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Medicare Recovery Audit Contractor (RAC)

Medicare Recovery Audit Contractor (RAC). An Uncertain Future June 2008. RAC Demonstration. Name of RAC Jurisdiction (start date) Connolly Consulting New York (March 2006) Massachusetts (July 2007) Health Data Insights Florida (March 2006) South Carolina (July 2007)

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Medicare Recovery Audit Contractor (RAC)

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  1. Medicare Recovery Audit Contractor(RAC) An Uncertain Future June 2008

  2. RAC Demonstration Name of RAC Jurisdiction (start date) Connolly Consulting New York (March 2006) Massachusetts (July 2007) Health Data Insights Florida (March 2006) South Carolina (July 2007) PRG-Schultz California (March 2006) Arizona (July 2007)

  3. Where did RACs find Overpayments? Most overpayments were collected from inpatient hospital services for medical necessity and coding Outpatient Hosp/IRF/SNF 14% Incorrectly Coded 35% Other 17% DME 1% Physician/ Ambulance/ Lab/Other 1.5% No/Insufficient Documentation 8% Inpatient Hospital 84% Medically Unnecessary 40% 95% or more from Hospitals SOURCE: RAC Data Warehouse, CMS presentation on 5/13/08

  4. Prepayment Claims Review National Correct Coding Initiatives (NCCI) Edits Medically Unlikely Edits (MUE) Post payment Claim Review Comprehensive Error Rate Testing (CERT) Program Recovery Audit Contractor (RAC) MedicareClaim Review Programs Carrier/FI/MAC Medical Review (MR)

  5. National Rollout Plan

  6. MAC-RAC Jurisdictions StateMACRAC Colorado 4-Trailblazer-Spring C-Spring 08 New Mexico 4-Trailblazer-Spring C-Spring 08 Oklahoma 4-Trailblazer-Spring C-Fall 08 Texas 4-Trailblazer-Spring C-Fall 08 Arkansas 7-(Award 9/07 now Spring 08) C-Jan 09 Louisiana 7-(Award 9/07 now Spring 08) C-Jan 09 Mississippi 7-(Award 9/07 now Spring 08) C-Jan 09 Florida 9-(Award 9/08) C-Spring 08Tennessee 10-(Award 9/08) C-Jan 09 Alabama 10-(Award 9/08) C-Jan 09 Georgia 10-(Award 9/08) C-Jan 09 South Carolina 11-(Award 9/ 08) C-Spring 08North Carolina 11-(Award 9/ 08) C-Jan 09 Virginia 11-(Award 9/08) C-Jan 09 West Virginia 11-(Award 9/ 08) C-Jan 09

  7. RAC Rollout • 4 new RACs to be announced late July • There will be a RAC blackout period for: • 3 months before a MAC begins processing claims • 3 months after a MAC begins processing claims • CMS/RACs to conduct outreach to hospitals in first round • 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

  8. RAC Scope of Work What RACs may not review: • Services provided under a program other than Medicare FFS (i.e., Medicare Advantage) • Cost report settlement process (IME or GME payments) • Claims more than 3 years past the claim paid date. • Claims paid earlier than October 1, 2007. • Claims where the beneficiary is liable for the overpayment because the provider is without fault with respect to the overpayment. • Claims in a demonstration program or with special processing rules • Prepayment Review

  9. RAC Scope of Work Types of RAC audits: • Automated review – when the RAC is able to make an over/under payment determination without evaluating the medical record. • Excessive unit audits – the RAC searches for claims for two or more identical surgical procedures for the same beneficiary on the same day at the same hospital. • Incorrect discharge status code – the RAC reviews the full claims series for a given time period and discovers the hospital had coded the beneficiary as going home however a second claims from another provider indicated the beneficiary was in fact transferred from the first hospital. • Complex review – when the RAC makes an over/under payment determination after evaluating the medical record.

  10. RAC Scope of Work RACs may review improper payments that result from: • Incorrect payment amounts • Non-covered services (including services that are not reasonable and necessary under section 1862(a)(1)(A) of the Social Security Act) • Incorrectly coded services (including MSDRG miscoding) • Duplicate services

  11. RAC Target Areas Coding Targets: • Reporting of excisional debridement (86.22) w/o adequate medical record documentation to meet the definition of “excisional.” • MSDRG 573-578 and MS-DRGs 463, 464 and 465 • DRGs designated as CC or MCC with only one secondary diagnosis. i.e., • MSDRG 329 Major Small & Large bowel with MCC 4.5059 • MSDRG 330 Major Small & Large bowel with CC 2.8935 • MSDRG 331 Major Small & Large bowel w/o cc/MCC 1.8415 (Are you coding from pathology reports without physician documentation?) (Are you coding from lab reports without physician documentation?) • Correct coding of discharge status for post acute care transfer (discharge status codes)

  12. RAC Target Areas Coding Targets: • Unit Coding • grams vs. milligram, • number or procedures per day (e.g., appendectomy, colonoscopy) (automated review) • blood transfusion 36430, billed 1 service per pint rather than 1 service per transfusion session (automated review) • speech/hearing therapy 92507, billed 1 service per 15 minutes rather than 1 service per session. Processing manual 100-5, Chap 5, Sec 20.2 (automated review) • Neulasta J2505, billed 1 service per mg when the definition of the code is 1 service per 6 mg vial. Transmittal 949. (automated review)

  13. RAC Target Areas Medical Necessity Targets: • Inpatient admissions for procedures that are eligible for outpatient surgery (eg. laparoscopy, cholecystectomy) • One-day stays that would qualify as observation • Chest pain: MSDRG 313 • Back Pain: MSDRG 551 • Three-day stays to qualify for SNF care • Inpatient rehabilitation (joint replacement patients)-RAC determines service was medically unnecessary for inpatient setting according to Medicare ruling 85-2 and Medicare Benefit Polity Manual Section 110.

  14. RAC Target Areas Medical Necessity Targets: • Wrong principal diagnosis – • Incorrect coding – principal diagnosis on claims did not match the principal diagnosis in the medical record. Example: respiratory failure 518.81 was listed as the principal diagnosis but the medical record indicates that sepsis 038-038.9 was the principal diagnosis. • Most common MSDRGs 981-983 • Incorrect coding – hospital reported a principal diagnosis of 03.89 septicemia. Medical record shows diagnosis of urosepsis, not septicemia or sepsis; blood cultures were negative. • Most Frequent Medically Unnecessary Errors* – • MSDRG 313 Chest Pain 20.1% • MSDRG 551 Medical Back 15.5% • MSDRG 391 Esoph,Gastroent 11.9% • MSDRG 640 Nutr & Misc Metab Disor 10.7% • MSDRG 287 Circ Disor 9.8% • MSDRG 264 Oth Circ Sys OR Proc 9.6% • MSDRG 637 Diabetes 9.2% • MSDRG 312 Syncope 8.1% * January 2008 CMS Improper Medicare FFS Payments Report

  15. If appeal within 30 days – NO Recoupment

  16. Preparing for the RAC • Assemble the Right (Multidisciplinary) Team • RAC Liaison – primary point of contact • Health Information Management (HIM) • Compliance • Accounting • Patient Financial Services (PFS) • Care Management (CM) • Utilization Review (UR) • Risk Management • Legal • Physician Liaison • Identify resources needed (internal/external)

  17. Projected Program Costs 50 Claims per Month = Per year 600 Approved in appeal to RAC 50% Appealed to ALJ level 300 Cost to appeal to ALJ level $1,000 Estimated Program Cost $300,000 Average Take-back per claim $4,000 Claims appealed to ALJ level 300 Take-backs $1,200,000 ALJ Overturn success rate 75% Hospital Recovery $900,000

  18. Establish a Process • Prepare information for effective review by team • Establish a tracking system and log each demand letter or request for medical record (+ automated reviews) • Verify the claim is open for RAC to review • Classify each demand by type of issue and $$ impact • i.e., duplicate payment, medical necessity, DRG recode, units • Review every demand • Should not be a 1 person decision • Team should meet regularly to review status of demands • Prioritize reviews: time remaining to respond, $$ impact, volume of claims with common issues • Review every medical record sent to the RAC • Are demands excessively burdensome – request extension, notify RAC, CMS.

  19. Establish a Process • Understand the Rules • Is the RAC’s determination correct? • If RAC is not following the rules, notify CMS and THA • Have both defensive and offensive strategies • Medical necessity may be subjective • Request waiver of timely filing deadlines for identified underpayments • When an overpayment occurred, determine and implement corrective action to avoid repeat • Remember to address co-payments / deductibles

  20. Appeals Process • Team should review appeal documentation to ensure it is complete, accurate and convincing • Establish standard templates for specific denial types • Share successful strategies with THA • Assure timelines for medical record documentation request are compliant • Create central repository for all communication between your facility and the RAC

  21. Start Now • Identify your RAC team and educate them • Identify your areas of weakness • Begin self audits and correct errors • Establish a tracking system • Establish criteria / trigger points for appeals Reference: http://www.tha.com

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