs are very expensive the charge master
  and J or Q code quantities will rarely match.

22
Second 2006 Outpatient RAC Finding Speech
Therapy

• RAC found claims with Speech Evaluations CPT
  code 92506 being reported multiple times per day.
  Speech therapists often evaluate patients for
  varying amounts of time, depending upon the
  condition of the patient.
• Speech Therapy CPT Code range 92506 through
  92526 DO NOT have any time increments included in
  the CPT definition.
• RAC found Speech services reported more than once
  per encounter. This error was found WITHOUT
  requesting the patients medical record.

23
Incorrect Units in Speech Therapy

• Unlike Physical and Occupational Therapy, NONE of
  the CPT code descriptions for Speech Therapy
  include a specified amount of time.
• No Speech service descriptions should include
  Per 15 minutes.
• Having multiple charges for total amounts of time
  for the same service with same CPT code is
  appropriate. Example
• Speech Evaluation 45 minutes 92506 150
• Speech Evaluation 1 Hr 92506 200
• Speech Evaluation 90 minutes 92506 300
• This enables the Speech Therapist to account for
  the total amount of time they evaluated the
  patient.

24
Blood Transfusions Services from RAC Software Only

• Blood Transfusions Look on Hospital Charge
  Description Master (CDM) for all entries in all
  Departments. CPT code will be 36430 Blood
  Transfusion with Revenue Code 391 Blood
  Transfusion. If the CDM description includes
  EACH, or no quantity, investigate immediately
  revise charging policy. Blood transfusion
  36430 should be charged only ONCE per day,
  regardless of the number of units given.
• Mine patient account data for charges of more
  than one blood transfusion -36430 and/or revenue
  code 391.
• Identify any departments over reporting educate.

25
RAC Auditors Changed Focus As They Became More
Experienced

• RAC Auditors found a gold mine in two different
  inpatient areas
• Inpatient Rehab Departments for Medicare patients
  admitted for a single joint replacement, such as
  hip or knee.
• One day Inpatient stays for surgical procedures.
• The RAC auditors singled out the entire hospital
  stay asnot medically necessary. CMS took back
  the entire payment for each claim the RACs
  pocketed their contingency fee.

26
First New Inpatient Focus

• One Day Inpatient Stays for Surgery
• Most not meeting inpatient admission criteria.
  (Should have been Observation patients instead of
  inpatients.)
• Surgical procedures normally performed on an
  outpatient basis. If the principal ICD-9
  Procedure cross-walked to the Outpatient APC
  list, the claim was denied.
• Mr. Edward McGill, in New York reported the RAC
  auditors ignored the presence of complex
  co-morbid conditions found in the patients
  medical record denied the claim.

27
Identifying Surgical Patients with 1 Day
Inpatient Stay

• Obtain a list of surgical procedures paid as
  outpatients under APC payment methodology. These
  procedures will have a status indicator of Q,
  S, T, X in RBRVS or a list of APC payments.
• Utilize the HIM department to supply a cross
  walk from ICD-9 Procedure Codes to CPT codes.
  Collect a list. Some software programs, such as
  Code Correct will supply that cross walk on a
  code by code basis.
• Mine the Patient Account computer system for
  specified ICD-9 procedures from Field 74 on the
  UB04 a one day calendar stay in Field 6.
• Pull the patients medical record have the HIM
  coder and Utilization Nurse review for medical
  necessity.
• Plan to educate physicians, possibly change
  admissions policies continually review to
  mitigate the risk before RAC arrives.

28
Second Big Inpatient Focus

• Inpatient Rehab stays on patients having had a
  single joint replacement.
• Reasons why included Medicare expects patients
  having a single joint replacement to go from
  their inpatient joint replacement hospital stay
  to home.
• The physical therapy and rehabilitation services
  are handled on an outpatient basis.
• For patients having a bilateral knee
  replacement, the expectation is that they will go
  from the acute inpatient stay into Inpatient
  Rehabilitation for a period of time.
• RAC seized this difference collected millions
  of dollars.

29
Reasons for Denying Inpatient Rehabilitation Stays

• Lack of co-morbid condition over beyond the
  joint replacement.
• Lack of documentation of medical necessity for
  intensive rehab services.
• Patient not provided at least 3 hours of skilled
  therapy each day during their inpatient rehab
  stay.
• Ms. Patricia Blaisdell reported her IP Rehab
  facility had 8 million dollars identified by RAC
  auditors by January, 2008. 6.5 million has been
  taken back she expects 1-2 million more by
  3-27-08 when the RAC Demonstration Project ends.

30
Identifying Inpatient Rehabilitation Patients
with Single Joint Replacement

• Look for the principal/admitting DIAGNOSIS in
  Field 67 of V57.89 Multiple Therapy Care
  involving Rehabilitation Procedures. Another
  option could be V57.1 Other Physical Therapy
  715.16 Knee 715.15 Hip or 719.7 Difficulty
  Walking
• ICD-9 PROCEDURE codes that are likely to appear
  on the inpatient surgery bill include
• 81.51 Total Hip Replacement
• 81.52 Partial Hip Replacement
• 81.53 Revision of Previous Hip Replacement
• 81.54 Total Knee Replacement
• 81.55 Revision of Previous Knee Replacement
• Obtain the patients inpatient surgery medical
  record plus the inpatient rehabilitation medical
  record
• Obtain a copy of the surgery rehabilitation
  claims.

31
2007 RAC Outpatient Focus

• The RACs used their own software and no medical
  records.
• They focused on the absence of modifiers. (e.g.
  Missing left or right on a procedure)
• Also on too many units of service. (e.g. More
  units of service than would be provided in a
  calendar day.)
• Duplicate payments for the same claim were also
  identified.

32
AVOIDING RAC AUTOMATIC CODING ERRORS

• Each RAC will have their own proprietary software
  for finding errors without requesting medical
  records.
• Expect the software to find services where only 1
  unit should be reported per day more are.
  These include the following from 2006 others
• Physical Occupational Therapy - Any CPT Code
  in the range of 97001 through 97028
• Speech Therapy Any CPT Code in the range of
  92506 through 92526
• Blood Transfusions 36430, regardless of the
  number of units of blood given in a calendar day.
• Routine Venipuncture 36415 (Medicare is only
  paying one venipuncture per day. Also they will
  not pay when the patients blood specimen comes
  from an established Intravenous line.

33
INCORRECT NUMBER OF UNITS

• PHYSICAL OCCUPATIONAL THERAPY
• Obtain copy of the hospital charge master.
  Identify all Physical Occupational Therapy
  Departments.
• List HCPCS/CPT column numerically.
• Review to make sure that none of the descriptions
  for CPT codes in the range of 97001 through 97028
  have ANY time increments included in the
  description. (15 minutes is the most common time
  increment.)
• Contact IT mine data for patients being charged
  for more than 1 unit of any of these codes in a
  calendar day. If found
• Revise description, charge capture to reporting
  only ONCE per day.
• Almost all other PT OT services are charged in
  15 minute increments or more. Therefore,
  reporting multiple units of a given service is
  common. The 2008 CPT book should be the guide.

34
Missing Modifiers Easy for RAC to Find

• Almost all charge masters have a field for
  modifiers to the CPT code assigned. Obtain a
  copy of the charge master and look for possible
  MISSING modifiers, such as
• LT Left 26 Professional Interpretation
• RT Right 76 Repeat Procedure
• 50 Bilateral 91 Repeat Lab Test
• 25 Significant Unrelated Procedure
• 59 Distinct Procedure
• Licensed PT, OT Speech Therapists are required
  to treat Medicare patients. Hospitals attest to
  using these professional people with the
  modifiers PT GP OT GO and Speech GN

35
RAC Financial Impact from Memorial Care in
California
36
HOW TO GET YOUR MONEY BACK

• After your F.I. has retracted the payments RAC
  has identified as improper, you can appeal.
  Expect to spend between 1500 - 2000 for each
  appeal. The providers can appeal to
• RAC auditors. This worked quite well at first
  when the auditors were inexperienced. Now not so
  well. If the RAC refuses to take back their
  denial, they get paid dont have to return
  their contingency fees even if their denial is
  reversed on additional appeal.
• Appeal to the Qualified Independent Contractor
  (QIC). About 40 of these appeals have come back
  in favor of the provider. CMS is very slow in
  refunding money.
• Administrative Law Judge ALJ). No one in the
  three states has seen any money returned to date
  from successful appeals at this level

37
BE PROACTIVE BEFORE THE RAC ARRIVES

• Form a team consisting of
• Utilization Review Nurse or Quality Assurance
  Nurse or Nurse Auditor.
• HIM Coder who assigns the DRGs, selects the
  Principal Diagnosis and Principal Procedures.
  Helpful to obtain a cross-code of ICD-9
  Procedures to CPT coded procedures.
• Charge Master Coordinator to identify CPT codes
  and Clinical Departments causing risk, especially
  for outpatient services.
• Revenue Cycle or Patient Financial Service
  managers who can identify which boxes on the UB04
  identify the data that the RAC auditors will
  review.
• IT support personnel to mine data.

38
DONT WAIT

• The effort spent identifying the various risk
  areas eliminating them will keep the money
  Medicare has already paid you for the services
  you have provided in your bank account.
• The appeals process takes months days of people
  time costing about 1500 to 2000 per claim.
• Even when the appeal is successful, the money may
  be out of your bank account one to two years or
  more.
• The RAC auditors will come. Please be prepared.