RAC AUDITS April 19, 2012 4:30-5:30 pm LHIMA State Convention 2012 Lafayette, Louisiana

1. RAC AUDITSApril 19, 2012 � 4:30-5:30 pmLHIMA State Convention 2012Lafayette, Louisiana Presented By: Danielle L. Trostorff, Shareholder Health Care Law Department Baker Donelson Bearman Caldwell & Berkowitz, PC 201 St. Charles Avenue, Suite 3600 New Orleans, Louisiana 70170 (504) 566-5224 dtrostorff@bakerdonelson.com

2. HISTORY Section 306 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) authorized CMS to conduct a 3 year demonstration using Recovery Audit Contractors (RACs) to detect and correct improper payments in the Medicare FFS program. RACs were paid on a contingency fee basis � a percentage of the improper payments corrected by the RACs. Section 911 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003. The ZPICs perform both Medical Review (�MR� and Benefit Integrity review (�BI�) MR: ZPIC focuses on making coverage and/or coding determinations for medical necessity BI: ZPIC reviews claims for possible fraudulent billing activity Unlike the RACs, ZPICs are not paid based on a contingency fee arrangement with CMS

3. PERMANENT RAC Tax Relief and Health Care Act of 2006, Section 302 establishes permanent RAC Implementation in all 50 states by January 1, 2010 RAC Medicaid PPACA RAC Medicaid regulations 9/16/11 76 FR 57808-57844 Look back 3 years from the date the claim was paid RACs cannot review claims prior to October 1, 2007

4. Independent Contractors Collect overpayments from Providers Payback underpayments to Providers Paid on contingency fee basis for overpayments Paid on a percentage basis for underpayments Fees will be disclosed WHO ARE THOSE GUYS

5. ZPIC Jurisdiction The Zone Program Integrity Contractors (ZPICs) replace the existing Program Safeguard Contractors (PSCs) and the Medicare Drug Integrity Contractors (MEDICs). ZPICs are charged with ferreting out fraud and abuse in the Medicare Programs. ZPICs will ensure the integrity of all Medicare-related claims in assigned zones unlike their predecessors who handled Medicare Part A Claims or Medicare Part B Claims in the same zones. ZPICs handle Part C Medicare Advantage Health Plans and Part D prescription drug plans.

6. ZPIC Zones There are seven ZPIC zones Zone 1 - California, Nevada, American Samoa, Guam, Hawaii, the Northern Mariana Islands, Palau, Marshall Islands, and the Federated States of Micronesia. Zone 2 - Alaska, Washington, Oregon, Montana, Idaho, Wyoming, Utah, Arizona, North Dakota, South Dakota, Nebraska, Kansas, Iowa and Missouri. Zone 3 - Minnesota, Wisconsin, Illinois, Indiana, Michigan, Ohio, and Kentucky. Zone 4 - Colorado, New Mexico, Oklahoma, and Texas. Zone 5 - Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia. Zone 6 - Pennsylvania, New York, Maryland, Washington D.C., Delaware, Maine, Massachusetts, New Jersey, Connecticut, Rhode Island, New Hampshire, and Vermont. Zone 7 - Florida, Puerto Rico and Virgin Islands.

7. ZPIC Zones (con�t) The alignment of ZPIC and (Medicare Administrative Contractors) MAC jurisdictions will provide a continuity between claims review and the integrity processes. ZPIC zones also align with Program Integrity field offices ZPIC audit roll out is now fully under way in all zones ZPICs are authorized to conduct investigations, perform audits and provide support to law enforcement.

8. �Hot� Zones Zone 7 is devoted almost solely to Florida Other �hot zones� include California, particularly Los Angeles, Kern, Orange, Riverside, San Bernardino and San Diego counties), Texas (Houston and Dallas) and Louisiana

9. ZPICs � An Overview ZPIC Jurisdictions (now all seven ZPIC zones, which cover the entire United States, have been contracted) Zone 1 � SafeGuard Services, LLC Zone 2 � NCI, Inc. (previously AdvanceMed) Zone 3 � Cahaba Safeguard Administrators, LLC Zone 4 � Health Integrity, LLC Zone 5 � NCI, Inc. (previously AdvanceMed) Zone 6 � Cahaba Safeguard Administrators, LLC Zone 7 � SafeGuard Services, LLC

11. Diversified Collection Services, Inc. (DCS) of Livermore, California, in Region A, working in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, New York, Maryland, District of Columbia, Connecticut, Delaware, Pennsylvania, and New Jersey. Region A - PRG-Schultz, Inc. will perform responsibilities described in the subcontract statement of work (SOW) with respect to all Home Health claims in RAC Region A and all Part A/B claims processed by the Medicare Administrative Contractor (MAC) for Jurisdiction 14.� Region A MAC Jurisdiction � J12 � DC, MO, DE, PA, NJ; J13 � NY, CT; J-14 � NH, VT, ME, MA, and RI CGI Technologies and Solutions, Inc. of Fairfax, Virginia, in Region B, working in Michigan, Indiana, Minnesota, Wisconsin, Illinois, Ohio, and Kentucky. Region B - PRG-Schultz, Inc. will perform responsibilities described in the subcontract statement of work (SOW) with respect to all Durable Medical Equipment and Home Health claims in RAC Region B and all Part A/B claims processed by the Medicare Administrative Contractor (�MAC�) for Jurisdiction 6 in Wisconsin and Minnesota.� RAC Auditor Assignments

12. Connolly Consulting Associates, Inc. of Wilton, Connecticut, in Region C, working in South Carolina, Florida, Colorado, New Mexico, Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, Tennessee, Texas, Virginia, West Virginia, Puerto Rico, and U.S. Virgin Islands. Region C - Viant Payment Systems, Inc. will perform Part A complex reviews equivalent to twenty-five percent of Recovery Audit Contractor (RAC) Region C�s Medicare discharges and physician-administered J-code claims in the states of North Carolina, South Carolina, Virginia, and West Virginia. HealthDataInsights, Inc. (HDI) of Las Vegas, Nevada, in Region D, working in Montana, Wyoming, North Dakota, South Dakota, Utah and Arizona. Region D - PRG-Schultz, Inc. will perform responsibilities described in the subcontract statement of work (SOW) with respect to all Home Health claims in RAC Region D and all Part A/B claims processed by the Medicare Administrative Contractor for Jurisdiction 2 Under the PPACA, RACs will also take over the Medicaid Integrity Contractor (MIC) function effective December 31, 2010. RAC contracts for this function will be with the State but CMS will work cooperatively with the States to accomplish this. RACs will also expand into the Part C and D Programs.