PAYMENT DENIAL UPDATEBy: Rebecca Corzine Tarr RN, MBA, CPA

Executive Vice President and COO

MedPerformance, LLC

(813) 786-8974

2

Agenda

Introduction Today’s Focus is on RACs, MACs, PROBEs And

Denials Underpayments & Take Backs Appeals

3

RAC Update CMS recovery audits on hold as contractors deal

with huge backlog. CMS is winding down its recovery audit program

with its current contractors, placing the program effectively on hold, perhaps for several months, while it awards new contracts.

CMS has extended its contracts with its current four vendors until Dec. 31, 2015, for “administrative and transition activities.” The contracts were to end on Feb. 7.

This time period, while hospitals are not getting any (ADRs), could still be audited in the future.

The program currently has a three-year look-back period.

4

RAC Update – Continued The deadline has passed for RACs to send a post-

payment ADRs. Medicare Administrative Contractors can no longer send

a pre-payment ADRs to the Recovery Audit Prepayment Review Demonstration.

June 1st is the last day for auditors to send improper payment files to Medicare Administrative Contractors for adjustment.

The appeals process has become so overloaded that HHS' Office of Medicare Hearings and Appeals recently began notifying hospitals that it won't be able to accept new appeals until the backlog clears.

Sixty-five administrative law judges are now receiving 15,000 claims per week, when they're only equipped to handle 2,000. That has meant a collective backlog topping 350,000 appeals.

Don’t let your guard down.

5

MAC vs. RAC Statistics MAC conducted four widespread probes on the below MS-DRGs in

response to medical record review findings identified by the recovery auditor (RA). MS-DRG 074 Cranial & peripheral nerve disorders w/o MCC

RA error rate was 89.87 percent MAC error rate was 7.77 percent

MS-DRG 092 Other disorders of nervous system w/CC RA error rate was 14.29 percent MAC error rate was 6.49 percent

MS-DRG 419 Laparoscopic cholecystectomy w/o C.D.E. w/o CC/MCC RA error rate was 91.55 percent MAC error rate was 2.74 percent

MS-DRG 491 Back & neck procedure except spinal fusion w/o CC/MCC RA error rate was 91.98 percent MAC error rate was 23 percent

6

New Rules – Be Careful

CMS communications are sometimes misleading and confusing.

Be careful interpreting current guidelines. RAC may be on hold, but CMS, MAC, & Probe are

not! Focus today on what you need to do to get paid

Medical Necessity Etc…

7

Two Midnight rule – “CMS-1599 F”

CMS-1599 F = Requirements for Inpatient Admission Admission Order Physician Certification Medical Necessity Expectation of a Two-midnight Stay

8

Two Midnight rule – “CMS-1599 F”

While CMS is saying to just have physician sign inpatient orders for 2 midnights, you still need to ensure medical necessity.

You must ensure that y0u have sufficient documentation.

You must have a consistent and 100% compliant method to get the CMS approved inpatient order, whether in CPOE or on paper.

You should audit to minimize your risk of future denials.

9

Two Midnight rule Denial Results MAC

Most Current Data Results 27% Denial Rate

Denial Reasons 37% missing, unsigned, invalid order 63% failed to document 2 midnight

expectation PROBE Results

30-60% based on sample size of 10

10

Results of Original Research Study

Observation & Inpatient Status: Clinical Impact of the 2-Midnight Rule

Retrospective descriptive study of all observation and IP encounters between 1/1/12 and 2/28/13 at Midwestern academic medical center

N = 36,193 Net loss of IP = 14.9% Estimated revenue loss per case ~ $4,000 Same outcome even when IP only surgeries

included CMS’s claim that more patients will be IP not

found to be correct

11

Not Just for Acute Care Providers

Denials are affecting all organizations along the continuum of care Hospice Home Health DME Inpatient Rehab LTAC

12

Best Practices Centralized Function Multi-Disciplinary Team Consisting of:

RN/Case Managers Physician Advisors Coders Billers Revenue Integrity Clerical

Systematic Methodology to approach appeal process

13

Best Practices - Continued

Flow charted process Role Clarity State of the Art Software System

Easy to use Has powerful reporting capabilities Alerts to ensure deadlines are met Dollars at risk vs. dollars lost

Focus should be on determining the root cause and putting preventative measures in place

Requires support at highest level and process changes in many facets of the organization

14

Change Physician Behavior

Physicians are scientists Provide hard facts and data Evidenced based Medicine Physicians do not like to be outliers Leave emotion and finances out of

discussions

15

The Appeal Process Appeal process

Intentionally complex and deceptive process….

Hard deadlines Labor intensive Allow recoupment or risk interest

16

Questions/Comments?

Rebecca Corzine Tarr RN, CPAExecutive Vice President and COO

MedPerformance LLC813-786-8974

beckytarr@me.com