THE RACS ARE COMING, THE RACS ARE COMING!!!!!

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THE RACS ARE COMING, THE RACS ARE COMING!!!!!
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Who they are, what they want, and how they get it

• RAC RECOVERY AUDIT CONTRACTOR
• Section 306 of the Medicare Modernization Act
  directed CMS to investigate Medicare claims
  payments using RACs under a three year
  demonstration project whereby RACs would be paid
  on a contingency basis. Two types of contractors
  were used
• Claims RACs
• MSP RACs
• CMS hired contractors and conducted a
  demonstration project focusing on services
  provided from October 1, 2001 - September 31,
  2005.

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CMS PAYMENTS TO RACs

• RACs paid on a contingency basis for all
  accurately identified overpayment
• Paid on a percentage basis for all underpayments
  identified and recovered
• CMS RACa very cost effective program.
• achieved a respectable return on investment of
  373 in 2006
• (2006 RAC Status Report)

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Meet the Contractors...
RAC contractor Jurisdiction
Connolly Consulting HealthData Insights (HDI) PRG-Schultz (PRG) New York (3/05) Mass (7/07) Florida (3/05) South Carolina (7/07) California (3/05) Arizona (7/07)
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Overpayments by Error Type
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COMING OUR WAY
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Legislation

• RACs will become a permanent fixture on our
  payment auditor/reviewer circuit
• Section 302 of the Tax Relief and Health Care Act
  of 2006 makes the RAC Program permanent and
  requires the DHHS Secretary to expand the program
  to all 50 states by no later than 2010.

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Permanent program-lessons learned
DEMO PERMANENT RACs
Look back period 4 years 3 years
Maximum look back None 10/1/07
Standardized request ltrs No Yes
RAC medical director Not required Mandatory
Credentialed coders Not required Mandatory
RAC must pay back its contingency fee if claim overturned At 1st level of appeal only At ANY/ ALL levels of appeal
External validation process None Mandatory
Web based application for providers None Mandatory by 1/1/10
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What to Expect
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RAC Process

• The process in a nutshell-
• Initial Communication from RAC
• - Letter to designee introducing you to your RAC
• - Request to designate a RAC Liaison
• - Roles and Responsibilities of RAC Liaison
• 2. Receiving RAC Requests
• - Typically sent to RAC Liaison/HIM Director
• - Specific Records Listed

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• Responding to RAC Requests
• Timeliness 45 DAYS AND COUNTING
• Providers must respond within 45 days of date of
  request letter
• You may request an extension any time prior to
  the 45th day by contacting the RAC
• THE CLAIM IS CONSIDERED AN OVERPAYMENT IF
  RECORDS ARE REQUESTED AND NOT RECEIVED!!!
• Questions when preparing response
• Previously evaluated claims?
• Do not assume RAC database is accurate
• If you conclude a claim has already
• been reviewed, notify RAC

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• 4. Notification of Outcome
• Who receives the denial
• Reasons for denial, including regulatory
  citations
• Rights of appeal
• Contact information
• Payment refund procedures

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Lets have a round of appeals, please

• Appeal Processes
• Timeline for appealing denials
• Phone vs. paper appeal
• Resubmission of records

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FIVE LEVELS OF APPEALNote Interest accrues
throughout the appeals process

• 1st level - 120 days to file
• Redetermination with FI or carrier (60 days)
• 2nd level 180 days to file
• Reconsideration by QIC (qualified independent
  contractor) (60 days)

• 3rd level 60 days to file
• ALJ (Administrative Law Judge) - 90 days
• 4th level 60 days to file
• Medicare Appeals Council
• 90 days
• Final Appeal Level 60 days
• U.S.District Court

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How are claims selected?

• Must target claims through data analysis
• Cannot randomly select claims
• Cannot just focus on high payment claims
• Two Types Reviews
• Automated No medical records involved in the
  review, certainty that overpayment exists based
  on claims data review
• Complex Medical records are involved in the
  review, high probability (but not certainty) that
  the service is not covered

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Providers under Scrutiny

• CURRENT TARGETS INCLUDE
• INPATIENT HOSPITAL CLAIMS
• OUTPATIENT HOSPITAL CLAIMS
• SKILLED NURSING FACILITY CLAIMS
• PHYSICIAN SERVICES
• LAB AND AMBULANCE SERVICES
• DME

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• So, what can we do?
• This is probably not our best option

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Some Familiar Problem Areas Identified

• Inpatient (complex reviews)
• Skin graft /or debridement for skin ulcers and
  cellulitis
• Respiratory system dx w/ ventilator support
• DRG with single CC
• Coagulation Disorders
• Major small and large bowel procedures
• Unrelated PDX and Procedure
• 1-2 day stays
• Chest pain as inpatient PDX
• Septicemia, bacteremia, urosepsissound familiar?
• Outpatient
• Neulasta (J2505) (complex review)
• Speech/hearing therapy (92507) (automated)
• Blood transfusion services (36430) (automated)

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Other Identified Issues

• Outpatient-approved surgical procedures performed
  on an inpatient basis
• Short stay acute patients should they have been
  observation patients?
• 3-day stays shipped to SNF bed medically
  necessary admission or social admit to qualify
  for a skilled bed?
• Discharge Disposition errors on Transfer MS-DRGs
• PEPPER data outliers
• PEPPERs Program for Evaluating Payment Pattern
  Reports produced by QIO identify claims patterns
  for your facility relative to other hospitals in
  the state for the top 20 DRGs that are prone to
  billing errors.

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Stay current with coding guidelines!

• CMS considers AHAs Coding Clinic the official
  source for coding guidelines
• Many coding errors are due to application of
  outdated coding directives
• This information has been superceded by
  Coding Clinic notes
• Failure to follow basic coding rules
• and guidelines

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WHAT PROVIDERS ARE DOING

• Create a team to prepare an effective RAC
  response
• HIM, Finance-Patient Accounts, Quality Assurance,
  Case Management, Physician Liaison, and
  Compliance
• Identify facility RAC Liaison primary hospital
  contact and back-up.
• Assign tasks to designated depts/staff
• Think about what resources youll need and their
  budget impact

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Internal Data Mining

• Run Reports, pull charts, perform internal
  audits, rebill if necessary. Look at your
• High Risk MS-DRGs
• High Volume MS-DRGs
• High Volume OP services
• Known/suspected care management/UR problems

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Once RAC requests start coming in

• Schedule regular team meetings to review new
  demands/requests and the status of prior demands.
• Prioritize review of claims by time remaining to
  respond impact and volume of claims with
  common issues.
• If volume of requests is overwhelming, remember
  you can formally request extension from RAC
  before the 45-day response time expires.

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Establish a RAC Response Process

• Log each Demand Letter / Request for Medical
  Record into Tracking System
• Verify that the claim is open for RAC to review.
• Classify each demand by type of issue and
  Impact
• (e.g., Duplicate Payment, Service Not Covered,
  Not Medically Necessary, DRG recode, HCPCS Error,
  Units, etc.)

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Monitor your appeals

• Team should review appeal documentation to ensure
  it is complete, accurate and convincing
• What appeals strategies are working, which ones
  arent?
• Establish a tracking database
• Develop standard templates for specific denial
  types
• Identify the processes and practices resulting in
  denials

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Response Time Medical Record Documentation

• Assure timelines for medical records requests are
  met
• Create central repository for all communication
  between your facility and the RAC
• Consider using a vendor to help organize copying,
  scanning, and tracking records sent in response
  to RAC requests.

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Future Moves

• Take immediate action when RAC letters are
  received
• Educate all impacted departments and individuals
  based on RAC findings
• Use RAC targets to improve coding and
  documentation