Recovery Audit Contractors

1. Darren Anderson, MSN, RN, ACM Manager, Utilization Management Vidant Medical Center Recovery Audit Contractors

2. Vidant Health 10 hospitals across 28 counties in eastern North Carolina Largest employer with nearly 11,000 employees serving 1.4 million people

3. Vidant Medical Center • Tertiary care center for the region • Affiliated with Brody School of Medicine at East Carolina University • Key Stats Fiscal Year 2011: • 861 Licensed Beds • Level I Trauma Center • 44,352 Admissions • 32,026 Surgeries • 3,711 Births • 111,418 ED Visits • 261,941 Outpatient Visits

4. History of the RAC • 2003 – Section 306 of the Medicare Modernization Act • Demonstration Project: 2005 - 2008 • 2005: 3 States • Florida • California • New York • 2007: 2 Additional States • Massachusetts • South Carolina • 2006 – Section 302 of the Tax Relief and Health Care Act • Permanent Program by Jan 1, 2010 • Nationwide • 2010 - 2012 – Congress further expands RAC program under the Affordable Care Act • Medicare Part C and D • State Medicaid programs

5. RAC Demonstration • Per CMS: • RACs reviewed all claims from 2001 – 2007 • “Proprietary algorithms” to identify improper payments without medical record review • “Complex” medical record review of claims “likely to contain improper payments” • Correction of $1.03 billion in improper Medicare payments • 96% ($990 million) were overpayments • Medically unnecessary care • Incorrect Coding • Contractors were paid a contingency fee for all improper payments identified

6. Permanent Program • Some changes: • RAC must hire a physician medical director • Record request limits • Pre-approval from CMS of “issues” to review • Contingency fees refunded for any decision overturned on appeal • Look back period restricted to 3 years from claim date • 4 Regions • Region A: Diversified Collection Services • Region B: CGI Federal • Region C: Connolly • Region D: HealthData Insights

7. CMS Program ResultsJuly – September 2012 *Figures provided in millions.

8. CMS Program ResultsJuly – September 2012

9. What’s Next? • RACs expanding to Medicaid • North Carolina contractor named: HMS • RAC agreements with at least 24 other states • NCHA Medicaid RAC Education • January 17, Greensboro, NC • E&M Codes • Medicare Part C and D • Pre-Payment Audits

10. Issues of Concern to Coding Professionals • E&M Codes • Which set of guidelines? • Auditors use both and give credit for highest • EMR influence? • Place of Service • Where is the patient? • Principle Diagnosis / Procedure • What does the record support? • How much evidence? • Coding Clinics

11. Process • Data Mining • Automatic Takebacks • “Never” events • Multiple “one-time” events • Non-covered services (labs, etc.) • Complex Reviews: • Additional Documentation Request (ADR) • Notification by RAC that they are reviewing a case or set of cases based on an approved issue • 45 days to get records to RAC • Review Results Letter • 60 days after records received • Results of the RAC audit

12. Process • Complex Review (continued) • Demand Letter • No time frame to issue • “Official” date of denial • Appeals period begins • Options after Demand: • Agree with RAC determination (no appeal) • Appeal per established CMS guidelines • Engage in Discussion Period with RAC

13. Medicare Appeals Process • Level 1 – Redetermination • 120 days from demand to appeal • Appeal is to Medicare Administrative Contractor (MAC) • MAC has 60 days to review / respond • Level 2 – Reconsideration • 180 days from date of MAC Determination • Appeal is to Qualified Independent Contractor (QIC) • QIC has 60 days to review / respond

14. Medicare Appeals Process • Level 3 – Administrative Law Judge (ALJ) • 60 days from QIC Determination • Amount in controversy? • No new evidence • ALJ has 90 days to review / respond • Level 4 – Departmental Appeals Board / Medicare Appeals Council • 60 days from ALJ Determination • DAB has 90 days to review / respond • Level 5 – Judicial Review in US District Court • 60 days from DAB Determination • Need Legal Representation • Contested Claim Amount > $1,300

15. Factors to Consider • Amount in controversy • Interest Penalties • Interest accrues from date of demand • Filing deadlines to prevent recoupment • Automatic recoupment at ALJ level (plus interest) • Number of cases • Extrapolation • Cost to appeal the case • US District Court is very expensive

16. Medicaid RAC • A lot of unknowns • Record request limits? • Look-back period? • Pre-approval of issues? • ???

17. Who Else is Out There? • Alphabet Soup • RAC (Recovery Audit Contractor) • Medicare Post-Payment • Medicare Pre-Payment • Medicaid • MAC (Medicare Administrative Contractor) • CERT (Comprehensive Error Rate Testing) • ZPIC (Zone Program Integrity Contractors) • MIC (Medicaid Integrity Contractors) • Commercial Auditors • Many are also RACs / MICs!!

18. What to Do? • Self Audits • Targeted / Approved Issues • Outside Auditor • Identify problems and correct them • RAC Team • Billing • Office Manager • Coder • Lawyer? • Financial Reserves • Plan for losses / refunds up front • External Experts • Consider the cost vs. the benefit • APPEAL • Aggressively appeal appropriate cases

19. Conclusion We live in an audit-rich environment RACs are here to stay As the RACs go, so goes the commercial payors Get it right the first time – minimize your audit risk