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Medicare Recovery Audit Contractors (RACs): An Overview 1 1
MedicareRecovery Audit Contractors (RACs):
An Overview
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What is a RAC?RAC Program Mission
The RACs will detect and correct past improper payments so that CMS and the Carriers/FIs/MACs can implement actions that will prevent future improper payments
Providers can avoid submitting claims that don’t comply with Medicare rules CMS can lower its error rateTaxpayers and future Medicare beneficiaries are protected
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RAC Legislation
Tax Relief and Healthcare Act of 2006, Section 302:
requires a permanent and nationwide RAC program by no later than 2010gave CMS the authority to pay RACs on a contingency fee basis
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4
D
C
B
A
RAC Jurisdictions
March 1, 2009
March 1, 2009
August 1, 2009
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RAC Review Process
RACs review claims on a post payment basisRACs use the same Medicare policies as FIs, Carriers and MACs
NCDs, LCDs & CMS manualsTwo types of review:
Automated (no medical record needed) Complex (medical record required)
RACs will NOT be able to review claims paid prior to October 1, 2007RACs will be able to look back three years from the date the claim was paid
RACs are required to employ a staff consisting of nurses, therapists, certified coders & a physician CMD
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RAC Program’s Three Keys to Success
1. Minimize Provider Burden 2. Ensure Accuracy 3. Maximize Transparency
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Minimize Provider Burden
Limit the RAC “look-back period” to three years
Maximum look back date is October 7, 2007 RACs will accept imaged medical records on CD/DVDLimit the number of medical record requests (based on previous year Medicare volume)
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Ensure Accuracy
Each RAC employs:A physician medical directorCertified coders
CMS’ New Issue Review Board provides greater oversightRAC Validation Contractor provides annual accuracy scores for each RACIf a RAC loses at any level of appeal, the RAC must return the contingency fee
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Maximize Transparency
New issues are posted to the webMajor Findings are posted to the webRAC claim status web interface (2010)Detailed Review Results Letter following all Complex Reviews
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What Can Providers Do to Get Prepared?
Know where previous improper payments have been found (OIG, CERT, Demo RAC Reports)Know if you are submitting claims with improper paymentsPrepare to respond to RAC medical record requestsKeep/submit proper documentationAppeal when necessary Learn from your past experiences
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CMS Region C RAC
Christine Castelli, PrincipalClient Relations/Quality Assurance
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Connolly Background
Established in 1979 with a singular focus on recovery auditing
Pioneered the use of data mining technology to identify and recover overpayments and underpayments
Serves Medicare and Medicaid, and some of the industry’s largest commercial payers
Reviewed over $150 billion in paid medical claims in 2008
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Connolly RAC Program Mission
Detect and correct Medicare past improper payments
Analyze root causes of those improper payments and provide actionable process improvement recommendations to CMS that prevent or mitigate future improper payments
Operate with high sensitivity to provider relations
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Connolly Review Process
Use same Medicare policies as MACs, FIs, Carriers, and DME MAC— NCDs, LCDs, CMS Manuals (e.g. claims processing,
program integrity, benefit policies, etc.)
Use same types of staff as the MACs, FIs, Carriers, DME MAC— Nurses, therapists, certified coders and physician
CMD
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Connolly’s Subcontractor: Viant
Viant is based out of Naperville, Illinois
Viant has 18 years of servicing the nation’s largest healthcare payers
Viant participated in the RAC Demonstration as a subcontractor in California
Viant will be subcontracting in Region C, providing Part A Complex Reviews
Connolly is 100% accountable for the Region C RAC contract
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Get Prepared & Organized
Complete, submit, and keep current your Request for Contact Information form
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Prepared & Organized, cont.
Identify and maintain a RAC Liaison to manage correspondence
Respond to RAC medical record requests fully and within the required 45 day turn around
Utilize the benefit of the discussion period
Communicate, communicate, and communicate
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Medical Record Submission
We will accept paper medical records, but we suggest submitting medical records via CD/DVD
Adhere to the provider medical record submission requirements —See Handout Instructions
Make sure all medical record images are sent in a tamper-proof package
Strongly suggest that all medical records be sent on CD/DVD via trackable carriers —FedEx, UPS, DHL, registered USPS mail, etc.
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Connolly Key RAC Personnel
Dr. James Lee, D.O. —Medical Director and Registered Pharmacist
Thomas Gallo, Principal—Operations
Christine Castelli, Principal—Client Relations / Quality Assurance
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Connolly Resources
Connolly RAC toll free phone number — 866.360.2507
Connolly RAC fax number— 203.529.2995
Connolly website & email address — www.connollyhealthcare.com/RAC
Connolly RAC office address— The Navy Yard Corporate Center
One Crescent Drive, Suite 300-A
Philadelphia, PA 19112
Christine Castelli — 203.529.2315
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Questions?
Medicare Recovery Audit Contractor (“RAC”) Program
American Health Care AssociationMay-June 2009 RAC Webinars
Mark E. [email protected], LUNDY & BOOKMAN, INC.575 Market Street, Suite 2300San Francisco, CA 94105Tel: 415.875.8501Fax: 415.875.8519
Recovery Audit Contractors
Background-Demonstration Program – Lessons LearnedPermanent Program –
ImplementationTiming Rules and procedures
Areas of Potential FocusManaging the Appeal Process - TimelinesStrategies to Limit Recoupment – Timelines within Timelines
Background – RAC Legislation
Medicare Modernization Act Section 306: Mandates CMS to conduct RAC demonstration Contingency fee-based retrospective claim review
Tax Relief Act and Healthcare of 2006, Section 302:
Mandated a permanent and nationwide RAC program by no later than 2010
Background –RAC Program Mission
to detect and correct past improper payments,
to implement actions that will prevent futureimproper payments.
• Providers can avoid submitting claims that don’t comply with Medicare rules
• CMS can lower its error rate
• Taxpayers & future Medicare beneficiaries are protected
Background – Source of RAC’s Audits
Where do RAC audits come from:Data miningOIG Work PlanCERT ReportsGAO ReportsRAC Evaluation Report (as updated)
The Demonstration Phase
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) Section 306:
• Mandated 3-year CMS demonstration using Recovery Audit Contractors (RACs) to detect and correct “improper payments” in the Medicare fee for service program.
• Demonstration program intended to determine if use of RACs was “a cost-effective means” of adding resources to ensure correct payments to providers and suppliers and to protect the Medicare Trust Fund.
• The demonstration operated in New York, Massachusetts, Florida, South Carolina and California and ended on March 27, 2008.
RAC Collections by Error Type/Demonstration
(Net of Appeals)
Most improper payments occur when providers submit claims that don’t comply with Medicare coding rules or medical necessity guidelines
17% Other$160.2M
9% No/Insufficient Documentation$74.3M
32% MedicallyUnnecessary
$391.3M
42% Incorrect Coding$331.8M
SOURCE: Self-reported by RACs
RAC Appeal Data/Demonstration (update Jan 2009)
Number of Claims with
Overpayment Determin-
ations
Number of Claims Where
Provider Appealed (any level)
Percentage of Claims
Where Provider Appealed (any level)
Number of Claims
with Appeal
Decisions in
Provider's Favor
Percentage of Claims
with Appeal Decisions in Provider's
Favor
Percentage of Overpayment Determinatio
ns Overturned on Appeal
All RACs 9/07* 358,765 51,507 14.4% 25,559 50%
All RACs 3/08** 525,133 73,266 14.0% 24,376 33% 4.6%
34%
7.1%
All RACs 8/08*** 525,133 118,051 22.5% 40,115 7.6%
*source CMS report 2/08
** source CMS report 6/08
*** source CMS report 1/09
Permanent RAC Program
Tax Relief and Health Care Act of 2006 Section 302:
• The RAC Program made permanent and requires the Secretary to expand the program to all 50 states by no later than 2010.
• CMS plans to have 4 RACs in place.
• Each RAC will be responsible for identifying overpayment and underpayments in approximately ¼ of the country.
• The new RAC jurisdictions match the DME MAC jurisdictions.
• First rollout in Summer of 2009 (from previous March 1, 2009 dates)
Revised Phase-In
Viantsubcontractor
PRG subcontractor
PRG subcontractorPRG
subcontractor
Implementation Statushttp://www.cms.hhs.gov/RAC/Unselected RACs appealed selection whereupon an automatic stay stopped work for all four RAC regional awards until a determination is made by GAO, as required under provisions of the Competition and Contracting Act of 1984 (CICA).
On February 6th, CMS effectively resolved the disputes by settlement where two unsuccessful RACs would subcontract with selected RACs.
Viant. As a subcontractor to Connolly Consulting, the RAC for Region C,Viant will conduct complex reviews of hospital inpatient claims and physician-administered J-codes in North Carolina, South Carolina, Virginia and West Virginia.
• PRG-Schultz. PRG Schultz will act as a subcontractor to Diversified Collection Services (Region A), CGI (Region B) and HealthDataInsights(Region D). In this capacity, PRG Schultz will audit Part A/B MAC claims in, Maine, New Hampshire, Vermont, Minnesota, Wisconsin, Idaho, Oregon, and Washington; home health claims in Regions A, B and D; and durable medical equipment claims in Region B.
Lessons Learned: CMS Changes to RAC Program
Demonstration RACs Permanent RACs
Look back period (from claim pmt date – date of medical record request)
4 years 3 years
Maximum look back date None 10/1/2007
Discussion with CMD regarding claim denials if requested
Not Required Mandatory
Allowed to review claims in current fiscal year?
No Yes
RAC medical director Not Required Mandatory
Coding experts Optional Mandatory
Credentials of reviewers provided upon request
Not Required Mandatory
Lessons Learned: CMS Changes to RAC Program
Demonstration RACs Permanent RACs
Vulnerability reporting Limited Mandatory
RAC must payback the contingency fee if the claim overturned at…
…first level of appeals …all levels of Appeal
Web-based application that allows providers to customize address & contact
None Mandatory by Jan. 1, 2010
External validation process Not Required Mandatory
RAC PROGRAMRecord Request Limitations
•Limits on the Number of Medical Records a RAC can Request per Month (Actually every 45 days)
• Based on 10% of average monthly claims (2008)
• Maximum of 200 claims every 45 days
Permanent RAC ImplementationSection 302 in TRHCA requires the Secretary to implement the RACprogram throughout the country by no later than January 1, 2010RAC MAC coordination - CMS transmittal 145 Jan 9, 2009
CMS strategy to ensure that the RAC permanent program will not interfere with transition from FI’s to new Medicare claims processing contractors, called Medicare Administrative Contractors (MACs). This strategy will allow the new MACs to focus on claims processing activities before working with the RACs.
Generally, the RAC blackout period will be:a. 3 months before a MAC begins processing claims for a given Stateb. 3 months after a MAC begins processing claims for a given State.
CMS and the permanent RACs will undertake aggressive provider outreach.CMS to make available RAC-identified service specific vulnerability data via web posting, so providers can avoid making those errors in the future.
Providers should regularly review on-lineProviders should all review trends in their own past denials
Top RAC Recovered SNF ClaimsCA only
Physical therapy and occupational therapy (medically unnecessary)Speech-language pathology services (medically unnecessary)Other Part B claims (i.e., blood glucose)Part A claims will likely be in playImpact of consolidated billing
Investigation/AnalysisAccording to CMS, the RACs analyze claims data using their own proprietary software to identify “clearly”improper payments and “likely” improper payments
Clearly improper Automated Review: the RAC contacts the provider and requests a refund of any overpayment amountsExample: Duplicate PaymentLikely improper Complete Review: the RAC requests medical records form the provider, reviews the claim and medical record and then makes a determination as to whether the claim contained an overpaymentExample: Medical Necessity
Problematic Areas for Potential Denials of Claims
Payments are made for services that do not meet Medicare’s medical necessity criteriaPayments are made for services that are incorrectly codedProviders fail to submit documentation TIMELY, or fail to submit enough documentation to support the claim reviewed Duplicate payments
RAC Application of Standards
RACs apply statutes, regulations, CMS national coverage, payment and billing policies as well as National Coverage Determinations, Local Coverage Determinations that have been approved by Medicare RACs are not to develop or apply their own coverage, payment or billing policies
RAC ProgramPrepare for RACs
• Establish internal RAC team Interdisciplinary Team: Legal, Finance, Clinical, Compliance, IT• Identify RAC point of contact for internal and external RAC
communications• Develop central tracking mechanisms/database for all RAC -
Incoming and Outgoing• Coordinate the tracking mechanism with communications
structure – record reviews, and appeal of recoupment deadlines• Conduct self audits to identify potential problems• Participate in RAC trainings and outreach• Monitor news sources, CMS, associations, and your own reports
to stay abreast of trends• If desired, development of unique forms for Redeterminations
and other appeal levels once issues identified
Strategies
Record RequestsDenials
Reviewing Denials for complianceImplementing the Appeal Process –appeal rights and recoupmentAdditional Defenses and Issues to Raise or Consider
RAC initiates Review
Request for medical recordsTypically the process will begin with a notice of a possible overpayment and a request for medical recordsThe RAC will request certain records to support the claim and provide a deadline for the provider to submit the recordsTypically, 45 calendar days from date of letter
Responding to Record Requests:
Stamp date and Time Received45 calendar days from date of letterCan request an extensionNotify RAC if significant discrepancy between date of letter and date of receiptIdentify any internal issues in expeditiously getting the mail for processing
Responding to Record Requests:
Was the request sent to the right place?Notify RAC of the contact person with contact information
Did the RAC exceed the Record Request Limit?
Every 45 days (starting with the first request received)10% of average monthly inpatient claims (max of 200)1% of average monthly outpatient claims (max of 200)
Responding to Record Requests:
Copying of Record and OthersEnsure entire record is copiedInclude copies of NCD, LCD, coding guidelines, CMS guidance?
Review of all records before they are released
Permits early identification of issuesEstablishes priority for appealsIntensive work
Responding to Record Requests:
Has the claim already been subject to audit by another contractorDid the RAC follow the New Issue Review Process?
Initial requests may be part of the processLetter should clearly state basis for the requestLook to the CMS and RAC websites and confirm that issue is identified
Is this even a RAC Request?Confusion with so many different Medicare contractors (i.e., MACs, PSCs, MICs, etc.)
Responding to Record Requests:
Document Management?Stamp number (Bates Stamp) on bottom of each page producedScan everything produced to RACInclude cover letter itemizing contents of box of documents or CDSend certified mail or, if regular mail, complete affidavit of service by mail
Responding to Record Requests:Data Management
• Audit ID Number
•Type of Audit
• Reason for Audit (Issue Specific)
• Date of Record Request
• Date Received
• Next Deadline
• Information about the production
• Patient information
• Status of case
• Reimbursement information
• RAC response
• Status at each level of appeal
RAC Claim DenialsDetermination Letter
If the RAC concludes that there has been an overpayment, based on its review of the medical records, it will send a notice of determination which explains, among other things:
How the overpayment was determinedRecoupment and Right to Rebuttal/Discussion PeriodAppeal rights
The letter will also notify the provider of the date of recoupment
Handled by the MAC
Pressure points of appeal and recoupment timelines – The time to stop recoupment is far shorter than time to appeal
Stamp the date receivedAppeal period begins when you receive the redetermination (“demand letter”), which is presumed to be five days after the date of the letter absent evidence to the contrary120 days to appeal (i.e., request a determination)Appeal within 30 days to stop recoupment on day 41
Review the DenialAutomated reviewsLack of documentation (records not submitted timely)Coding issuesMedical necessity denials
Recoupment Rebuttal/Discussion Period
Vehicle to indicate why recoupment should not occur/discussion periodMay rebut any proposed recoupment action by submitting a statement within 15 days of the notice of an impending recoupment actionDesigned to detect errors in calculation/not substantive analysisDiscussion period allows for discussion of medical necessity denial with RAC up through recoupmentOccurs prior to and separate from the appeal process
RAC Appeals
Provider has right to appeal adverse determination as with any Medicare contractor
Request for redeterminationRequest for reconsideration to QICRequest for administrative law judge hearingRequest for review by Medicare Appeals CouncilFederal court review
Appeal Rights/Process
Notice of Initial DeterminationNotice must contain:
Basis for full or partial denialInfo on right to a redeterminationAll applicable claim adjustment reasons and remark codesSource of the RA and who may be contacted for more information
Appeal Rights/ProcessAppeal Process Step 1: Request for Redetermination
Provider’s Request for Redetermination due 120 days from receipt of the notice of initial determination from RAC)“Medicare Redetermination Request Form (CMS 20027)” or your own form submitted to the MAC (not the RAC)Notice of initial determination is presumed to be received five days from the date of the notice unless evidence to the contraryMAC has 60 days for written redeterminationRedetermination Notice must contain explanation how CMS policies, coverage rules, etc. apply
Recoupment Limitation During Appeal
Demand letter required for all overpayments subject to recoupment limitationsNew requirements for demand letters for overpayments subject to recoupment limitations (Medicare Financial Management Manual (“MFMM”) §200.2)
Recoupment Limitation After Demand Letter – First Level
Recoupment stopped if valid and timely request for redetermination received within 30 days from date of demand letter.If valid and timely request for redetermination received more than 30 days from date of demand letter, recoupment will be stopped from that point, but any previously recouped funds may not be refunded.Strategic Question – Ability to submit complete redetermination request to stop recoupment
Recoupment Limitation After Demand Letter
Timeframe Medicare Contractor Provider
Day 1 Date of Demand Letter Mailed
Receives Notice by First Class Mail
Day 1-15 Deadline for Rebuttal Request. No recoupment occurs.
Submit rebuttal statement
Day 1-40 No recoupment occurs Provider can appeal and potentially limit recoupment from occurring
Day 41 Recoupment begins Provider can appeal and potentially stop recoupment
Appeal Rights/Process
Appeal Process Step 2: Request for Reconsideration to QIC
“Reconsideration Request Form (CMS Form 20033)” or your own form due to FI within 180 days from receipt of the redeterminationNo minimum amount in controversy requirementAll evidence must be submitted at this level unless good cause shownQIC has 60 days for written Reconsideration
Recoupment Limitation - Second Level Appeal
Upon receipt of Medicare redetermination notice or revised overpayment notice/demand letter, recoupment will be stopped if valid and timely appeal received within 60 days of notice for second level appeal by a Qualified Independent Contractor (“QIC”)If decision unfavorable to provider or partially favorable, recoupment can begin on 61st day after Medicare redetermination notice or revised overpayment notice/demand letterContractors have until 76th day to start recoupment. After recoupment begins, recoupment can be stopped by a valid and timely appeal.
Recoupment After Second Appeal (QIC)
Recoupment will occur regardless of any further appealsRecoupment can occur at day 30 after the date of the QIC decision or from the revised written final determination due to effectuation
Appeal Rights/ProcessAppeal Process Step 3: Request for Administrative Law Judge Hearing
Request for ALJ hearing due 60 days from date of receipt of the QIC’s reconsideration noticeUse Form CMS 20034 A.B or your own formCase file forwarded by QIC to the Office of Medicare Hearing & AppealsHearing is “de novo”ALJ decision due within 90 daysMinimum Amount in Controversy is $120Hearing by video conference, telephone conference or in personMaximum chance of success
Appeal Rights/ProcessAppeal Process Step 4: Request for Review with Medicare Appeals Council
Any party to the hearing can request review (DAB-101)MAC can review ALJ decision on its own motionRequest for MAC review due 60 days from the date of receipt of the ALJ hearing decision or dismissalMAC’s review is “de novo”No minimum amount in controversyRecord review but may request oral argumentAppeals Council will remand to ALJ if additional facts are necessary
Appeal Rights/Process
Appeal Process Step 5: Federal Court Review
Request for judicial review due 60 days from the date of receipt of the MAC decision or declination for review by the MACMinimum amount in controversy is $1,220
Strategic Issues30 days to stop recoupment120 days to request redetermination11.375% interest accrues from date of determinationCash flow – can extend repayment for 210 days from the date of determination
One strategy – appeal all claims within 30 days at first level and within 60 days at second levelAdvantages
Cash flow (for a maximum of 210 days from date of determination)Potential Sentinel Effect?
DisadvantagesAccrue interest at 11.375%Frantic timetable to assemble appeals
A Second Strategy – appeal some claims within recoupment limits
Based on amount in question?Based on review of the merits?
A Third Strategy – appeal claims within appeal but not recoupment limits
Additional Defenses and Issues
Without Fault (Section 1870)Even if overpayment identified provider may still be paid if “without fault” (i.e., no fraud or pattern)3 year rule (unique counting rule)
Waiver of Liability (Section 1879)Even if service determined to be not reasonable and necessary, payment could be made if provider or supplier did not know, and could not reasonably have been expected to know that payment would not be made
Additional Defenses and Issues
Timing of Reopening “Good Cause”42 C.F.R. 405.980
Medicare Appeals Council Decisions involving hospitals and skilled nursing facilitiesDecisions by Appeals Council and the ALJ lack jurisdiction to decide contested reopenings under the Medicare appeals process
Additional Defenses and IssuesTiming of Reopening/”Good Cause”
MAC Decision Palomar Medical Center v. Johnson, S.D. Cal. No. 3:09-cv-00605-BEN-NLS (S.D. Cal. Complaint filed 3/24/09)Challenges RAC reopening of two year old hospital claim ALJ determined RAC had not shown “good cause”for reopening MAC reversed ALJ finding ALJ lacked jurisdiction to determine whether reopening was lawfulCourt challenge to jurisdictional argument and due processCMS Transmittal 1671 (February 16, 2009) – RAC data analysis is “good cause” and ALJ has no jurisdiction
Additional Defenses and Issues
Credentials of reviewerCan request a copy of credentialsMedical DirectorCoding Experts
Additional Defenses and Issues
Review criteria usedMust be Medicare policy, National Coverage Determinations, Local Coverage DeterminationsWhat was in effect at timeIs Medicare policy applied correctlyCan any of the coverage determinations be used as a defense?
Incorrect application of statutesMedical records standardsPhysician testimony/declarationStandard of care evidencePeer-reviewed science
Additional Defenses and Issues
SamplingExtrapolation PIM (CMS Pub100-08) Chapter 33.10.1-3.10.11.2Challenge statistical analysis
