The Big Picture
• Huge focus on “fraud, waste and abuse”• Contract audits provide high ROI• Audits are here to stay
– Bipartisan support!• Private payers also getting into the game• The Audit Era has begun
– RACs, MACs, ZPICs, OIG, DOJ, … and more
What does this mean for YOU?
• Must focus on reducing risks, not avoiding review
• Examine past services/records for identified risk areas
• Move forward with changes to reduce future risk (and possibly find opportunities)
Recovery Auditors
• Program established by statute• Process governed by Statement of Work• Four RACs operate regionally• Paid on a contingency fee basis• As of 12/2011, auditors had discovered:
– $1.27 billion in overpayments– $183.7 million in underpayments
General RAC Rules
• 3 year look-back period– Runs from date claim was originally paid to
• Date of medical record request (for complex)• Date of demand letter (for automated)• Original payment, whichever is sooner
• Must reimburse PPS hospitals (but not CAHs) for copies of records– But can include copy expenses in cost report
Staffing Requirements
• RNs or therapists• Certified coders• At least 1 FTE contracted Medical Director
– Must make him/her available to discuss a denial upon request of a provider
Required Customer Services
• Toll Free Number• Knowledgeable customer service staff• Quality Assurance Program • Website
– New Issue Listing!– Provider Contact Portal– Medical Record Tracking
3 Types of Audits
• Automated– Data mining using proprietary software
• Semi-automated– Opportunity to send records “if you disagree”
• Complex– Review of medical records required– Most are medical necessity reviews
Semi-Automated Review• Data mining identifies potential billing error
– Clinically unlikely or not evidence based• Notification/Information Letter sent
– 45 days to submit supporting documentation– Otherwise, demand letter issued
• Not subject to ADR limit
Complex Review
• Medical Record Request letter sent– 45 plus 10 days to respond– May up to ADR limit every 45 days
• 2% of prior year’s Medicare claims ÷ 8
• RAC reviews and sends review results letter– 60 day time limit
• MAC sends remittance advice/demand letter
Recoupments from CAHs
• Before final settlement of cost report– Remittance Advice sent– Improper payment identified in next Provider
Statistical and Reimbursement Report– Reconciled at final settlement of cost report
• After final settlement of cost report– Demand letter sent
Appeals
• Level 1 “Redetermination”– 120 days time limit– Must file within 30 days to avoid recoupment
• Level 2 “Reconsideration” by Qualified Independent Contractor– 180 day time limit– Must file within 60 days to avoid recoupment
Appeals, cont.
• After Level 2, cannot stay recoupment• Level 3, ALJ Decision
– 60 day time limit• Level 4, Medicare Appeals Council• Level 5, Federal Court
RACTrac
• Web-based survey designed to assess hospitals’ RAC activity and the resulting administrative burden
• Free participation for all hospitals• Quarterly data submitted online• Important tool for advocacy & information
sharing
National RACTrac Data
• 2220 hospitals have participated– Last quarter, 248 CAHs reported RAC activity
while 205 reported no RAC activity• $741 million in denied claims reported
– This amount nearly doubled in 1Q 2012
• Over ⅔ of medical records reviewed did not contain an improper payment
National Data, cont.
• Over ½ of medical necessity denials were one day stays where medically necessary care was provided in the wrong setting– 52% or $190 million
• Medical necessity is top reason for complex denials– In Region B, 69%– In Region C, 92%
National Data, cont.
• Region A had the highest number of medical record requests
• Region C had 64% of automated denials• All regions experiencing complex denials• 64% of denials appealed, 75% success rate
– Region B, 40% appealed w/ 84% success– Region C, 27% appealed w/ 79% success
CAH Audit Issues
• Must think differently about RACs • Consider all listed RAC issues and test to
see if they are applicable to CAHs• Overutilization as a key point• Complex review issues include DRG
validation & medical necessity– Medical necessity applies to CAHs even if
DRGs do not
CAH Audit Issues, cont.
• Don’t ignore DRGs just because “we don’t bill that way.”– RAC issues often listed by DRG, but ICDs are
included within each DRG.– These can apply to CAHs too
• Charge capture rules are the same for large and small hospitals!
Outpatient Billing Errors
• Many CAHs not turning on edits to process outpatient claims– Allows mistakes
• Examples of automated denials for CAHs– 2 initial 1st hours of drug administration billed
in ER, then in Observation– Respiratory therapy billing multiples of demo
& eval, rather than treatment
Protocols
• High risk area• Regardless of excellent protocol, still need
physician’s order– e.g., lab / radiology tests
• Include referenced protocols when submitted records for audit
Transfer to Swing & SNF Beds
• 3 day clinically appropriate stay required for Medicare coverage– Must have clinical reason
• No automatic recoupment against “innocent” party, but if you’re transferring to your own swing beds or SNF, you aren’t innocent.
Incomplete Records
• Emergency Room to Inpatient– Need ER record to support admission
• Direct admits from Clinic– May need clinic record to support admission
• Beware of the Hybrid Record– Information lost in “hand offs” between written
and electronic record
Documentation
• EMRs may present “cookie cutter” view of patients– Need specific patient issues included
• Treatment, outcomes and results of ordered services must be in clinical record– Crucial to answer the question “Why is this
patient still an inpatient?”
Physicians
• Employed physicians– Hospital is billing physician services, so must
monitor RAC physician issues too– No $$ on the line for deficient documentation,
so should be addressed in contract• For all doctors, employed and otherwise,
ongoing education and support is crucial
Multi-Tasking Staff
• Charge capture and documentation leaders also care givers– “I have to take care of patients. I don’t have
time to worry about money.”• All must own the billing process. Without
the money, no patient care job.
Overpayments & False Claims
• False claims liability can arise if you:– know of an overpayment and– do not report and return it within 60 days after
it is identified (or the due date of any corresponding cost report, if applicable)
• Overpayment = funds received or retained by a person who, “after applicable reconciliation,” is not entitled to them.
Need Good Review Process
• Is there an order to support the service you are billing?
• Does the documentation in the record support the order?
• Does the itemized statement reflect what you said you did in the documentation?
• Does the UB match the 3 things above?
Prepare, prepare, prepare• Put together a good audit response team• Check all 4 RAC websites for new issues• Establish an efficient and effective process
for handling audits– Responsibilities at department & individual levels– Tracking methodology
• Train staff on audit process, tracking system and audit issues
• Bring physicians into the team• Track and trend to know your risks• Do proactive internal auditing • Consider targeted outside reviews• When weaknesses are identified, do rapid
and aggressive improvements• Beef up utilization review• Ongoing education and outreach
Use the PEPPER Reports
• Offers ready-made list of priority audit targets – areas identified as at-risk for improper payments
• Contains claims data statistics & shows where your hospital is an outlier
• Compares your data to national, jurisdictional, and state statistics
Don’t Forget the P.R.Issue
• If you have a denial, you also have to refund money to the patient.
• If you rebill, you may have to send another bill to the patient.
• Work on your letter to patients– Focus on commitment to quality and
compliance, not “oops, we goofed.”