The RACs Attack!

1. The RACs Attack! Recovery Auditors and Critical Access Hospitals

2. 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

3. 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)

4. 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

5. 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

6. 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

7. Required Customer Services • Toll Free Number • Knowledgeable customer service staff • Quality Assurance Program • Website • New Issue Listing! • Provider Contact Portal • Medical Record Tracking

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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 ⅔of medical records reviewed did not contain an improper payment

16. 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%

17. 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

18. 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 keypoint • Complex review issues include DRG validation & medical necessity • Medical necessity applies to CAHs even if DRGs do not

19. 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!

20. 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

21. 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

22. 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.

23. 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

24. 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?”

25. 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

26. Teamwork is Critical Image: Apple's Eyes Studio / FreeDigitalPhotos.net

27. 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.

28. 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.

29. If that’s not enough …

30. Feeling Overwhelmed?

31. 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?

32. 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

33. 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

34. 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

35. 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.”

36. Questions?