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Recovery Audit Contractors (RAC) Overview

Recovery Audit Contractors (RAC) Overview.

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Recovery Audit Contractors (RAC) Overview

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  1. Recovery Audit Contractors (RAC) Overview

  2. This power point presentation was prepared to accompany the RRHIMA RAC presentation and in no way is a substitute for authoritative guidelines. The presenters make no representation or guarantee that the use of this material will prevent differences of opinions or disputes with Medicare/Medicaid or other third-party payers as to claims processing and reimbursement. The presenters assume no responsibility for the consequences attributed to or related to any use or interpretation of any information or views contained in or not contained in this presentation R&R Support Services, Inc. 2

  3. Today’s Compliance Environment Joining the fight against Fraud, Waste & Abuse Office of the Medicaid Inspector General (OMIG) James Cox President Barack Obama Office of the Inspector General (OIG) Daniel Levinson NYS Attorney General & Medicaid Fraud Control Unit (MFCU) Eric Schneiderman Office of Alcoholism & Substance Abuse Services (OASAS) Office of Mental Health (OMH) CMS Recovery Audit Contractors (RAC) U.S. Dept of Justice (DOJ)

  4. Medicare 1965 Medicare Today

  5. Purpose of Recovery Audit Contractor (RAC) ~Recovery Auditor The Recovery Auditor detect and correct past improper payments so that CMS can implement actions that will prevent future improper payments: • Providers can avoid submitting claims that do not comply with Medicare rules • CMS can lower its error rate • Taxpayers and future Medicare beneficiaries are protected

  6. Started as a Demonstration Project Legislative Authority • Section 306 of the Medicare Prescription Drug Improvement and Modernization Act of 2003 • Test the use of Recovery Audit Contractors (RACs) to identify Medicare Part A and B overpayments and underpayments and recoup overpayments • Started in 2006 • 3 year pilot • 3 states – NY, FL, CA • Ended March 31, 2008

  7. Demonstration Project, continued… • RACs succeeded in correcting more than $1.03 billion in Medicare improper payments • Approximately 96 percent ($992.7 million) of the improper payments were overpayments collected from providers • Remaining 4 percent ($37.8 million) were underpayments repaid to providers • Overpayments Collected • CA - 32% • FL - 6% • NY – 8%

  8. RAC Federal Agency • The test went well, now it’s gone NATIONAL • Permanent National Program • Tax Relief and Health Care Act of 2006, Congress required a permanent and national RAC program to be in place by January 1, 2010 • NY = Region A RAC – Diversified Collection Services DCS Healthcare Perfomant Recovery INC. • Healthcare Reform Mandates Expansion to Medicaid by December 2010

  9. RAC Process Now • Three Types of Audits Identified Through Data Mining • Automated • Automatic audits are conducted through software analysis of large batches of claims • Do not require chart review • Semi-automated • Automatic audits are conducted through software analysis of large batches of claims • Require medical record review • Complex • Require medical record review • Coding Validations • Diagnosis-related Group (DRG) Validations • Medical Necessity Reviews (MNR)

  10. Appeals Process • The process consists of five levels, each level having a time specific deadline • Level one, also known as redetermination, is processed through the fiscal intermediary or the Medicare Administrative Contractor (MAC). • The provider has 120 days from the date of receipt of the initial claim determination to file an appeal for redetermination. The redetermination must be filed by day 30 of the demand letter date to avoid recoupment of the denial amount on day 41 from the MAC. The MAC has 60 days to make a determination. • Level two, also known as the reconsideration, is performed through a qualified independent contractor (QIC). • Providers have 180 days from the date of receipt of the redetermination decision to file a request for reconsideration by the QIC. The request must be filed by day 60 of receipt of the redetermination to avoid recoupment. Level two is the last stage where a provider can submit any additional information. The QIC has 60 days from the receipt of the reconsideration request to return a decision to the provider

  11. Appeals Process Continued… • Level three consists of an Administrative Law Judge (ALJ) hearing. • To present a case to the ALJ, the amount in controversy must be at least $140. Providers have 60 days from the receipt of the reconsideration decision to file a request for a hearing. At this point, CMS will recoup the overpayment plus interest, currently at a rate of 10.5%. • Level four consists of the Medicare Appeals Council. • Providers have 60 days from the receipt of the ALJ decision to file an appeal to the Medicare Appeals council. • Level five, the last level of appeal, is the Federal District Court. • Providers have 60 days from the decision issued by the Medicare Appeals Council to file an appeal to the federal district court. For requests filed on or before 12/31/2013, at least $1,400 remains in controversy. For requests filed on or after 01/01/2014, at least $1,430 remains in controversy. • The appeals process can be greater than two years per claim.

  12. Review and Collection Process Automated Review The Collection Process Complex Review

  13. How Does the RAC Ensure Accuracy • Each Recovery Audit team employs: • Certified coders • Nurses • Therapists • A physician CMD • The CMS’ New Issue Review Board provides greater oversight • Recovery Audit Validation Contractor provides annual accuracy scores for each Recovery Audit organization • If a Recovery Auditor loses at any level of appeal, the Recovery Auditor must return its contingency fee

  14. Advantages • Some good qualities to the RACs • RACs work on a contingency basis, compensation is only made when results are realized. • CMS will assume no risk because the auditors are paid a percentage of what they recoup in improper payments. • Through the use of the RACs CMS will be able to identify denial patterns, abuse, or fraud in a rapid and efficient manner. • On the flip side, CMS must prevent the RACs sacrifice of accuracy for efficiency.

  15. Disadvantages • The denials management process is the final step in the RAC process and the last window of opportunity for providers to keep the reimbursement they received for treating their patients • The appeals process can be costly and time consuming depending on the circumstances for each case • Each level involves tracking deadlines, preparing supporting documentation, customized appeal letters, and the submission of any additional evidence to support each case • It is up to the provider to ensure all the deadlines are met and the proper forms are submitted in a timely fashion for each level of appeal • The writing of appeal letters is very time consuming and takes both administrative and clinical staff away from their primary duties • In some cases, the help of an external contractor may be enlisted to help manage the appeals process – this is very costly

  16. Disadvantages Continued… • The RAC process is compounded with new claims being requested every 45 days and the increasing number of unresolved denials in various stages of the appeals process • Monies are constantly being refunded or recouped electronically, hence making the tracking of each claim extremely difficult • The administrative and clinical burden this process has created in many instances seems unethical • For example, interest starts to accrue on day 31 of an unfavorable RAC decision, but automatic recoupment does not occur till day 41 • If the provider does not pay close attention, they are essentially paying Medicare to treat the patient • The RACs have a rolling three year look back period, but providers can only rebill claims one calendar year from the date of service

  17. Disadvantages Continued… • The decision to admit a patient is a complex medical judgment made by the physician only after a number of factors have been considered • Many of the medical necessity denials involve decisions made hastily by post audit reviewers with the advantage of the 20/20 hindsight of the patient’s complete medical visit • If a provider is denied for medical necessity due to inappropriate setting, CMS is looking to recoup all payments made to the facility for that patient’s treatment • The provider stands to lose all monies associated with that claim unless the appeals process is invoked • Keep in mind that in the course of treatment, that patient consumed resources from the treating facility

  18. Who Cares? • The high overturn rate in the Medicare appeals process is evidence to the inappropriateness of many of these denials • Health care systems and providers are making sure they are doing everything possible to be prepared for this bombardment of audits and pre- and post-payment denials • It is crucial for providers to stay abreast of regulatory issues as they will continue to amplify in the coming years • Love or hate them, the RACs are here to stay • An ongoing process improvement plan should be implemented to effectively prevent any future denials. • This should include an improved utilization review process, routine auditing, and review of current admission protocols • Ongoing education should be provided to all hospital staff and physicians to demonstrate the importance of these issues • Though the appeals process is very lengthy, input from multiple disciplines will afford the opportunity for success in overturning the denials

  19. April 2011 RAC Update - New Statement of Work • New RAC Statement of Work • https://www.cms.gov/Recovery-Audit-Program/Downloads/090111RACFinSOW.pdf • A contract signed by all four RACs: • More CMS oversight of RACs to increase program collections • Semi-automated review • Requires better organization of websites • Requires appropriate notification of reasons for denials • Guarantees a discussion period

  20. Semi-automated Reviews April 2011 RAC creates “Semi-automated” Reviews • Hybrid of the two primary techniques – two parts • The only exception being that identified claims only contain possible errors, rather than assumed errors, as in the previous automated review process • Data mining to identify billing aberrancies with a high index of suspicion of improper payment • Notification letter sent to the provider explaining the potential billing error and giving the provider 45 days to submit documentation to support the original billing

  21. RAC Update—CMS RAC Report • CMS releases 2010 RAC annual report • $92.3 million in combined overpayments (82%) and underpayments (18%), $41.4 million were inpatient claims. • Providers appealed 5% of claims collected in FY 2010, nearly one in two of those appeals resulted in decisions made in favor of the provider (2010 appeals still in the process are not factored in to these statistics). • RAC Accuracy Scores? • Update on RAC expansion to Parts C and D • Contains region and state specific overpayment amounts and top incorrect codes and errors.

  22. CMS Identifies Total Improper Payment Figures; Top RAC Issue Per Region In the Q3 FY 2011 update, CMS identified $233.4 million in overpayments and $55.9 million in underpayments with a total correction amount of $289.3 million – more than $100 million more than in the previous quarter. In addition to the figures, the report also contains the top RAC issue per region for Q3 FY 2011. The issues are as follows: Region A:  Renal and urinary tract disorders (medical necessity)

  23. Bill to Address RAC Issues Introduced in Congress • The bill, which has the endorsement of the American Hospital Association, among other professional organizations, is the Medicare Audit Improvement Act of 2012 (H.R. 6575). It was introduced by U.S. Representatives Sam Graves (R-MO) and Adam Schiff (D-CA) on October 17, 2012 • RAC Act Legislation would establish a consolidated limit for medical record requests; • Improve auditor performance by implementing financial penalties and requiring medical necessity audits to focus on widespread payment errors; • The bill would improve recovery auditor transparency; restore due process rights under the Centers for Medicare & Medicaid Services’ (CMS) Part A to Part B Rebilling Demonstration; • Freedom of Information Act • What software are they using? • What revenue are they collecting? • What audits are they succeeding on and where are their errors falling? • Allow denied inpatient claims to be billed as outpatient claims, when appropriate

  24. The Obama Administration’s Expanded Efforts To Fight Health Care Fraud • In a Fact Sheet released December 13, the Obama administration announced that it has recovered over $5.6 billion in fraudulent payments in fiscal year 2011. This is an increase of 167% over 2008. • The Affordable Care Act (ACA) contains new tools now being used to fight waste and fraud in Medicare and Medicaid. According to the CMS Fact Sheet released December 13, 2011, the ACA: • Increases the federal sentencing guidelinesfor health care fraud offenses by 20-50% for crimes that involve more than $1 million in losses. • Establishes penalties for obstructing a fraud investigation. • Makes it easier for the government to recapture any funds acquired through fraudulent practices. • Makes it easier for the Department of Justice to investigate potential fraud or wrongdoing at facilities like nursing homes. • Provides an additional $350 million over 10 years to ramp up anti-fraud efforts, including increasing scrutiny of claims before they have been paid, investments in sophisticated data analytics, and more “feet on the street” law enforcement agents and others to fight fraud in the health care system.

  25. Expanded Efforts To Fight Health Care Fraud Continued… • Implements sophisticated predictive modeling techniques that “allow CMS for the first time to spot suspect claims and take action to stop fraudulent payments before they are paid.” • Increases coordination between states, CMS and law enforcement agencies at the Office of the Inspector General and the Department of Justice. • Deters fraudulent providers and suppliers from moving from state to state or between Medicare and Medicaid by requiring all states to terminate anyone from Medicaid who has been terminated by Medicare or by Medicaid in another state. • Requires CMS to work closely with the Office of the Inspector General on suspending payments to suspect providers and to provide the Office of the Inspector General and the Department of Justice with “improved real-time data access to enable investigators and law enforcement agents to more quickly detect and prosecute fraud schemes.” • The Senior Medicare Patrol program, led by the Administration on Aging, has educated over 4 million beneficiaries in group or one-on-one counseling sessions and has reached almost 25 million people through community education outreach events to identify and fight fraud.

  26. Expanded Efforts To Fight Health Care Fraud Continued… • Has centralized claims data from a wide range of federal health care programs “making it easier for agency and law enforcement officials to identify criminals and prevent fraud on a system-wide basis.” • Establishes the DOJ/HHS interagency Health Care Fraud Prevention and Enforcement Action Team (HEAT) Task Force in cities with high rates of Medicare fraud. • According to a July 16, 2010 HHS New Release: “[The HEAT program] is making a significant difference. In FY2009, the Department of Justice (DOJ), including its 94 U.S. Attorneys’ Offices, HHS’s Office of the Inspector General, and the Centers for Medicare and Medicaid Services (CMS) worked together to file charges involving criminal health care fraud violations against more than 800 defendants, secure 583 criminal convictions, open 886 new civil health care fraud investigations, obtain 337 civil administrative actions against individuals and organizations who were committing Medicare Fraud, and recovered more than $2.5 billion in criminal, civil and administrative actions related to our joint health care fraud enforcement activities.” • The DOJ and HHS have established a new Web site to educate the public on Medicare fraud ( www.hhs.gov/stopmedicarefraud ) and have set up a hot line at 1-800-HHS-TIPS (1-800-447-8477) to report suspected Medicare fraud.

  27. Expanded Efforts To Fight Health Care Fraud Continued… • Creates new screening requirements for all Medicare, Medicaid, and CHIP providers and suppliers, including site visits and in some cases, FBI criminal background checks for high risk provider types. • Gives CMS the authority to suspend Medicare payments to providers or suppliers while investigating a credible allegation of fraud as well as authority to impose a temporary moratorium on enrolling new providers or suppliers in certain geographic areas when a pattern of claims suggests a high rate of abuse. States may use these same tools in their CHIP and Medicaid programs. • Requires a face-to-face physician/patient meeting for referrals to Medicare home health and Medicare hospice. On July 12, 2011, CMS published a proposal to expand the face-to-face requirement to Medicaid. Providers and suppliers who order and refer certain items or services for Medicare beneficiaries are required to enroll in Medicare and maintain documentation on those orders and referrals. • Requires providers and suppliers to establish compliance programs. • Establishes new compliance and ethics plan requirements for nursing homes.

  28. Corrections for Performant Hit $493.4M

  29. Medical Necessity of Cardiology Procedures Top Issue For RACs In Region A and Unity

  30. Medicare Fee-for-Service Recovery Audit Program June 2013

  31. Recovery Audit Contractors (RAC) Updates 2013 Region A: Performant Recovery INC 2014 Region A: ?

  32. Five RACS, Not Four • Current RAC contracts are expected to expire in February 2014. The deadline for RFP submittal was April 4, 2013. The new RAC contract period is to extend from 2014 to 2018 • The most sweeping of all anticipated changes is that CMS will have recovery auditors in all four geographical RAC regions, as currently configured, with a fifth “nationwide” RAC responsible for identifying overpayments among home health hospice facilities and durable medical equipment (DME) • Under the plan, the four regional RACs no longer will handle improper payments for home health, hospice or DME. • All work must be completed by the current RAC contractors when the current contract expires

  33. RAC Updates Continued… • Another change to the RAC program is that CMS is requiring recovery auditors to support the agency throughout the entire appeals process, including at the administrative law judge (ALJ) level. According to its 2013 Statement of Work (SOW), CMS writes:  • For any Recovery Auditor-identified improper payment that is appealed by the provider, the Recovery Auditor shall provide support to CMS throughout the administrative appeals process and, where applicable, (during) a subsequent appeal to the appropriate federal court. This includes participating or taking party status at the administrative law judge (ALJ) level of appeal in a minimum of 25 percent of the cases that reach this level • The time frame for completing claims reviews is cut in half, from 60 to 30 days, and the new program will give CMS more control to stop work with a contractor that does not follow guidelines

  34. RAC Updates Continued… • CMS has been under siege on two fronts recently: • First via the lawsuit filed in federal court on Nov. 1, 2012 by the American Hospital Association against the U.S. Department of Health and Human Services • Second, the recently proposed legislation by U.S. Rep. Sam Graves (R-Mo.) and Rep. Adam Schiff (D-Calif.), who introduced the Medicare Audit Improvement Act of 2013 (HR 1250) on March 19, 2013.

  35. CMS Ruling CMS-1455-NR and Proposed Rule CMS-1455-P • On March 13, 2013, CMS issued an Administrator's Ruling (CMS-1455-R) establishing that when a Part A inpatient claim for a hospital inpatient admission is denied because the inpatient admission was not reasonable and necessary, the hospital may submit a Part B inpatient claim for services that would have been payable to the hospital had the beneficiary originally been treated as an outpatient rather than admitted as an inpatient. • Specifically, the hospital may submit a Part B inpatient claim for more services than just those listed in Section 10, Chapter 6 of the MBPM to the extent additional reasonable and necessary services were furnished. • Hospitals also may bill separately for outpatient services furnished in the three-day payment window (or one-day payment window for non-IPPS hospitals) prior to the inpatient admission as the outpatient services that they were on an outpatient Part B claim. • Hospitals may only submit claims for Part B inpatient and Part B outpatient services that are reasonable and necessary in accordance with Medicare coverage and payment rules and must maintain documentation to support the services for which they are rebilling. • The Part B inpatient and Part B outpatient claims that are filed later than 1 calendar year after the date of service are not to be rejected as untimely by Medicare’s claims processing system as long as the corresponding denied Part A inpatient claim was filed timely in accordance with 42 CFR 424.44.

  36. CMS Finalizes Rebilling Policy Finalizes proposed limitations on rebilling certain inpatient denials Monday, August 5, 2013 The Centers for Medicare & Medicaid Services (CMS) on Aug. 2 finalized its policy on rebilling Medicare Part A claims denied by Medicare contractors, including recovery audit contractors (RACs), as part of its fiscal year 2014 hospital inpatient prospective payment system (PPS) final rule. CMS made few changes to its March 13 proposed rebilling policy. Specifically, the final rule: • Limits rebilling to claims that are within one year of the date the service was provided (as proposed); • Prohibits rebilling of “services that require an outpatient status,” including outpatient visits, emergency department visits and observations services (as proposed); and • Restricts the scope of administrative law judge review to whether a claim is reasonable and necessary under Part A (as proposed).

  37. HANYS Files Brief in AHA RAC Lawsuit DETAILS: • The American Hospital Association (AHA) filed its case last fall to challenge the Centers for Medicare and Medicaid Services (CMS) policy that effectively prohibits rebilling Medicare Part B when a Part A claim is denied by a Recovery Audit Contractor (RAC). After CMS issued Interim Rule 1455, which allows rebilling for a temporary period that ends when regulations reinstating the prohibition take effect, AHA amended its case to challenge CMS' proposed regulations. • Last month, the government asked the federal court to dismiss AHA's lawsuit on two grounds. The government contends that the hospital co-plaintiffs in the case have not pursued claims through the entirety of the administrative appeals process and therefore are seeking court intervention prematurely. The government also claims that the case is inappropriate because it challenges CMS' proposed rule, not a final rule. • HANYS' Board Authorizes RAC Lawsuit; Member Participation Essential • “AHA's legal papers present powerful legal arguments to rebut the government's assertions. Rather than repeat AHA's legal presentation, HANYS' brief focuses on real-world issues hospitals face. Using data supplied by member hospitals, we point out that the appeals process has become absurdly slow and is now riddled with unending cycles of delay, obstruction, and backward-moving processes.” • “We also emphasize that the system quickly wrings repayments from providers and retains these dollars for years as appeals grind to a virtual halt. However, those few appeals that are decided by administrative law judges are overwhelmingly in hospitals' favor, accentuating the fundamental unfairness of the entire process.” • HANYS thanked those members that quickly provided invaluable information that was cited in our brief.

  38. HANYS' Board Authorizes RAC Lawsuit; Member Participation Essential • On January 18, the HANYS Board of Trustees unanimously authorized filing litigation to challenge many features of the Medicare Recovery Audit Contractor (RAC) program. The Board's authorization was conditioned on widespread member participation in the case and further refinement of legal arguments. • HANYS urges all members that have received RAC denials to join this lawsuit as a unified force to fight RAC program abuses.

  39. Two Midnight Rule MFCU MAC ZPICS RAC CERT OIG OMIG

  40. Transmittal 505 CMS Manual System Department of Health & Human Services (DHHS) Pub 100-08 Medicare Program Integrity Centers for Medicare & Medicaid Services (CMS) Date: February 5, 2014 Change Request 8425 EFFECTIVE DATE: March 6, 2014 IMPLEMENTATION DATE: March 6, 2014 The MAC, Recovery Auditor, and ZPIC have the discretion to deny other related claims submitted before or after the claim in question.If documentation associated with one claim can be used to validate another claim, those claims may be considered “related.” Claims may be “related” in the following EXAMPLE situations: • An inpatient claim and associated documentation is reviewed and determined to be not reasonable and necessary and therefore the physician claim can be determined to be not reasonable and necessary. • A diagnostic test claim and associated documentation is reviewed and determined to be not reasonable and necessary and therefore the professional component can be determined to be not reasonable and necessary. • The list of examples is not an exhaustive list and claims may be “related” in other scenarios. • If “related” claims are denied automatically, MACs shall count these denials as automated review. If the “related” claims are denied after human intervention, MACs shall count these denials as routine review. • The MAC, Recovery Auditor, and ZPIC are not required to request additional documentation for the related claims before issuing a denial for the related claims.

  41. Process Management • Denials Management Coordinator • RAC Tracking Software • RAC Dashboard • RAC Response Team • Physician Involvement

  42. RAC Response Team • Members • Utilization Management • Health Information Management • Patient Financial Services • Physicians • Reimbursement • Corporate Compliance • Duties • Conduct Risk Assessment for CMS approved projects • Identify potential population under review • Conduct audit to determine if any vulnerabilities exist • Develop corrective action plan if applicable • Communication/Education/Controls • Continued Monitoring

  43. What Can We Do About It • Educate physicians on appropriate level of care from the onset of patient encounter • Start small—outpatients can progress to inpatients with appropriate diagnosis and intensity of service • Provide tools to registration and scheduling staff to raise awareness of inpatient only list for Medicare • Explore IT solutions to alert registration staff of possible variance from appropriate patient status at time of scheduling/registration • Educate providers to improve documentation regarding medical necessity and severity of illness • Educate patients on their appropriate level of care

  44. Medical Short Stay Obstacles • Medicare does not follow any established criteria • Patients differential diagnoses does not always match the principal diagnosis determined after diagnostic workup—red flags on claims review—constipation as principal diagnosis. • Documentation does not support medical necessity • Documentation does not support intensity of service • Misconception that patient receives better treatment as inpatient status

  45. Surgical Short Stay Obstacles • Physicians drive admission type (current state) • Procedure does not warrant inpatient hospitalization • Lack of awareness of inpatient only list (Medicare only) • Variability among payers • Patient Perceptions — ”I was an inpatient because I stayed the night!” • Patient out of pocket responsibilities varies by inpatient or outpatient status

  46. Unity’s Steps To Improve Patient Status Assignment • Use appropriate screening criteria • Screening criteria is nationally accepted, evidence based, and approved by fiscal intermediary, MAC, and Quality Improvement Organization • Apply screening criteria to 100% of Medicare cases • Refer cases that require a second-level physician review to a physician advisor (EHR) • UR staff members stick to the screening criteria • Violation of the Conditions of Participation if we go outside the screening criteria • Education to the UR Staff on proper screening criteria application • Make sure all new staff is properly trained • More than one physician on staff who is capable of performing a second-level review • Electronic Medical Record Order Sets

  47. HUGS – Market Share Review

  48. % CHANGE December 2013 VS. 2012

  49. % CHANGE YTD December 2013 VS. 2012

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