1. Transition of Inpatient Hospital Review Workload Office of Financial Management Program Integrity Group Date: June 2008 An Overview of Changes to the Review of Acute Inpatient Prospective Payment System (IPPS) Hospital and Long Term Care Hospital (LTCH) Claims* * Also includes claims from any hospital that would be subject to the IPPS or LTCH PPS had it not been granted a waiver

2. 2 Outline The Old Environment The New Environment Roles under the New Environment Why the Change? When will the Transition occur? What will be Different? What will be the Same?

3. 3 Acute IPPS Hospital and LTCH Claim Review: The Old Environment In the past, QIO 1 responsibility included: Hospital Payment Monitoring Program (HPMP) reviews Conducting utilization reviews for payment purposes Measurement of the accuracy of Medicare FFS payments for short- and long-term acute care hospitals Quality of care reviews to ensure that care provided to Medicare beneficiaries meets professionally recognized standards of healthcare Performance of provider-requested higher-weighted DRG reviews Review of Emergency Medical Treatment Active Labor Act (EMTALA) cases Performance of Expedited Determinations Medicare Part A claims processing contractors, called FIs 2 and MACs 3 had no acute care inpatient hospital claim review responsibility CERT 4 program had no acute care inpatient hospital claims improper payment measurement responsibility 1 – Quality Improvement Organizations 2 – Fiscal Intermediaries 3 – Medicare Administrative Contractors 4 – Comprehensive Error Rate Testing

4. 4 QIOs will focus their efforts on quality improvement and continue to perform quality reviews, certain utilization reviews, such as, provider-requested higher-weighted DRG and EMTALA reviews, and expedited determinations. 5 FIs and MACs will perform most utilization reviews of acute care inpatient hospital claims CERT will measure the inpatient hospital paid claims error rate Acute IPPS Hospital and LTCH Claim Review: The New Environment 5 – The QIO 9 th Statement of Work provides a full listing of activities and is available at http://www.cms.hhs.gov/QualityIMprovementOrgs/04_9thsow.asp http://www.cms.hhs.gov/QualityIMprovementOrgs/04_9thsow.asp

5. 5 Acute IPPS Hospital and LTCH Claim Review: Why the Change? CMS initiated the change in response to recommendations by OIG 6 and the Institute of Medicine 7 There are 3 primary benefits to the transition: Consistency Acute long- and short-term hospitals have been the only Medicare Fee For Service (FFS) settings not reviewed by FIs and MACs These hospitals have been the only settings not included in the CERT error rate measurement Efficiency The entities that process claims will be responsible for preventing improper payments We anticipate the new strategy will be more cost effective since fewer contractors will be conducting the non-quality reviews Mitigation of the Perception of a Potential Conflict of Interest There is the perception of a potential conflict of interest created by having the QIOs measure the payment error rate for claims on which they themselves made payment determinations. The transition will enable QIOs to focus efforts on quality improvement and maintenance. 6 – Office of Inspector General Report: Oversight and Evaluation of the Fiscal Year 2005 Comprehensive Error Rate Testing Program (A-03-05-00006) (http://oig.hhs.gov/oas/reports/region3/30500006.pdf)http://oig.hhs.gov/oas/reports/region3/30500006.pdf 7 – Institute of Medicine Report: Medicare’s Quality Improvement Organization Program, Maximizing Potential (http://www.iom.edu/CMS/3809/19805/33411.aspx)

6. 6 Acute Care Inpatient Hospital Claim Review: When will the transition occur? CERT began reviewing acute care hospital claims for improper payment measurement in April 2008 This corresponds with the beginning of the November 2009 Medicare FFS Improper payment report period. CERT will review claims submitted April 1, 2008 forward We anticipate FIs and MACs will begin performing reviews on acute care inpatient hospital claims for improper payment prevention/reduction in the Summer 2008 FIs and MACs would be allowed to review claims submitted January 1, 2008 forward.

7. 7 Acute IPPS Hospital and LTCH Claim Review: How will reviews be different? Claim Selection After the first phase of review, FIs/MACs will perform targeted medical review, based on data analysis, not random review like QIOs have done. During the first phase, FIs/MACs will have the option to perform targeted or random medical review. FIs/MACs can perform medical review on a prepayment OR postpayment basis, unlike QIOs who only performed postpayment review CERT performs random reviews and utilizes different sampling, review, and calculation methodologies than those used by the QIOs to establish and report an error rate. Because of the difference in approach, CERT error rates will not be comparable to previous QIO-calculated error rates. Because of varying statutory requirements, the FI/MAC, CERT, and QIO review procedures differ. The review procedures for acute inpatient hospital claims will be consistent with the procedures used by FIs/MACs and CERT for review of outpatient hospital claims and all other Medicare FFS claims.

8. 8 Medical Record Requests The CERT Documentation Contractor will notify providers that claims have been selected for CERT review via letter or telephone contact. The medical record request letter will be mailed or faxed according to the hospital’s preference Hospitals may submit medical records via mail or fax. The CERT Documentation Contractor also accepts CDs with imaged medical records. The FIs and MACs will send an automated letter or provide instructions for how to access FISS (the claims processing system) for Additional Documentation Requests (ADRs). Providers may use the claim inquiry screen in Direct Data Entry (DDE) to verify the status of claims suspended for medical review, as they currently do for outpatient claims and other types of claims. Hospitals submit hardcopy medical records via mail Acute IPPS Hospital and LTCH Claim Review: How will reviews be different? (cont)

9. 9 Physician Involvement in Reviews As with any claim reviewed by FIs/MACs or CERT, physicians will be utilized in acute inpatient hospital claim review to the extent that it is necessary. Qualified clinicians, such as nurses and therapists, will perform the reviews, consulting with physicians or other specialists as needed. Reimbursement for Photocopy Costs Neither CERT nor the FIs/MACs reimburse for photocopying expenses for medical record requested from any setting. Appeals Appeals of claim denials will occur after the payment denial is issued. Like all other Medicare claims, providers and beneficiaries will have appeal rights. Acute IPPS Hospital and LTCH Claim Review: How will Reviews be Different? (cont)

10. 10 Acute IPPS Hospital and LTCH Claim Review: What will Remain the Same? Review Criteria The coverage and payment guidelines used by FIs/MACs and CERT will be the same as used in the past by QIOs. Like the QIOs, FIs/MACs will adhere to CMS national policy and contractor local coverage determinations (LCDs) in making payment decisions. FI/MAC reviewers will utilize clinical judgment in making payment determinations, as the QIOs did. Use of Screening Tool We anticipate that FIs/MACs and the CERT contractor will continue to use a screening tool for claims review, before making a determination on an individual claim basis. Like QIOs, FIs/MACs will not be required to use a specific tool.

11. 11 Acute IPPS Hospital and LTCH Claim Review: Comparison At a Glance IssueQIOs - HPMPCERTFIs/MACs Review SelectionRandom Targeted Timing of ReviewPost payment Post payment or Pre payment Level of physician involvement in review process Review all claims where nonphysician reviewer identifies a problem with the claim As needed for complex cases Use of coding expertsMandatory Reimbursement for photocopying medical records YesNo Where to file initial appeal QIOFI/MAC

12. 12 Acute IPPS Hospital and LTCH Claim Review: Roles of Review Entities in the New Environment EntityQIOsFIs / MACsCERTRACs PSCs / Z PICs PERM Primary Review Responsibility Promote Quality of Care Prevent / reduce improper Medicare FFS payments Measure Medicare FFS improper payments Identify past Medicare FFS improper payments Identify fraud and abuse in Medicare FFS Measure Medicaid improper payments Provider Education Responsibility Educate about quality of care Educate about submitting claims for correctly coded, medically necessary services N/A

13. 13 Information About the CERT Program and FI/MAC Review Process CERT Fact Sheet: www.cms.hhs.gov/MLNProducts/downloads/certfactsheetv1-3.pdf www.cms.hhs.gov/MLNProducts/downloads/certfactsheetv1-3.pdf Medicare FFS Improper Payment reports: www.cms.hhs.gov/CERT www.cms.hhs.gov/CERT CERT Documentation Contractor website: www.certprovider.org www.certprovider.org Medical Review Fact Sheet (being revised): www.cms.hhs.gov/MedicalReviewProcess/Downloads/mrfactsheet. pdf www.cms.hhs.gov/MedicalReviewProcess/Downloads/mrfactsheet. pdf Program Integrity Manual – Publication 100-08: http://www.cms.hhs.gov/Manuals/IOM/list.asp http://www.cms.hhs.gov/Manuals/IOM/list.asp

14. 14 Questions?