The RACs Attack! Recovery Auditors and Critical Access Hospitals

The Big Picture Huge focus on “fraud, waste and abuse” Contract audits provide high ROI Audits are here to stay –Bipartisan support! Private payers also getting into the game The Audit Era has begun –RACs, MACs, ZPICs, OIG, DOJ, … and more

What does this mean for YOU? Must focus on reducing risks, not avoiding review Examine past services/records for identified risk areas Move forward with changes to reduce future risk (and possibly find opportunities)

Recovery Auditors Program established by statute Process governed by Statement of Work Four RACs operate regionally Paid on a contingency fee basis As of 12/2011, auditors had discovered: –$1.27 billion in overpayments –$183.7 million in underpayments

General RAC Rules 3 year look-back period –Runs from date claim was originally paid to Date of medical record request (for complex) Date of demand letter (for automated) Original payment, whichever is sooner Must reimburse PPS hospitals (but not CAHs) for copies of records –But can include copy expenses in cost report

Staffing Requirements RNs or therapists Certified coders At least 1 FTE contracted Medical Director –Must make him/her available to discuss a denial upon request of a provider

Required Customer Services Toll Free Number Knowledgeable customer service staff Quality Assurance Program Website –New Issue Listing! –Provider Contact Portal –Medical Record Tracking

3 Types of Audits Automated –Data mining using proprietary software Semi-automated –Opportunity to send records “if you disagree” Complex –Review of medical records required –Most are medical necessity reviews

Semi-Automated Review Data mining identifies potential billing error –Clinically unlikely or not evidence based Notification/Information Letter sent –45 days to submit supporting documentation –Otherwise, demand letter issued Not subject to ADR limit

Complex Review Medical Record Request letter sent –45 plus 10 days to respond –May up to ADR limit every 45 days 2% of prior year’s Medicare claims ÷ 8 RAC reviews and sends review results letter –60 day time limit MAC sends remittance advice/demand letter

Recoupments from CAHs Before final settlement of cost report –Remittance Advice sent –Improper payment identified in next Provider Statistical and Reimbursement Report –Reconciled at final settlement of cost report After final settlement of cost report –Demand letter sent

Appeals Level 1 “Redetermination” –120 days time limit –Must file within 30 days to avoid recoupment Level 2 “Reconsideration” by Qualified Independent Contractor –180 day time limit –Must file within 60 days to avoid recoupment

Appeals, cont. After Level 2, cannot stay recoupment Level 3, ALJ Decision –60 day time limit Level 4, Medicare Appeals Council Level 5, Federal Court

RACTrac Web-based survey designed to assess hospitals’ RAC activity and the resulting administrative burden Free participation for all hospitals Quarterly data submitted online Important tool for advocacy & information sharing

National RACTrac Data 2220 hospitals have participated –Last quarter, 248 CAHs reported RAC activity while 205 reported no RAC activity $741 million in denied claims reported –This amount nearly doubled in 1Q 2012 Over ⅔ of medical records reviewed did not contain an improper payment

National Data, cont. Over ½ of medical necessity denials were one day stays where medically necessary care was provided in the wrong setting –52% or $190 million Medical necessity is top reason for complex denials –In Region B, 69% –In Region C, 92%

National Data, cont. Region A had the highest number of medical record requests Region C had 64% of automated denials All regions experiencing complex denials 64% of denials appealed, 75% success rate –Region B, 40% appealed w/ 84% success –Region C, 27% appealed w/ 79% success

CAH Audit Issues Must think differently about RACs Consider all listed RAC issues and test to see if they are applicable to CAHs Overutilization as a key point Complex review issues include DRG validation & medical necessity –Medical necessity applies to CAHs even if DRGs do not

CAH Audit Issues, cont. Don’t ignore DRGs just because “we don’t bill that way.” –RAC issues often listed by DRG, but ICDs are included within each DRG. –These can apply to CAHs too Charge capture rules are the same for large and small hospitals!

Outpatient Billing Errors Many CAHs not turning on edits to process outpatient claims –Allows mistakes Examples of automated denials for CAHs –2 initial 1 st hours of drug administration billed in ER, then in Observation –Respiratory therapy billing multiples of demo & eval, rather than treatment

Protocols High risk area Regardless of excellent protocol, still need physician’s order –e.g., lab / radiology tests Include referenced protocols when submitted records for audit

Transfer to Swing & SNF Beds 3 day clinically appropriate stay required for Medicare coverage –Must have clinical reason No automatic recoupment against “innocent” party, but if you’re transferring to your own swing beds or SNF, you aren’t innocent.

Incomplete Records Emergency Room to Inpatient –Need ER record to support admission Direct admits from Clinic –May need clinic record to support admission Beware of the Hybrid Record –Information lost in “hand offs” between written and electronic record

Documentation EMRs may present “cookie cutter” view of patients –Need specific patient issues included Treatment, outcomes and results of ordered services must be in clinical record –Crucial to answer the question “Why is this patient still an inpatient?”

Physicians Employed physicians –Hospital is billing physician services, so must monitor RAC physician issues too –No $$ on the line for deficient documentation, so should be addressed in contract For all doctors, employed and otherwise, ongoing education and support is crucial

Teamwork is Critical Image: Apple's Eyes Studio / FreeDigitalPhotos.net

Multi-Tasking Staff Charge capture and documentation leaders also care givers –“I have to take care of patients. I don’t have time to worry about money.” All must own the billing process. Without the money, no patient care job.

Overpayments & False Claims False claims liability can arise if you: –know of an overpayment and –do not report and return it within 60 days after it is identified (or the due date of any corresponding cost report, if applicable) Overpayment = funds received or retained by a person who, “after applicable reconciliation,” is not entitled to them.

If that’s not enough …

Feeling Overwhelmed?

Need Good Review Process Is there an order to support the service you are billing? Does the documentation in the record support the order? Does the itemized statement reflect what you said you did in the documentation? Does the UB match the 3 things above?

Prepare, prepare, prepare Put together a good audit response team Check all 4 RAC websites for new issues Establish an efficient and effective process for handling audits –Responsibilities at department & individual levels –Tracking methodology Train staff on audit process, tracking system and audit issues

Bring physicians into the team Track and trend to know your risks Do proactive internal auditing Consider targeted outside reviews When weaknesses are identified, do rapid and aggressive improvements Beef up utilization review Ongoing education and outreach

Use the PEPPER Reports Offers ready-made list of priority audit targets – areas identified as at-risk for improper payments Contains claims data statistics & shows where your hospital is an outlier Compares your data to national, jurisdictional, and state statistics

Don’t Forget the P.R.Issue If you have a denial, you also have to refund money to the patient. If you rebill, you may have to send another bill to the patient. Work on your letter to patients –Focus on commitment to quality and compliance, not “oops, we goofed.”

Questions?