Medicare Medicare Recovery Audit Recovery Audit

Contractors Contractors (RACs)(RACs)Preparing for RAC AuditsPreparing for RAC Audits

Presentation OutlinePresentation Outline

I. BackgroundI. BackgroundA. What are the RACs?A. What are the RACs?B. When are the RACs coming to B. When are the RACs coming to Georgia?Georgia? C. RAC Focus AreasC. RAC Focus Areas

II. Case StudiesII. Case Studies III. How to Prepare for RACsIII. How to Prepare for RACs IV. GHA Initiatives to Assist IV. GHA Initiatives to Assist

Member Hospitals with RACsMember Hospitals with RACs

What are RACs?What are RACs? Medicare Modernization Act of 2003 Medicare Modernization Act of 2003

created a 3-year demonstration project in created a 3-year demonstration project in NY, FL, CANY, FL, CA

Recover Medicare overpayments and Recover Medicare overpayments and identify underpayments—payment mistakesidentify underpayments—payment mistakes

RACs are paid on a contingency fee basisRACs are paid on a contingency fee basis During FY 2007, RACs identified and During FY 2007, RACs identified and

corrected $371 Million dollars of Medicare corrected $371 Million dollars of Medicare improper payments in the demonstration improper payments in the demonstration statesstates

Over 96% were overpaymentsOver 96% were overpayments

Why Congress Believes Why Congress Believes RACs are Necessary…RACs are Necessary…

The Improper Medicare FFS The Improper Medicare FFS Payments Report for November Payments Report for November 2007 estimates that 3.9% of the 2007 estimates that 3.9% of the Medicare dollars paid did not Medicare dollars paid did not comply with one or more Medicare comply with one or more Medicare coverage, coding, billing, or payment coverage, coding, billing, or payment rules.rules.

This equates to This equates to $10.8 billion$10.8 billion in in Medicare FFS overpayments and Medicare FFS overpayments and underpayments annually.underpayments annually.

Overpayments by Error Overpayments by Error Type in Demonstration Type in Demonstration

ProjectProject 42% Incorrectly coded42% Incorrectly coded 32% Medically unnecessary service 32% Medically unnecessary service

or settingor setting 9% No/Insufficient Documentation9% No/Insufficient Documentation 17% Other17% Other

Source: CMS RAC Status Document FY 2007, February 2008

Average Overpayment Average Overpayment Amounts FY 2007Amounts FY 2007

Per ClaimPer Claim Per ProviderPer Provider

Inpatient Inpatient Hospital/SNFHospital/SNF

$10,618$10,618 $549,447$549,447

Outpatient Outpatient HospitalHospital

$273$273 $38,136$38,136

PhysicianPhysician $160$160 $834$834

DMEDME $85$85 $1,511$1,511

TotalTotal $11,136$11,136 $589,928$589,928

Source: CMS RAC Status Document FY 2007, February 2008

Permanent RAC ProgramPermanent RAC Program

CMS will contract with a permanent CMS will contract with a permanent regional RAC in 4 regions (the RAC regional RAC in 4 regions (the RAC for Georgia is Connolly Consulting)for Georgia is Connolly Consulting)

RACS can review claims for:RACS can review claims for: Inpatient hospitalInpatient hospital Outpatient hospitalOutpatient hospital Skilled nursing facilitiesSkilled nursing facilities Physician, ambulance, and lab servicesPhysician, ambulance, and lab services Durable medical equipmentDurable medical equipment

Permanent RAC ProgramPermanent RAC Program

RACs cannot look for any improper RACs cannot look for any improper payments on claims paid before payments on claims paid before October 1, 2007October 1, 2007

RACs can review claims during the RACs can review claims during the current fiscal yearcurrent fiscal year

Each RAC must use certified codersEach RAC must use certified coders RACs must pay back contingency fee RACs must pay back contingency fee

if their decision is reversed on any if their decision is reversed on any level appeallevel appeal

Types of RAC ReviewsTypes of RAC Reviews

Automated ReviewAutomated Review Proprietary software algorithms used to Proprietary software algorithms used to

identify clear errors that resulted in identify clear errors that resulted in improper paymentsimproper payments

Complex ReviewComplex Review Medical records requested to further Medical records requested to further

review the claimreview the claimRACs must use Medicare coverage, coding RACs must use Medicare coverage, coding

or billing policies in or billing policies in effect at the time effect at the time when the claim was adjudicatedwhen the claim was adjudicated

RAC Focus Areas in RAC Focus Areas in Demonstration StatesDemonstration States

Excisional DebridementExcisional Debridement Back PainBack Pain Outpatient vs. Inpatient SurgeriesOutpatient vs. Inpatient Surgeries Transfer PatientsTransfer Patients Inpatient Rehab, especially knee and hip Inpatient Rehab, especially knee and hip

replacementsreplacements Joint replacement patients and patients in Joint replacement patients and patients in

inpatient rehabilitation facilities that should have inpatient rehabilitation facilities that should have been treated in a lower intensity setting such as been treated in a lower intensity setting such as a SNFa SNF

Wrong diagnosis or principal procedure codesWrong diagnosis or principal procedure codes

Outpatient Hospital Areas Outpatient Hospital Areas of RAC Focusof RAC Focus

ColonoscopyColonoscopy Speech Language Pathology Speech Language Pathology

ServicesServices Infusion ServicesInfusion Services Neulasta (boosts white blood cell Neulasta (boosts white blood cell

counts to reduce chance of infection counts to reduce chance of infection in patients undergoing in patients undergoing chemotherapy)chemotherapy)

Short Stay ClaimsShort Stay Claims

Validate whether the admissions met Validate whether the admissions met Medicare’s medical necessity criteriaMedicare’s medical necessity criteria

One-day stays by chest pain patients One-day stays by chest pain patients were targeted by RACs in were targeted by RACs in demonstration statesdemonstration states

Many three-day stays were denied Many three-day stays were denied because they were inappropriately because they were inappropriately extended in order to qualify for extended in order to qualify for Medicare Part A coverage of post-Medicare Part A coverage of post-acute skilled nursing careacute skilled nursing care

Some Case Examples from Some Case Examples from the Demonstration Statesthe Demonstration States

(Note: These slides are optional (Note: These slides are optional depending on how the CEO wants to depending on how the CEO wants to present this information to the board present this information to the board members)members)

Excisional DebridementsExcisional Debridements

Hospital coder assigned a procedure Hospital coder assigned a procedure code of 86.22 (excisional code of 86.22 (excisional debridement of wound, infection, or debridement of wound, infection, or burn)burn)

In the medical record, the physician In the medical record, the physician writes “debridement was performed”writes “debridement was performed”

Excisional DebridementsExcisional Debridements

Coding Clinic 1991 Q3 states “unless the Coding Clinic 1991 Q3 states “unless the attending physician documents in the attending physician documents in the medical record that an excisional medical record that an excisional debridement was performed (definite cutting debridement was performed (definite cutting away of tissue, not the minor scissors away of tissue, not the minor scissors removal of loose fragments), debridement of removal of loose fragments), debridement of the skin that does not meet the criteria the skin that does not meet the criteria noted above or is described in the medical noted above or is described in the medical record as debridement and no other record as debridement and no other information is available should be coded as information is available should be coded as 82.26 (ligation of dermal appendage).”82.26 (ligation of dermal appendage).”

Excisional DebridementsExcisional Debridements

The RAC determines that the claim The RAC determines that the claim was was incorrectly codedincorrectly coded and issues and issues repayment request letter for the repayment request letter for the difference between the payment difference between the payment amount for the incorrectly coded amount for the incorrectly coded procedure and the payment amount procedure and the payment amount for the correctly coded procedure.for the correctly coded procedure.

Wrong Principal Wrong Principal DiagnosisDiagnosis

Principal diagnosis on claim did not Principal diagnosis on claim did not match the principal diagnosis in the match the principal diagnosis in the medical recordmedical record

Example: Respiratory failure (code Example: Respiratory failure (code 518.81) was listed as the principal 518.81) was listed as the principal diagnosis but the medical record diagnosis but the medical record indicates that sepsis (code 038-indicates that sepsis (code 038-038.9) was the principal diagnosis038.9) was the principal diagnosis

Wrong Principal Wrong Principal DiagnosisDiagnosis

The RAC issued overpayment request The RAC issued overpayment request letter for the difference between the letter for the difference between the amount for the amount for the incorrectly codedincorrectly coded services and the amount for the services and the amount for the correctly coded servicescorrectly coded services

Most common DRGs with this problem:Most common DRGs with this problem: DRG 475 Respiratory System DiagnosesDRG 475 Respiratory System Diagnoses DRG 468 Extensive OR Procedure DRG 468 Extensive OR Procedure

Unrelated to Principal DiagnosisUnrelated to Principal Diagnosis

Wrong Diagnosis CodeWrong Diagnosis Code

Hospital reported a principal Hospital reported a principal diagnosis of 03.89 (septicemia)diagnosis of 03.89 (septicemia)

Medical record shows diagnosis of Medical record shows diagnosis of urosepsis, not septicemia or sepsis; urosepsis, not septicemia or sepsis; Blood cultures were negativeBlood cultures were negative

Did not meet the coding guidelines Did not meet the coding guidelines for “septicemia”. Urinary tract for “septicemia”. Urinary tract infection causes the claim to group infection causes the claim to group to a lower payment DRGto a lower payment DRG

Wrong Diagnosis CodeWrong Diagnosis Code

RAC issued a repayment request RAC issued a repayment request letter for the difference between the letter for the difference between the payment amount for the incorrectly payment amount for the incorrectly coded procedure and the correctly coded procedure and the correctly coded procedurecoded procedure

ColonoscopyColonoscopy

The hospital billed for multiple The hospital billed for multiple colonoscopies for the same beneficiary colonoscopies for the same beneficiary the same daythe same day

Beneficiaries never need more than one Beneficiaries never need more than one colonoscopy per day. The excessive colonoscopy per day. The excessive services are services are not medically necessary. not medically necessary.

The RAC issued overpayment request The RAC issued overpayment request letters for the difference between the letters for the difference between the billed number of services and 1.billed number of services and 1.

Outpatient Hospital Speech Outpatient Hospital Speech TherapyTherapy

The outpatient hospital billed for each The outpatient hospital billed for each 15 minutes of speech therapy15 minutes of speech therapy

The code definition specifies that the The code definition specifies that the code is per session, not per 15 minutescode is per session, not per 15 minutes

The units billed exceeded the approved The units billed exceeded the approved number of sessions per day. The number of sessions per day. The excessive services billed are excessive services billed are medically medically unnecessaryunnecessary

RAC issued overpayment request RAC issued overpayment request lettersletters

Coping with the RACsCoping with the RACs

Comply with RAC medical record Comply with RAC medical record requests. If you don’t submit them requests. If you don’t submit them on time, the RAC automatically on time, the RAC automatically classifies the claim as an classifies the claim as an overpayment and makes a recovery.overpayment and makes a recovery.

Develop an internal tracking system Develop an internal tracking system for medical records requested for for medical records requested for review by the RACreview by the RAC

Review Your PEPPER Review Your PEPPER ReportsReports

Program for Evaluating Payment Patterns Program for Evaluating Payment Patterns Report (PEPPER)Report (PEPPER)

Formerly Prepared by QIO, then Support Formerly Prepared by QIO, then Support QIO- no one knows if they will continueQIO- no one knows if they will continue

Identifies claims patterns that are outliers Identifies claims patterns that are outliers relative to other hospitals in the staterelative to other hospitals in the state

““Top 20” list of DRGs that are prone to Top 20” list of DRGs that are prone to certain billing areascertain billing areas

Other problem areas which vary by stateOther problem areas which vary by state

Hospital Next StepsHospital Next Steps Look at potential areas of riskLook at potential areas of risk Establish single point of contact for RACEstablish single point of contact for RAC Establish RAC committee—include key Establish RAC committee—include key

hospital stakeholders (finance, UR, Case hospital stakeholders (finance, UR, Case Management, compliance, legal, medical Management, compliance, legal, medical records, etc.)records, etc.)

Review records before sending to RACReview records before sending to RAC Support your claimSupport your claim

Understand the parametersUnderstand the parameters For ProvidersFor Providers For the RACFor the RAC

Hospital Next StepsHospital Next Steps Plan to participate in the AHA’s RACTrac Plan to participate in the AHA’s RACTrac

to report your hospitals experience with to report your hospitals experience with the RACthe RAC

www.AHARACTrac.orgwww.AHARACTrac.org Data will provide both the AHA and GHA Data will provide both the AHA and GHA

the data they need to advocate on behalf the data they need to advocate on behalf of the hospitals and to identify trends in of the hospitals and to identify trends in reasons for denials reasons for denials

Implement a system for charging RACs Implement a system for charging RACs for copying costs of medical records for copying costs of medical records (.12/page)(.12/page)

GHA Next StepsGHA Next Steps

Establish RAC Task ForceEstablish RAC Task Force Establish relationship with RAC—the RAC Establish relationship with RAC—the RAC

for Georgia will be Connolly Consultingfor Georgia will be Connolly Consulting Facilitate information exchange between Facilitate information exchange between

CMS, RAC, and hospitalsCMS, RAC, and hospitals Monitor RAC activities with Georgia Monitor RAC activities with Georgia

providersproviders Georgia is scheduled to begin RAC Georgia is scheduled to begin RAC

Activity August 1, 2009 or laterActivity August 1, 2009 or later

GHA RAC Task ForceGHA RAC Task Force

A multi-disciplinary cross-section of A multi-disciplinary cross-section of GHA members including CEOs, GHA members including CEOs, CFOs, legal counsel, compliance CFOs, legal counsel, compliance officers, case/utilization managers, officers, case/utilization managers, medical records, and othersmedical records, and others

Task Force will provide guidance Task Force will provide guidance and feedback to GHA as we develop and feedback to GHA as we develop strategies and tools to assist strategies and tools to assist members in dealing with RACsmembers in dealing with RACs

Questions or Comments?Questions or Comments?

Feel Free to Contact GHA Staff for Feel Free to Contact GHA Staff for assistanceassistance

Robert E. Robert E. Bolden—rbolden@gha.orgBolden—rbolden@gha.org, , (770) 249-4505(770) 249-4505

Liz Schoen, Liz Schoen, lschoen@gha.orglschoen@gha.org, (770) , (770) 249-4564249-4564

www.gha.orgwww.gha.org