1. Not Another RAC Presentation! Presented By: Virginia Gleason, JD/MPA, CHC, CPHRM MHIMA 2011 Spring Meeting

2. Then and Now " They believe we are bounty hunters," N. Lee White, who " They believe we are bounty hunters," N. Lee White, who heads U.S operations for PRG-Shultz International, said of California lawmakers and the California Hospital Association. "I don't appreciate the characterization.” November 12, 2007 According to the Associated Press, on March 9th 2010, According to the Associated Press, on March 9th 2010, President Barack Obama said he'll bring in high-tech “bounty hunters” to help root out health care fraud using data mining and computer programs that looks for fraudulent claims and erroneous data.

3. RACs Are Here RAC Program implemented nationwide RAC Program implemented nationwide Automated and Complex Audits underway Automated and Complex Audits underway Started with focus on DRG Validation Started with focus on DRG Validation Coding Validations are underway Coding Validations are underway Medical Necessity Reviews underway Medical Necessity Reviews underway Health Care Reform expands RACs to Medicaid and Medicare Parts C and D Health Care Reform expands RACs to Medicaid and Medicare Parts C and D

4. The Alphabet Soup Medicare Administrative Contractor (MAC) Medicare Administrative Contractor (MAC) Recovery Audit Contractor (RAC) Recovery Audit Contractor (RAC) Medicare Secondary Payor RAC (MSP RAC) Medicare Secondary Payor RAC (MSP RAC) RAC Validation Contractor RAC Validation Contractor Medicaid Integrity Program Contractor (MIP, MIC) Medicaid Integrity Program Contractor (MIP, MIC) Program Safeguard Contractor (PSC) Program Safeguard Contractor (PSC) Zone Program Integrity Contractor (ZPIC) Zone Program Integrity Contractor (ZPIC) Qualified Independent Contractor (QIC) Qualified Independent Contractor (QIC) Quality Improvement Organization (QIO) Quality Improvement Organization (QIO) Medicaid Payment Error Rate Measurement Contractor (PERM) Medicaid Payment Error Rate Measurement Contractor (PERM) Medicare Drug Integrity Contractor (MEDIC) Medicare Drug Integrity Contractor (MEDIC) Medicare Demos (DME, HHA) Medicare Demos (DME, HHA)

5. What does this mean to Providers? They perform data mining. "This is a new era of using data in the health care marketplace," says Larry Vernaglia, an attorney with Foley & Lardner LLP. "CMS has always had access to tons of data, but now they have new ways to slice and exploit this data both internally and through Medicare contractors."

6. What is AHA RACTrac? Web-based survey to collect RAC experience data from hospitals Web-based survey to collect RAC experience data from hospitals Unit of analysis is the hospital Unit of analysis is the hospital General Medical/Surgical Hospitals including Critical Access Hospitals General Medical/Surgical Hospitals including Critical Access Hospitals LTCH LTCH Psych Psych Rehab Rehab Quarterly data collection Quarterly data collection Automated Denials Automated Denials Complex Denials Complex Denials Underpayments Underpayments Appeals Appeals Administrative burden Administrative burden Collect both quarterly snapshot and cumulative information on RAC experience to date Collect both quarterly snapshot and cumulative information on RAC experience to date Review the RACTrac Survey Questions and Definitions at www.aha.org/rac under RACTrac! www.aha.org/rac

7. Results of AHA RACTrac Survey 4 th Quarter, 2010 Let’s look at some data http://www.aha.org/aha/content/2011/pdf/Q4ractracresults.pdf

8. The Big Picture 79 percent of the 1850 hospitals surveyed have had RAC activity through the fourth quarter of 2010 79 percent of the 1850 hospitals surveyed have had RAC activity through the fourth quarter of 2010 Of this 79 percent, nearly four out of five reported complex RAC reviews which involve the review of medical records and other documentation to identify improper payments Of this 79 percent, nearly four out of five reported complex RAC reviews which involve the review of medical records and other documentation to identify improper payments Majority (90 percent) of denials that hospitals are receiving from RACs are for complex reviews, totaling over $78 million dollars Majority (90 percent) of denials that hospitals are receiving from RACs are for complex reviews, totaling over $78 million dollars Hospitals are appealing only 23 percent of the denied claims Hospitals are appealing only 23 percent of the denied claims Of the claims that have completed the appeals process, 85 percent were overturned in favor of the provider Of the claims that have completed the appeals process, 85 percent were overturned in favor of the provider

9. Where does that leave us? RAC to accept records electronically RAC to accept records electronically CMS refines guidance regarding inpatient admissions CMS refines guidance regarding inpatient admissions Increase in records request limit for certain hospitals Increase in records request limit for certain hospitals CMS announces RAC Medical Records Request Limits for Physicians CMS announces RAC Medical Records Request Limits for Physicians Medicaid RAC Program Update Medicaid RAC Program Update

10. RAC Accepting Electronic Records? Announced February, 2011 Announced February, 2011 Electronic Submission of Medical Documentation (“esMD”) pilot. http://www.cms.gov/ESMD/ Electronic Submission of Medical Documentation (“esMD”) pilot. http://www.cms.gov/ESMD/ Two Phases: Two Phases: Phase 1 – anticipated July 2011 Phase 1 – anticipated July 2011 RACs will send requests via paper letters RACs will send requests via paper letters Providers will have the option to electronically submit documentation Providers will have the option to electronically submit documentation RAC Regions A, B and D “anticipate” participating in Phase 1 RAC Regions A, B and D “anticipate” participating in Phase 1 Phase 2 – Beginning 2012 Phase 2 – Beginning 2012 RACs will electronically send documentation requests RACs will electronically send documentation requests RAC Region C will participate by Phase 2 RAC Region C will participate by Phase 2

11. What Constitutes an Inpatient? During the demonstration project, 85% of claims denied were inpatient hospital claims. During the demonstration project, 85% of claims denied were inpatient hospital claims. Routinely denied for lack of medical necessity to support inpatient level of care Routinely denied for lack of medical necessity to support inpatient level of care “High Risk” medical necessity denials – MLN Matters revised November, 2010 “High Risk” medical necessity denials – MLN Matters revised November, 2010 Guidance on Hospital Inpatient Admissions – MLN Matters January, 2011 Guidance on Hospital Inpatient Admissions – MLN Matters January, 2011 CMS Podcast – March 9, 2011 CMS Podcast – March 9, 2011 http://www.cms.gov/MLNProducts/MLM/itemdetail.asp?filterType=none&filterByDID=- 99&sortByDID=3&sortOrder=ascending&itemID=CMS1245720&intNumPerPage=10%20 http://www.cms.gov/MLNProducts/MLM/itemdetail.asp?filterType=none&filterByDID=- 99&sortByDID=3&sortOrder=ascending&itemID=CMS1245720&intNumPerPage=10%20

12. Interqual vs. Milliman vs. CMS Regulations and Manuals Guidance on Hospital Inpatient Admissions – MLN Matters January, 2011 Guidance on Hospital Inpatient Admissions – MLN Matters January, 2011 Acknowledged “commerically available screening tools” Acknowledged “commerically available screening tools” Supported RACs ability to use these tools Supported RACs ability to use these tools Cited: Medicare Program Integrity Manual (CMS Pub. 100-08), Chapter 6, Section 6.5.1 Cited: Medicare Program Integrity Manual (CMS Pub. 100-08), Chapter 6, Section 6.5.1 When reviewing claims, a medical reviewer “shall use a screening tool” as part of their review When reviewing claims, a medical reviewer “shall use a screening tool” as part of their review CMS “screening tool” is its published criteria CMS “screening tool” is its published criteria Medicare Benefit Policy Manual (CMS Pub. 100-02), Chapter 1, Section 10 Medicare Benefit Policy Manual (CMS Pub. 100-02), Chapter 1, Section 10 Contractors “may” use proprietary criteria when reviewing medical necessity of inpatient admissions. Contractors “may” use proprietary criteria when reviewing medical necessity of inpatient admissions.

13. The Decision Seems Easy… Presents Patient Admit as Inpatient Treat as Outpatient

14. But It’s Much More Complicated Admit as Inpatient Office Follow-up Outpatient Procedure Observation Diagnostic Testing SNF Follow-up Specialty Clinic Follow-up Treat as Outpatient

15. Patient Status Options Admit as Inpatient Outpatient Observation Outpatient Procedure and/or Followup Presents Patient

16. Medicare’s Definition of Inpatient Medicare benefit policy manual chapter 1 sec. 10 An inpatient is a person who has been admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services. Generally, a patient is considered an inpatient if formally admitted as inpatient with the expectation that he or she will remain at least overnight and occupy a bed even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a hospital bed overnight.” An inpatient is a person who has been admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services. Generally, a patient is considered an inpatient if formally admitted as inpatient with the expectation that he or she will remain at least overnight and occupy a bed even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a hospital bed overnight.” “However, the decision to admit a patient is a complex medical judgment which can be made only after the physician has considered a number of factors, including the patient's medical history and current medical needs, the types of facilities available to inpatients and to outpatients, the hospital's by-laws and admissions policies, and the relative appropriateness of treatment in each setting. Factors to be considered when making the decision to admit include such things as: “However, the decision to admit a patient is a complex medical judgment which can be made only after the physician has considered a number of factors, including the patient's medical history and current medical needs, the types of facilities available to inpatients and to outpatients, the hospital's by-laws and admissions policies, and the relative appropriateness of treatment in each setting. Factors to be considered when making the decision to admit include such things as: – The severity of the signs and symptoms exhibited by the patient; – The medical predictability of something adverse happening to the patient…” – The medical predictability of something adverse happening to the patient…” 16

17. Medicare’s Definition of Inpatient Admitted to a hospital Admitted to a hospital Bed occupancy for purposes of receiving inpatient hospital services. Formally admitted as inpatient Bed occupancy for purposes of receiving inpatient hospital services. Formally admitted as inpatient Expectation that he or she will remain at least overnight … even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a hospital bed overnight Expectation that he or she will remain at least overnight … even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a hospital bed overnight Admit decision is a “complex medical judgment” Admit decision is a “complex medical judgment” patient's medical history patient's medical history current medical needs current medical needs the types of facilities available to inpatients and to outpatients the types of facilities available to inpatients and to outpatients hospital's by-laws and admissions policies hospital's by-laws and admissions policies Key Factors: Key Factors: – The severity of the signs and symptoms exhibited by the patient; – The medical predictability of something adverse happening to the patient…” – The medical predictability of something adverse happening to the patient…” 17

18. Transmittal 47 Interpretive Guidelines for Hospitals June 5, 2009 www.cms.hhs.gov/transmittals/downloads/R47SOMA.pdf Interpretive Guidelines for Hospitals June 5, 2009 www.cms.hhs.gov/transmittals/downloads/R47SOMA.pdf “ All entries in the medical record must be complete. Defined by: sufficient info to identify the pt; support the dx/condition; justify the care, treatment, and services; document the course and results of care, treatment and services and promote continuity of care among providers. “ All entries in the medical record must be complete. Defined by: sufficient info to identify the pt; support the dx/condition; justify the care, treatment, and services; document the course and results of care, treatment and services and promote continuity of care among providers. “All entries must be dated, timed and authenticated, in written or electronic format, by the person responsible for providing or evaluating the service provided.” “All entries must be dated, timed and authenticated, in written or electronic format, by the person responsible for providing or evaluating the service provided.” “ All entries must be legible. Orders, progress notes, nursing notes, or other entries ….. “ All entries must be legible. Orders, progress notes, nursing notes, or other entries ….. 18

19. More Transmittal 47 Timing establishes when an order was given, when an activity happened or when an activity is to take place. Timing and dating establishes a baseline for future actions or assessments and establishes a timeline of events. (71 FR 68687) Timing establishes when an order was given, when an activity happened or when an activity is to take place. Timing and dating establishes a baseline for future actions or assessments and establishes a timeline of events. (71 FR 68687) 19

20. Increased Record Limit CMS increase in records request limit for certain hospitals CMS increase in records request limit for certain hospitals Hospitals with more than $100 Million in annual Medicare reimbursement Hospitals with more than $100 Million in annual Medicare reimbursement 500 records allowed per 45-day period 500 records allowed per 45-day period AHA estimates this will impact 87 hospitals AHA estimates this will impact 87 hospitals

21. Physicians Are a Target CMS announces RAC Medical Records Request Limits for Physicians CMS announces RAC Medical Records Request Limits for Physicians February 14, 2011 February 14, 2011 Based on number of physician / non-physician practitioners reported under the Tax ID Number Based on number of physician / non-physician practitioners reported under the Tax ID Number CMS reserves the “right” to exceed the caps CMS reserves the “right” to exceed the caps Group / Office SizeMax Number of Records Every 45 Days 50 or more50 records 25 – 4940 records 6 – 2425 records Less than 510 records

22. Medicaid RACs Section 6411 of the Patient Protection and Affordable Care Act (“Affordable Care Act”) requires each State to establish a Medicaid RAC program similar to the existing Medicare RAC program Section 6411 of the Patient Protection and Affordable Care Act (“Affordable Care Act”) requires each State to establish a Medicaid RAC program similar to the existing Medicare RAC program New implementation deadline will be announced in the publication of the Final Rule anticipated “later” in 2011. New implementation deadline will be announced in the publication of the Final Rule anticipated “later” in 2011. CMS Medicaid RAC Website http://www.cms.gov/medicaidracs/ CMS Medicaid RAC Website http://www.cms.gov/medicaidracs/ “Out of consideration for State operational issues and to ensure States comply with the provisions of the Final Rule, we have determined that States will not be required to implement their RAC programs by the proposed implementation date of April 1, 2011.” http://www.cms.gov/MedicaidIntegrityProgram/Downloads/6411racdelay.pdf

23. More CMS Communications Medicare Quarterly Provider Compliance Newsletter Medicare Quarterly Provider Compliance Newsletter “ Help” providers understand audit findings of Medicare contractors “ Help” providers understand audit findings of Medicare contractors MAC, RAC, PSCs, ZPICs etc MAC, RAC, PSCs, ZPICs etc Newsletter describes problems, the issues that may occur and steps CMS has taken. Newsletter describes problems, the issues that may occur and steps CMS has taken. Important resource Important resource http://www.cms.gov/MLNProducts/downloads/MedQtrlyComp_Newsletter _ICN905712.pdf http://www.cms.gov/MLNProducts/downloads/MedQtrlyComp_Newsletter _ICN905712.pdf

24. February 2011 February 2011 Newsletter Highlights February 2011 Newsletter Highlights Coding of tracheostomy procedures Coding of “new patients” Coding of chemotherapy administration and non-chemotherapy injections and infusions Coding of excisional debridement E/M billing during a global surgery period DME provided to hospice beneficiaries Billing of Budensonide

25. Funding Healthcare Reform The Reform of Healthcare The Reform of Healthcare To be funded through “fraud, waste and abuse” detection and recovery To be funded through “fraud, waste and abuse” detection and recovery What does Medicare’s audit strategies have to do with “fraud, waste and abuse”? What does Medicare’s audit strategies have to do with “fraud, waste and abuse”? Wasteful spending = paying for care that is not supported by the documentation in the record and in compliance with Medicare laws, rules and regulations. Wasteful spending = paying for care that is not supported by the documentation in the record and in compliance with Medicare laws, rules and regulations.

26. Questions and Answers Contact Information: Virginia Gleason, JD/MPA, CHC, LPN Senior Consultant Quorum Health Resources Virginia.gleason@QHRconsulting.com