1. THE RACS ARE COMING, THE RACS ARE COMING!!!!!

2. Who they are, what they want, and how they get it RAC= RECOVERY AUDIT CONTRACTOR Section 306 of the Medicare Modernization Act directed CMS to investigate Medicare claims payments using RACs under a three year demonstration project whereby RACs would be paid on a contingency basis. Two types of contractors were used: –Claims RACs –MSP RACs CMS hired contractors and conducted a demonstration project focusing on services provided from October 1, 2001 - September 31, 2005.

3. CMS PAYMENTS TO RACs –RAC’s paid on a contingency basis for all accurately identified overpayment$ –Paid on a percentage basis for all underpayments identified and recovered CMS: “RAC…a very cost effective program.” “…achieved a respectable return on investment of 373% in 2006” (2006 RAC Status Report)

4. RAC contractorJurisdiction Connolly Consulting HealthData Insights (HDI) PRG-Schultz (PRG) New York (3/05) Mass (7/07) Florida (3/05) South Carolina (7/07) California (3/05) Arizona (7/07)

6. Overpayments by Error Type

7. COMING OUR WAY…

8. Legislation RAC’s will become a permanent fixture on our payment auditor/reviewer circuit… Section 302 of the Tax Relief and Health Care Act of 2006 makes the RAC Program permanent and requires the DHHS Secretary to expand the program to all 50 states by no later than 2010.

9. Permanent program-lessons learned DEMOPERMANENT RACs Look back period4 years3 years Maximum look backNone10/1/07 Standardized request ltrsNoYes RAC medical directorNot requiredMandatory Credentialed codersNot requiredMandatory RAC must pay back its contingency fee if claim overturned At 1st level of appeal only At ANY/ ALL levels of appeal External validation process NoneMandatory Web based application for providers NoneMandatory by 1/1/10

10. What to Expect…

11. RAC Process… The process in a nutshell- 1.Initial Communication from RAC - Letter to designee introducing you to your RAC - Request to designate a RAC Liaison - Roles and Responsibilities of RAC Liaison 2. Receiving RAC Requests - Typically sent to RAC Liaison/HIM Director - Specific Records Listed

12. 3.Responding to RAC Requests Timeliness 45 DAYS AND COUNTING… Providers must respond within 45 days of date of request letter You may request an extension any time prior to the 45 th day by contacting the RAC THE CLAIM IS CONSIDERED AN OVERPAYMENT IF RECORDS ARE REQUESTED AND NOT RECEIVED!!! – Questions when preparing response Previously evaluated claims? Do not assume RAC database is accurate If you conclude a claim has already been reviewed, notify RAC

13. 4. Notification of Outcome Who receives the denial Reasons for denial, including regulatory citations Rights of appeal Contact information Payment refund procedures

14. Let’s have a round of appeals, please… Appeal Processes –Timeline for appealing denials –Phone vs. paper appeal –Resubmission of records

15. FIVE LEVELS OF APPEAL Note: Interest accrues throughout the appeals process 1 st level - 120 days to file Redetermination with FI or carrier (60 days) 2 nd level – 180 days to file Reconsideration by QIC (qualified independent contractor) (60 days) 3 rd level – 60 days to file ALJ (Administrative Law Judge) - 90 days 4 th level – 60 days to file Medicare Appeals Council 90 days Final Appeal Level – 60 days U.S.District Court

16. How are claims selected? –Must “target” claims through data analysis Cannot randomly select claims Cannot just focus on high payment claims Two Types Reviews –Automated – No medical records involved in the review, certainty that overpayment exists based on claims data review –Complex – Medical records are involved in the review, high probability (but not certainty) that the service is not covered

17. Providers under Scrutiny CURRENT TARGETS INCLUDE : INPATIENT HOSPITAL CLAIMS OUTPATIENT HOSPITAL CLAIMS SKILLED NURSING FACILITY CLAIMS PHYSICIAN SERVICES LAB AND AMBULANCE SERVICES DME

18. So, what can we do? This is probably not our best option…

19. Some Familiar Problem Areas Identified Inpatient (complex reviews) Skin graft &/or debridement for skin ulcers and cellulitis Respiratory system dx w/ ventilator support DRG with single CC Coagulation Disorders Major small and large bowel procedures Unrelated PDX and Procedure 1-2 day stays Chest pain as inpatient PDX Septicemia, bacteremia, urosepsis…sound familiar? Outpatient Neulasta (J2505) (complex review) Speech/hearing therapy (92507) (automated) Blood transfusion services (36430) (automated)

20. Other Identified Issues Outpatient-approved surgical procedures performed on an inpatient basis Short stay acute patients: should they have been observation patients? 3-day stays shipped to SNF bed –medically necessary admission or “social admit” to qualify for a skilled bed? Discharge Disposition errors on Transfer MS-DRG’s PEPPER data outliers PEPPERs: Program for Evaluating Payment Pattern Reports produced by QIO; identify claims patterns for your facility relative to other hospitals in the state for the “top 20” DRGs that are prone to billing errors.

21. Stay current with coding guidelines! CMS considers AHA’s Coding Clinic the official source for coding guidelines Many coding errors are due to application of outdated coding directives –“This information has been superceded by…” Coding Clinic notes Failure to follow basic coding rules and guidelines

22. WHAT PROVIDERS ARE DOING 1.Create a team to prepare an effective RAC response HIM, Finance-Patient Accounts, Quality Assurance, Case Management, Physician Liaison, and Compliance Identify facility RAC Liaison – primary hospital contact and back-up. Assign tasks to designated depts/staff Think about what resources you’ll need and their budget impact

23. Internal Data Mining Run Reports, pull charts, perform internal audits, rebill if necessary. Look at your: High Risk MS-DRGs High Volume MS-DRGs High Volume OP services Known/suspected care management/UR problems

24. Once RAC requests start coming in… –Schedule regular team meetings to review new demands/requests and the status of prior demands. –Prioritize review of claims by time remaining to respond; $$ impact; and volume of claims with common issues. –If volume of requests is overwhelming, remember you can formally request extension from RAC before the 45-day response time expires.

25. Establish a RAC Response Process –Log each Demand Letter / Request for Medical Record into Tracking System –Verify that the claim is open for RAC to review. Classify each demand by type of issue and $$ Impact (e.g., Duplicate Payment, Service Not Covered, Not Medically Necessary, DRG recode, HCPCS Error, Units, etc.)

26. Monitor your appeals Team should review appeal documentation to ensure it is complete, accurate and convincing –What appeals strategies are working, which ones aren’t? –Establish a tracking database –Develop standard templates for specific denial types –Identify the processes and practices resulting in denials

27. Response Time & Medical Record Documentation Assure timelines for medical records requests are met –Create central repository for all communication between your facility and the RAC –Consider using a vendor to help organize copying, scanning, and tracking records sent in response to RAC requests.

29. Future Moves… Take immediate action when RAC letters are received Educate all impacted departments and individuals based on RAC findings Use RAC targets to improve coding and documentation