Medicare Recovery Audit Contractors National Association of Psychiatric Health Systems August 4, 2008

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2. 2 Recovery Audit Contractors Demo Summary National Rollout AHA Strategy

3. 3 Recovery Audit Contractors Medicare Modernization Act (Rx bill) 3-year demonstration project Recover overpayments and identify underpayments Payment made on a contingency fee basis 3 states selected based on highest per capita Medicare utilization: California Florida New York Tax Relief and Health Care Act of 2006 Expanded to all states by 2010 Started in 2000?? Demo operated 2004-07 and wrapping up now Started in 2000?? Demo operated 2004-07 and wrapping up now

4. 4 RAC Three-State Demo Review last four years of provider claims Use automated software programs to identify potential payment errors Types of Payment Review Duplicate payments FI errors Medical necessity Coding errors Hospitals can appeal using the standard Medicare appeals process What 4 years of claims were in play – if started in 2004 – they could go back to 2000 claims???? What 4 years of claims were in play – if started in 2004 – they could go back to 2000 claims????

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7. 7 RAC Target Areas Coding Targets: Correct coding for debridement (excisional or not) DRG 263/MSDRG 573 and DRG 217/MS-DRGs 463, 464 and 465 DRGs designated as complicated or having comorbidity with only one secondary diagnosis DRGs 079, 416, 468, 475, 477 and 483 Correct coding of discharge status for PAC transfer Unit Coding grams vs. milligram, number or procedures per day (e.g., appendectomy) Medical Necessity Targets: Inpatient admissions for procedures that are eligible for outpatient surgery (eg. laparoscopy, cholecystectomy) One-day stays Chest pain Back Pain: DRG 243/MS-DRG 551 Three-day stays to qualify for SNF care Inpatient rehabilitation (joint replacement patients)

8. 8 RAC Impact on Hospitals

9. 9 RAC Impact on Hospitals

10. 10 RAC Rollout Schedule RAC Demo ended March 27 Demo evaluation report released July 11 4 new RACs announced early August 1(or later) CMS/RACs to conduct outreach to hospitals in first round of RAC rollout 4-6 weeks if existing RAC 8-12 weeks if new RAC RAC audits begin 4-6 weeks after CMS/RAC education with state hospital association

11. 11 CMS’ National Rollout Plan

12. 12 Hospital View Hospitals strive for accuracy in service, billing, and coding Hospitals support program integrity efforts Lots of overlap by auditors RACs’ bad behavior unacceptable

13. Recovery Audit Contractors add to CMS redundancy and complexity

14. 14 AHA Strategy Push CMS for administrative changes Letters and continual discussions with CMS RAC improvements for permanent program Push Congress for legislative relief Advocacy – STOP and Fix-it Capps-Nunes legislation (HR 4105) Member Education Collaboration and education with state, metro and regional hospital associations Member advisories and education RACTrac: Collect data and examples of egregious behavior

15. 15 CMS Response to Hospital Concerns No contingency fee when denial is overturned at any level of appeal RAC contingency fees to be publicly released Three-year look-back period for review No claims with a payment date prior to October 1, 2007 will be reviewed, regardless of the actual start date for the RAC in a state.

16. 16 CMS Response to Hospital Concerns

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18. 18 CMS Response to Hospital Concerns with Medical Necessity Review RACs to initially focus on “black & white” issues Required to have a medical director Auditor credentials available on request Limits on the number of medical records a RAC can request per month RACs must accept electronically scanned/digital images of medical records New issue review process Audit of RAC performance

19. 19 AHA Strategy Push CMS for administrative changes Letters and continual discussions with CMS RAC improvements for permanent program Push Congress for legislative relief Advocacy – STOP and Fix-it Capps-Nunes legislation (HR 4105) Member Education Collaboration and education with state, metro and regional hospital associations Member advisories and education RACTrac: Collect data and examples of egregious behavior

20. 20 RAC Legislation H.R. 4105 The Medicare Recovery Audit Contractor Program Moratorium Act of 2007 Rep. Lois Capps (D-CA) Rep. Devin Nunes (R-CA) 100 Co-sponsors (23Rs and 77Ds) 1-year Moratorium CMS Report GAO Study Senate Bill??

21. 21 Message to CMS and Congress STOP and Fix-it Slow down Reduce or remove contingency method of payment Exclude medical necessity from RAC review (or more physician involvement) Reduce look-back to 12 months Centralized electronic tracking platform of RAC denials and appeals Exemption from “timely billing” rules Improved CMS management and transparency of RAC program RAC and Provider education Bigger focus on UNDERpayments

22. 22 AHA Strategy Push CMS for administrative changes Letters and continual discussions with CMS RAC improvements for permanent program Push Congress for legislative relief Advocacy – STOP and Fix-it Capps-Nunes legislation (HR 4105) Member Education Collaboration and education with state, metro and regional hospital associations Member advisories and education RACTrac: Collect data and examples of egregious behavior

23. 23 AHA Resources on RACs

24. 24 AHA Resources on RACs Upcoming Member Advisories Medicare Appeals Process andhow RAC program works Upcoming AHA Summer Call Series Appealing RAC Denials RAC Coding Strategies Maximize RAC Compliance/Minimize RAC Risk

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26. 26 RACTrac Goals PRIMARY purpose is to support advocacy efforts Tell the Hospital Story RACTrac will help the field better understand the nature of RAC activities Earlier this year, it was announced that AHA would develop a data collection tool to assist us in our advocacy efforts around RACs We have now named this initiative AHA RAC TRAC. RAC TRAC IS An investment in a long term data collection effort and we see you all as key partners in making this effort successful. RAC TRACK will collect data that will help the field better understand the nature of RAC activities And the data we collect will be primarily used for advocacy purposes Earlier this year, it was announced that AHA would develop a data collection tool to assist us in our advocacy efforts around RACs We have now named this initiative AHA RAC TRAC. RAC TRAC IS An investment in a long term data collection effort and we see you all as key partners in making this effort successful. RAC TRACK will collect data that will help the field better understand the nature of RAC activities And the data we collect will be primarily used for advocacy purposes

27. 27 Study Shows Inappropriate Medicare Payment Denials Reduce Access to Inpatient Medical Rehabilitation Services We have some experience in this type of data collection and I wanted to just briefly discuss how we envision this data to assist us in the future… In early 2007, AHA commissioned a study to look more closely at excessive medical necessity reviews by the FIs of inpatient rehabilitation facilities, particularly in areas of the country where FI’s have implemented a Local Coverage Determination, We have some experience in this type of data collection and I wanted to just briefly discuss how we envision this data to assist us in the future… In early 2007, AHA commissioned a study to look more closely at excessive medical necessity reviews by the FIs of inpatient rehabilitation facilities, particularly in areas of the country where FI’s have implemented a Local Coverage Determination,

28. 28 We collected claims denial information from 72 Rehab facilities across the nation resulting in about 2200 claims for review. After careful analysis of the data and looking specifically at claims that had been appealed and completed their appeals process, we found that 63 percent of the denials were overturned, returning nearly $6 million to providers. Fiscal intermediaries were inaccurately denying payment more than half of the time. This type of data resonates with Members of Congress and the media. We collected claims denial information from 72 Rehab facilities across the nation resulting in about 2200 claims for review. After careful analysis of the data and looking specifically at claims that had been appealed and completed their appeals process, we found that 63 percent of the denials were overturned, returning nearly $6 million to providers. Fiscal intermediaries were inaccurately denying payment more than half of the time. This type of data resonates with Members of Congress and the media.

29. 29 What is RACTrac? Web-based survey collecting RAC experience data from hospitals DATA COLLECTION TO BEGIN POST RAC AUDITS Solicitation via email and fax Quarterly data collection (open and close time period) Unit of analysis is the hospital – i.e. ONE Medicare provider number per data entry General Med/Surge (including CAH’s) LTAC Inpatient Rehabilitation Psyche Collect summary information on RAC experience to date Overpayments (automated and complex) Underpayments Appeals information Administrative Burden We believe that with your help, we will be able to get a much broader data set for analysis through this initiative. AHA contracted with Booz Allen Hamilton at the end of December and have been forging ahead in creating RAC TRAC. RAC TRAC will be a web-based…. We believe that with your help, we will be able to get a much broader data set for analysis through this initiative. AHA contracted with Booz Allen Hamilton at the end of December and have been forging ahead in creating RAC TRAC. RAC TRAC will be a web-based….

30. 30 RACTrac will give us trends in RAC activity Sample Talking Point: 80% of hospitals experienced denials in their inpatient services in Quarter 1 Hospitals cited medical necessity as their top reason for RAC denials in Quarter 1 Total dollars reported to have been recouped by hospitals responding in RAC TRAC to date is $XXX million or $XXX per hospital.

31. 31 AHA RACTrac Survey(www.aharactrac.org)

32. 32 Vendors in the Marketplace AHA is currently working with several vendors who have developed claim level RAC audit tracking tools and would like to make their tools RACTrac “compliant.” Ask your vendor – Is your tool AHA RACTrac “compliant?” AHA will work with others in order to ensure that its easy for you to report data back to AHA

33. 33 Top 5 Reasons to Report to RACTrac Internally tracking RAC audit activity is essential for minimizing financial risk, identifying areas for improvement and surviving the RACs Data on the impact of the RACs on hospitals is essential for a successful advocacy effort. Participation in RACTrac will provide AHA and the State Association the data they need to advocate on your behalf. Participation in RACTrac will allow AHA to identify trends in reasons for denials across the RAC regions or at the national level. This information can be used to educate the field. RACTrac provides a basic tool to organize your data

34. 34 National RACTrac Rollout and Timeline www.AHARACTrac.org COMING SOON! Estimated national release of RACTrac is currently scheduled for summer 2008 RACTrac Claim level tracking guide RACTrac Member Advisory AHA News and News Now Letters and Emails to all CEOs Following Member Advisory with Security Codes for Registering in RACTrac RACTrac Webinar Series Data collection to officially begin – post RAC audits

35. 35 QUESTIONS Don May, Vice President, Policy Alyssa Keefe, Senior Associate Director, Policy Questions on RACs RACinfo@aha.org