1. Recovery Audit Contractor (RAC) Denials 2010 Lean Symposium 4/20/2010 Presented by: Dennis McInerney representing The RAC Team $

2. 2008-Present IHDM RAC Team Charter Aim: To produce a complete and accurate medical record for each patient encounter that reflects the quality and value of healthcare delivered. By August 31, 2009 the team will have implemented new processes which will achieve these goals. Current State: CMS has hired the RAC (Recovery Audit Contractors) who are scheduled to identify and recoup improper Medicare payments. RAC implementation for Iowa is tentatively scheduled for Aug 1, 2009. On this date they will start to audit retrospectively back to Oct 1, 2007. It is estimated based on RAC take-back history that IHS-DM is vulnerable to an average annual $2.8MM loss (200 records every 45 days, take back rate of 35%, and average $5k per claim). Currently the processes and documentation that produce our medical record are prone to errors and rework. We want to review, standardize and improve these processes. We also do not have a process in place to address response to RAC letters. FOCUS: To develop a process for responding to RAC's by Aug 31,2009. This will consist of a baseline assessment of risks and development of processes: 1) to track and respond to RAC's denials and medical records requests, 2) to continuously improve documentation in the medical record in support of the RAC team aim and 3) to successfully implement these processes. Measures: All will improve by August 31, 2009 1.Prebill IHDM edits and their turnaround time (time the edit made the edit list to the time the edit is billed will improve by 25%). a.*CCI &*LCD/NCD: average days on list Dec 08 = 11.97 days turnaround, Feb 09 = 5.1 days turnaround b.CCI &LCD/NCD: accounts sent to work list (accounts in) Dec 08= 5.1 million Feb 09=4.6 million 2.Discharged patient accounts not final billed due to documentation deficiencies will improve by 25% a. Post discharge coding query average unable to bill weekly 2008 – 2.5 million 2009 to date– 1.86 million b. Dictation deficiency –unable to code and bill -average weekly 2008 – 2.1 million 2009 to date – 3.2 million 3.Patients level of care changes will improve by 50% + a. Dec 2008: 523 observation errors corrected. Average is 16.8 changes on a daily basis *CCI: Correct Coding Initiative Edits *LCD/NCD: Local Coverage Determination/National Coverage Determinations Team Senior Leader: Mark Purtle, CMO Team Leader: Patty Armstrong Team Members: David Stubbs; Kara Dunham, Crystal Estabrook, Kim Hill, Nici Johnston, LeAnn Kai, Brenda Long, Barbara McLeod, Theresa Miller, George Morgan, Debra Myers, Susan Searcy, Glenda Seemiller, Janet Stipe, Joy Trude Lean Advisors: Dennis McInerney and Ray Seidelman $

3. RAC Project Metrics MeasureDescriptionGoalBaseline 1. PreBill IHDM edits and Turn around time a.Turn Around Time – Average days on *CCI & LCD/NCD on list. Time the edit made the edit list to the time the edit is billed. *CCI: Correct Coding Initiative Edits & LCD/NCD: Local Coverage Determination/National Coverage Determinations b.Accounts In. $ accounts/volume sent to work list a.25% reduction b.25% reduction a.Dec ’08 – 11.97 days b.Dec ’08 – 5.1 MM 2.Documentation Deficiency Average unbillable discharged patient accounts due to: Post discharge coding query Dictation deficiencies a.25% reduction b.25% reduction a.’08 2.5 MM b.’08 2.1 MM 3. Level of Care (LOC) Changes Number Level of Care changes from original determination 50% reductionDec ’08 - 523 changes  Five measures in place to help drive improvements and lasting process improvement outcomes

4. RAC Project Improvement Metrics as of Jan ‘10 1a. HIM Claim Denials: Average Days on List Average 72% Improvement!

5. RAC Project Improvement Metrics as of January ‘10 2a. Discharged patient accounts not final billed due to Post Discharge Physician Queries Oct09 – Mar10 Positive Improvement from baseline

6. RAC Project Improvement Metrics as of March ‘10 3. Level of Care Changes (adjusted for those in error) Reduction in total LOC changes this March and a low of 6% Error Rate

7. RAC Implementation Plan 3 “Work Streams” Denial Process Design, Error Reduction, Risk Management April July “Design in” RAC record submittal, appeal, and CBO/HIM/CM processes. Improve the accuracy and completeness of current and future medical records Design and prototype record submittal, appeal, and recoup Simulate and redesign Sub processes Simulate “ stress test ” various high risk scenarios throughout all processes Identify and fix any RAC impactful errors in past medical records and minimize financial loss Institutionalize new processes, roles, and responsibilities Identify areas in medical record with potential risk for inaccuracy and completeness Design New and Improve Existing Process Simulations & Overpayment Identification & Disclosure Communicate, Institutionalize Identify areas in medical record potential for RAC overpayment Fix any past records Identify overpayments & Decide on Disclosure Dec Prioritize process improvements, ideate solutions, test, and refine Anticipated RAC Submittals Begin 1 2 3 Hardwire improvements and maintain the gains Denial Process Design MR Error Reduction Risk Management SepOngoing

8. Denial Process Design “Lean from the Start” Team created Value stream maps always with the question “is this step necessary” and using Takt Time as a benchmark? Integrated HIM processes with CBO system, CareMedic for efficient work flow Designed in signals/triggers for any “handoffs”, utilize CareMedic software for work flow Currently, testing work flow of process for additional streamlining Automated Denial (“N432” posted”) Complex Denial (“Requires Medical Record Review”) 1 46 mins / record Assuming 20 day Intervals

9. Error Reduction Facts about Current Medical Record In general current medical record contains: 1.184 + documents types in HPF 2.Anywhere from 50 pages to over 2,000 + pages 3.Anywhere from 4 to 50 people can provide “ input ” through the course of the medical record “ assembly ” process Observation Inpatient Note: No Care Cast info added From the floor … 40% (73) Handwritten 25% (46) Keyboard 24% (44) “Drop down / Pick list” 11% (21) Automated 4.The original source of input for the 184 documents are: YIKES, Where do we start? 2

10. Error Reduction “Top 10” Medical Documents based on Risk Priority* *Risk Priority score is a function of four criteria 1.The average # fields in the document 2.The originating input method (see table to right) 3.Annual Average number of people who can potentially enter information 4.Information in documents used by RAC (L,M,H) Based on the prioritized documents, sub teams were formed to verify potential risk, provide root cause analysis if needed, implement solutions, and ultimately improve accuracy and completeness. Please bring on the EMR… 2

11. Risk Management Disclosure or Not? Using an external audit team to identify overpayments & decide to make Disclosures versus appealing before RAC audit Reduce potential denial pipeline by self disclosing known, unrecoverable, overpayments 3

12. Are we Ready? Questions?