medicare recovery audit contractors (racs)

Medicare Medicare Recovery Audit Recovery Audit

Contractors Contractors (RACs)(RACs)Preparing for RAC AuditsPreparing for RAC Audits

Presentation OutlinePresentation Outline

I. BackgroundI. BackgroundA. What are the RACs?A. What are the RACs?

B. When are the RACs coming to B. When are the RACs coming to Georgia?Georgia? C. RAC Focus AreasC. RAC Focus Areas

II. Case StudiesII. Case Studies III. How to Prepare for RACsIII. How to Prepare for RACs IV. GHA InitiativesIV. GHA Initiatives

What are RACs?What are RACs?

Medicare Modernization Act of 2003 Medicare Modernization Act of 2003 created a 3-year demonstration projectcreated a 3-year demonstration project

Recover Medicare overpayments and Recover Medicare overpayments and identify underpayments—payment identify underpayments—payment mistakesmistakes

RACs are paid on a contingency fee RACs are paid on a contingency fee basisbasis

3 states selected for the demonstration 3 states selected for the demonstration project based on highest per capita project based on highest per capita Medicare utilization—NY, FL, and CAMedicare utilization—NY, FL, and CA

What are RACs?What are RACs?

The Tax Relief and Health Care Act The Tax Relief and Health Care Act of 2006 required DHHS to make the of 2006 required DHHS to make the RAC program permanent and RAC program permanent and nationwide by no later than January nationwide by no later than January 1, 2010.1, 2010.

The RAC program does not detect or The RAC program does not detect or correct payments for Medicare correct payments for Medicare Advantage plans (Medicare Part C) Advantage plans (Medicare Part C) or for the Medicare prescription or for the Medicare prescription drug benefit (Medicare Part D)drug benefit (Medicare Part D)

Why Congress Believes Why Congress Believes RACs are Necessary…RACs are Necessary…

The Improper Medicare FFS The Improper Medicare FFS Payments Report for November Payments Report for November 2007 estimates that 3.9% of the 2007 estimates that 3.9% of the Medicare dollars paid did not Medicare dollars paid did not comply with one or more Medicare comply with one or more Medicare coverage, coding, billing, or payment coverage, coding, billing, or payment rules.rules.

This equates to $10.8 billion in This equates to $10.8 billion in Medicare FFS overpayments and Medicare FFS overpayments and underpayments annually.underpayments annually.

RAC DemonstrationRAC Demonstration

During FY 2007, RACs identified and During FY 2007, RACs identified and corrected $371 Million dollars of corrected $371 Million dollars of Medicare improper payements in the Medicare improper payements in the demonstration statesdemonstration states

Over 96% were overpaymentsOver 96% were overpayments About 85% of overpayments were About 85% of overpayments were

from inpatient hospital providersfrom inpatient hospital providers About 6% of overpayments were About 6% of overpayments were

from outpatient hospital providersfrom outpatient hospital providers

How Do RACs Choose Cases How Do RACs Choose Cases for Review?for Review?

Data mining techniquesData mining techniques RACs used the findings of OIG and RACs used the findings of OIG and

GAO reports to help target their review GAO reports to help target their review effortsefforts

Comprehensive Error Rate Testing Comprehensive Error Rate Testing (CERT) reports (CERT) reports http://www.cms.hhs.gov/CERT/CR/list.http://www.cms.hhs.gov/CERT/CR/list.aspasp

Experience and knowledge of RAC staffExperience and knowledge of RAC staff

Overpayments by Error Overpayments by Error Type in Demonstration Type in Demonstration

ProjectProject 42% Incorrectly coded42% Incorrectly coded 32% Medically unnecessary service 32% Medically unnecessary service

or settingor setting 9% No/Insufficient Documentation9% No/Insufficient Documentation 17% Other17% Other

Average Overpayment Average Overpayment Amounts FY 2007Amounts FY 2007

Per ClaimPer Claim Per ProviderPer Provider

Inpatient Inpatient Hospital/SNFHospital/SNF

$10,618$10,618 $549,447$549,447

Outpatient Outpatient HospitalHospital

$273$273 $38,136$38,136

PhysicianPhysician $160$160 $834$834

DMEDME $85$85 $1,511$1,511

TotalTotal $11,136$11,136 $589,928$589,928

Permanent RAC ProgramPermanent RAC Program

RACS can review claims for:RACS can review claims for: Inpatient hospitalInpatient hospital Outpatient hospitalOutpatient hospital Skilled nursing facilitiesSkilled nursing facilities Physician, ambulance, and lab servicesPhysician, ambulance, and lab services Durable medical equipmentDurable medical equipment


Look back period is 3 yearsLook back period is 3 years RACs cannot look for any improper RACs cannot look for any improper

payments on claims paid before payments on claims paid before October 1, 2007October 1, 2007

RACs can review claims during the RACs can review claims during the current fiscal yearcurrent fiscal year

Each RAC must use certified codersEach RAC must use certified coders


Mandatory limits set by CMS on medical Mandatory limits set by CMS on medical record requestsrecord requests

Mandatory discussion with the RAC Mandatory discussion with the RAC Medical Director regarding claim denials Medical Director regarding claim denials if requested by providersif requested by providers

Frequent problem area reporting is Frequent problem area reporting is mandatorymandatory

RACs must pay back contingency fee if RACs must pay back contingency fee if their decision is reversed on any level their decision is reversed on any level appealappeal


Each RAC must have a web-based Each RAC must have a web-based application that allows providers to application that allows providers to customize addresses and contact customize addresses and contact information or see the status of information or see the status of casescases

External validation process is External validation process is mandatory and it is a uniform mandatory and it is a uniform processprocess


CMS will announce the permanent CMS will announce the permanent RACs for the four regions around RACs for the four regions around July 31, 2008July 31, 2008

RACs Focus on HospitalsRACs Focus on Hospitals

In the three demonstration states, In the three demonstration states, 89% of improper payments were 89% of improper payments were from hospitalsfrom hospitals

RAC Review ProcessRAC Review Process

RACs use proprietary automated software RACs use proprietary automated software programs to identify potential payment programs to identify potential payment errorserrors

Types of payment reviewTypes of payment review Duplicate paymentsDuplicate payments FI errors (i.e. claims paid using an outdated fee FI errors (i.e. claims paid using an outdated fee

schedule)schedule) Medical necessityMedical necessity Coding errorsCoding errors No documentation or insufficient documentation No documentation or insufficient documentation

to support the claimto support the claim

Types of RAC ReviewsTypes of RAC Reviews

Automated ReviewAutomated Review Proprietary software algorithms used to Proprietary software algorithms used to

identify clear errors that resulted in identify clear errors that resulted in improper paymentsimproper payments

Complex ReviewComplex Review Medical records requested to further Medical records requested to further

review the claimreview the claimRACs must use Medicare coverage, coding RACs must use Medicare coverage, coding

or billing policies in or billing policies in effect at the time effect at the time when the claim was adjudicatedwhen the claim was adjudicated

Automated ReviewsAutomated Reviews

Excessive Units Audit—two or more Excessive Units Audit—two or more identical surgical procedures for the identical surgical procedures for the same beneficiary on the same day at same beneficiary on the same day at the same hospitalthe same hospital

Use of incorrect discharge status Use of incorrect discharge status codescodes

Medically unbelievable situations Medically unbelievable situations (i.e. prostate procedure on a female)(i.e. prostate procedure on a female)

RAC Focus Areas in RAC Focus Areas in Demonstration StatesDemonstration States

Excisional DebridementExcisional Debridement Back PainBack Pain Outpatient vs. Inpatient SurgeriesOutpatient vs. Inpatient Surgeries Transfer PatientsTransfer Patients Inpatient Rehab, especially knee and hip Inpatient Rehab, especially knee and hip

replacementsreplacements Joint replacement patients and patients in Joint replacement patients and patients in

inpatient rehabilitation facilities that should have inpatient rehabilitation facilities that should have been treated in a lower intensity setting such as been treated in a lower intensity setting such as a SNFa SNF

Wrong diagnosis or principal procedure codesWrong diagnosis or principal procedure codes

DRGs Scrutinized in DRGs Scrutinized in Demonstration StatesDemonstration States

079 Respiratory infections and inflammations age >17 w 079 Respiratory infections and inflammations age >17 w CCCC

416 Septicemia age >17416 Septicemia age >17 468 Extensive OR procedure unrelated to principal diagnosis468 Extensive OR procedure unrelated to principal diagnosis 475 Respiratory System diagnosis with ventilator support475 Respiratory System diagnosis with ventilator support 477 Non-extensive OR procedure unrelated to principal 477 Non-extensive OR procedure unrelated to principal

diagnosisdiagnosis 483 Tracheostomy with mechanical vent—96+ hours483 Tracheostomy with mechanical vent—96+ hours 217 Wound debridement217 Wound debridement 397 Coagulation disorders397 Coagulation disorders 124 Circulatory disorders except AMI w Card Cath & 124 Circulatory disorders except AMI w Card Cath &

Complex DiagComplex Diag 076 Other respiratory system OR procedures w CC076 Other respiratory system OR procedures w CC 415 OR Procedures415 OR Procedures 082 Respiratory Neoplasms082 Respiratory Neoplasms 148 Major Bowel148 Major BowelNote: These DRGs are from the version 25 grouper. These are not MS-DRGs.

Outpatient Hospital Areas Outpatient Hospital Areas of RAC Focusof RAC Focus

ColonoscopyColonoscopy Speech Language Pathology Speech Language Pathology

ServicesServices Infusion ServicesInfusion Services Neulasta (boosts white blood cell Neulasta (boosts white blood cell

counts to reduce chance of infection counts to reduce chance of infection in patients undergoing in patients undergoing chemotherapy)chemotherapy)

Short Stay ClaimsShort Stay Claims

Validate whether the admissions met Validate whether the admissions met Medicare’s medical necessity criteriaMedicare’s medical necessity criteria

One-day stays by chest pain patients One-day stays by chest pain patients were targeted by RACs in were targeted by RACs in demonstration statesdemonstration states

Many three-day stays were denied Many three-day stays were denied because they were inappropriately because they were inappropriately extended in order to qualify for extended in order to qualify for Medicare Part A coverage of post-Medicare Part A coverage of post-acute skilled nursing careacute skilled nursing care

Some Case Examples from Some Case Examples from the Demonstration Statesthe Demonstration States

Excisional DebridementsExcisional Debridements

Hospital coder assigned a procedure Hospital coder assigned a procedure code of 86.22 (excisional code of 86.22 (excisional debridement of wound, infection, or debridement of wound, infection, or burn)burn)

In the medical record, the physician In the medical record, the physician writes “debridement was performed”writes “debridement was performed”


Coding Clinic 1991 Q3 states “unless the Coding Clinic 1991 Q3 states “unless the attending physician documents in the attending physician documents in the medical record that an excisional medical record that an excisional debridement was performed (definite cutting debridement was performed (definite cutting away of tissue, not the minor scissors away of tissue, not the minor scissors removal of loose fragments), debridement of removal of loose fragments), debridement of the skin that does not meet the criteria the skin that does not meet the criteria noted above or is described in the medical noted above or is described in the medical record as debridement and no other record as debridement and no other information is available should be coded as information is available should be coded as 82.26 (ligation of dermal appendage).”82.26 (ligation of dermal appendage).”


The RAC determines that the claim The RAC determines that the claim was was incorrectly codedincorrectly coded and issues and issues repayment request letter for the repayment request letter for the difference between the payment difference between the payment amount for the incorrectly coded amount for the incorrectly coded procedure and the payment amount procedure and the payment amount for the correctly coded procedure.for the correctly coded procedure.

Inpatient RehabilitationInpatient Rehabilitation

An inpatient rehabilitation facility (IRF) An inpatient rehabilitation facility (IRF) submitted a claim for inpatient therapy submitted a claim for inpatient therapy following a single knee replacementfollowing a single knee replacement

Medical record indicated that although Medical record indicated that although the beneficiary required therapy, the the beneficiary required therapy, the beneficiary’s condition did not meet beneficiary’s condition did not meet Medicare’s medical necessity criteria Medicare’s medical necessity criteria for IRF care (HCFA Ruling 85-2 and for IRF care (HCFA Ruling 85-2 and Medicare Benefit Policy Manual Section Medicare Benefit Policy Manual Section 110)110)

Inpatient RehabilitationInpatient Rehabilitation

Entire claim was denied by RACEntire claim was denied by RAC The RAC determines that the service The RAC determines that the service

was was medically unnecessarymedically unnecessary for the for the inpatient setting and issues inpatient setting and issues repayment request letters for the repayment request letters for the entire claimentire claim

Wrong Principal Wrong Principal DiagnosisDiagnosis

Principal diagnosis on claim did not Principal diagnosis on claim did not match the principal diagnosis in the match the principal diagnosis in the medical recordmedical record

Example: Respiratory failure (code Example: Respiratory failure (code 518.81) was listed as the principal 518.81) was listed as the principal diagnosis but the medical record diagnosis but the medical record indicates that sepis (code 038-038.9) indicates that sepis (code 038-038.9) was the principal diagnosiswas the principal diagnosis

Wrong Principal Wrong Principal DiagnosisDiagnosis

The RAC issued overpayment request The RAC issued overpayment request letter for the difference between the letter for the difference between the amount for the amount for the incorrectly codedincorrectly coded services and the amount for the services and the amount for the correctly coded servicescorrectly coded services

Most common DRGs with this problem:Most common DRGs with this problem: DRG 475 Respiratory System DiagnosesDRG 475 Respiratory System Diagnoses DRG 468 Extensive OR Procedure DRG 468 Extensive OR Procedure

Unrelated to Principal DiagnosisUnrelated to Principal Diagnosis

Wrong Diagnosis CodeWrong Diagnosis Code

Hospital reported a principal Hospital reported a principal diagnosis of 03.89 (septicemia)diagnosis of 03.89 (septicemia)

Medical record shows diagnosis of Medical record shows diagnosis of urosepsis, not septicemia or sepsis; urosepsis, not septicemia or sepsis; Blood cultures were negativeBlood cultures were negative

Did not meet the coding guidelines Did not meet the coding guidelines for “septicemia”. Urinary tract for “septicemia”. Urinary tract infection causes the claim to group infection causes the claim to group to a lower payment DRGto a lower payment DRG

Wrong Diagnosis CodeWrong Diagnosis Code

RAC issued a repayment request RAC issued a repayment request letter for the difference between the letter for the difference between the payment amount for the incorrectly payment amount for the incorrectly coded procedure and the correctly coded procedure and the correctly coded procedurecoded procedure

NeulastaNeulasta

In the past, the billing code for the In the past, the billing code for the drug Neulasta (Pegfilgrastim) drug Neulasta (Pegfilgrastim) indicated that providers should bill 1 indicated that providers should bill 1 unit for each unit for each milligrammilligram of drug of drug delivereddelivered

Several years ago, CMS changed the Several years ago, CMS changed the definition of the billing code to definition of the billing code to indicate that providers should bill 1 indicate that providers should bill 1 unit for each unit for each vialvial of drug delivered of drug delivered

NeulastaNeulasta

The hospital billed for 6 units of The hospital billed for 6 units of NeulastaNeulasta

The RAC determined that 5 units of The RAC determined that 5 units of service were service were medically unnecessarymedically unnecessary and issued a repayment request and issued a repayment request letter for the difference between the letter for the difference between the payment amount for 5 unnecessary payment amount for 5 unnecessary vialsvials

ColonoscopyColonoscopy

The hospital billed for multiple The hospital billed for multiple colonoscopies for the same beneficiary colonoscopies for the same beneficiary the same daythe same day

Beneficiaries never need more than one Beneficiaries never need more than one colonoscopy per day. The excessive colonoscopy per day. The excessive services are services are not medically necessary. not medically necessary.

The RAC issued overpayment request The RAC issued overpayment request letters for the difference between the letters for the difference between the billed number of services and 1.billed number of services and 1.

Outpatient Hospital Speech Outpatient Hospital Speech TherapyTherapy

The outpatient hospital billed for each The outpatient hospital billed for each 15 minutes of speech therapy15 minutes of speech therapy

The code definition specifies that the The code definition specifies that the code is per session, not per 15 minutescode is per session, not per 15 minutes

The units billed exceeded the approved The units billed exceeded the approved number of sessions per day. The number of sessions per day. The excessive services billed are excessive services billed are medically medically unnecessaryunnecessary

RAC issued overpayment request RAC issued overpayment request lettersletters

Most Frequent Medically Most Frequent Medically Unnecessary ErrorsUnnecessary Errors

21%

16%

13%11%

10%

10%

10%

9% DRG 143 Chest Pain

DRG 243 Medical Back Problems

DRG 182 Esoph, Gastroent &Misc. Digestive Disorder, Age>17w CC

DRG 296 Nutr & Misc Metab DisorAge>17 w CC

DRG 125 Circ Disor Exc AMI,W/Car Cath wo Compl Diag

DRG 120 Oth Circ Sys or Proc

DRG 294 Diabetes Age>35

DRG 141 Syncope & Collapse wCC

Coping with the RACsCoping with the RACs

Comply with RAC medical record Comply with RAC medical record requests. If you don’t submit them requests. If you don’t submit them on time, the RAC automatically on time, the RAC automatically classifies the claim as an classifies the claim as an overpayment and makes a recovery.overpayment and makes a recovery.

Develop an internal tracking system Develop an internal tracking system for medical records requested for for medical records requested for review by the RACreview by the RAC

One-Day StaysOne-Day Stays

Develop a system for clarifying Develop a system for clarifying unclear admission orders prior to unclear admission orders prior to admissionadmission

Implement the “admit to case Implement the “admit to case management protocol”management protocol”

Train utilization/case managers on Train utilization/case managers on how to determine medical necessity how to determine medical necessity through the use of screening criteriathrough the use of screening criteria


Involve Case Management/Utilization Involve Case Management/Utilization Review staff early in the process. Review staff early in the process.

Provide Case Management/Utilization Provide Case Management/Utilization Review staff to perform initial review Review staff to perform initial review of medical necessity for admission of medical necessity for admission while the patient is in the emergency while the patient is in the emergency department.department.

Place UR staff at every point of entry Place UR staff at every point of entry into the hospital (ED, day surgery, into the hospital (ED, day surgery, centralized admission center, etc.)centralized admission center, etc.)


Develop condition-specific pre-Develop condition-specific pre-printed order sheets that include the printed order sheets that include the appropriate patient status.appropriate patient status.

Provide Case Provide Case Management/Utilization Review Management/Utilization Review staffing during weekends and after staffing during weekends and after hours to ensure timely review for hours to ensure timely review for medical necessity.medical necessity.


Train hospital staff (nurses, ED staff, Train hospital staff (nurses, ED staff, unit clerks, day surgery staff and unit clerks, day surgery staff and CM/UR staff) on Medicare’s CM/UR staff) on Medicare’s requirements for appropriate requirements for appropriate documentation of medical necessity, documentation of medical necessity, the use of observation, requirements the use of observation, requirements for changing patient status and use for changing patient status and use of Condition Code 44.of Condition Code 44.


Use documentation prompters, stickers Use documentation prompters, stickers on observation charts, and prompters on observation charts, and prompters and posters in physician dictation areas and posters in physician dictation areas to remind physicians of appropriate use to remind physicians of appropriate use of outpatient observation.of outpatient observation.

Provide one-on-one education to Provide one-on-one education to physicians who consistently write physicians who consistently write unclear admission orders or consistently unclear admission orders or consistently have inappropriate one-day stays.have inappropriate one-day stays.

Review Your PEPPER Review Your PEPPER ReportsReports

Program for Evaluating Payment Program for Evaluating Payment Patterns Report (PEPPER)Patterns Report (PEPPER)

Prepared by gmcfPrepared by gmcf Identifies claims patterns that are Identifies claims patterns that are

outliers relative to other hospitals in the outliers relative to other hospitals in the statestate

““Top 20” list of DRGs that are prone to Top 20” list of DRGs that are prone to certain billing areascertain billing areas

Other problem areas which vary by stateOther problem areas which vary by state

Hospital Next StepsHospital Next Steps Look at potential areas of riskLook at potential areas of risk Establish single point of contact for RACEstablish single point of contact for RAC Establish RAC committee—include key Establish RAC committee—include key

hospital stakeholders (finance, UR, Case hospital stakeholders (finance, UR, Case Management, compliance, legal, medical Management, compliance, legal, medical records, etc.)records, etc.)

Review records before sending to RACReview records before sending to RAC Support your claimSupport your claim

Understand the parametersUnderstand the parameters For ProvidersFor Providers For the RACFor the RAC

Hospital Next StepsHospital Next Steps Plan to participate in the AHA’s RACTrac Plan to participate in the AHA’s RACTrac

to report your hospitals experience with to report your hospitals experience with the RACthe RAC

www.AHARACTrac.orgwww.AHARACTrac.org Data will provide both the AHA and GHA Data will provide both the AHA and GHA

the data they need to advocate on behalf the data they need to advocate on behalf of the hospitals and to identify trends in of the hospitals and to identify trends in reasons for denials reasons for denials

Implement a system for charging RACs Implement a system for charging RACs for copying costs of medical records for copying costs of medical records (.12/page)(.12/page)

GHA Next StepsGHA Next Steps

Establish RAC Task ForceEstablish RAC Task Force Establish relationship with RAC—Establish relationship with RAC—

once RAC is announced for our once RAC is announced for our regionregion

Facilitate information exchange Facilitate information exchange between CMS, RAC, and hospitalsbetween CMS, RAC, and hospitals

Monitor RAC activities with Georgia Monitor RAC activities with Georgia providersproviders

GHA RAC Task ForceGHA RAC Task Force

A multi-disciplinary cross-section of A multi-disciplinary cross-section of GHA members including CEOs, GHA members including CEOs, CFOs, legal counsel, compliance CFOs, legal counsel, compliance officers, case/utilization managers, officers, case/utilization managers, medical records, and othersmedical records, and others

Task Force will provide guidance Task Force will provide guidance and feedback to GHA as we develop and feedback to GHA as we develop strategies and tools to assist strategies and tools to assist members in dealing with RACsmembers in dealing with RACs

RAC ResourcesRAC Resources

http://www.cms.hhs.gov/RAC/http://www.cms.hhs.gov/RAC/ http://www.cms.hhs.gov/CERT/CR/http://www.cms.hhs.gov/CERT/CR/

list.asplist.asp

medicare recovery audit contractors (racs)

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