WEBINAR COLLABORATE WITH PLANTE & MORAN EXPERTS: RAC CRISIS CONTROL TIMES. plantemoran.com

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1 WEBINAR COLLABORATE WITH PLANTE & MORAN EXPERTS: RAC CRISIS CONTROL TIMES TOPICS4THET plantemoran.com February 25, 2010

2 GETTING STARTED RAC CRISIS CONTROL WEBINAR Today s session begins at 2 p.m. Eastern Time To Join the audio portion of the event: (Toll-Free 3921(Toll (US & Canada)) Questions You can submit questions at any time to the Q&A Group through the chat feature located on the right of your webcast console or verbally by pressing 7 on your phone key pad when prompted by the webinar operator during the last 15 minutes of the webinar hour. Presentation Slides You will receive a follow-up with a link to download today s presentation. The webinar archive will also be posted to webinars.plantemoran.com 2 to 3 business days after the webinar. For Technical support, please contact: support@atconference.com Phone or *0 from the conference

3 PRESENTER Jane C. Belt Consulting Manager Plante & Moran Clinical Group

4 OBJECTIVES Review the history of the federally mandated RAC program from the pilots in 2005 to the present national roll-out Identify the three (3) major audit issues found in the pilot project that generated the greatest SNF Medicare overpayments Discuss the strategies and tools for the nursing facility to prepare for the RAC audits 4

5 WHAT IS THE MEDICARE RAC PROGRAM? RAC stands for Recovery Audit Contractor Efforts by CMS to identify improper payments and fight fraud, waste and abuse in the Medicare Program 3-year, 3-state RAC demonstration program identified ~$1 billion in improper claims across all healthcare providers Pilot focused on highest Medicare utilization states: NY, CA, and FL in

6 WHAT IS THE MEDICARE RAC PROGRAM? Demonstration expanded in 2007 to MA, SC, AZ Permanent RAC began in 2009; January 2010 in all 50 states Four contractors hired on a performance contingency basis to identify overpayments (and underpayments) by reviewing Medicare claims data and medical records Program designed to identify and recoup $10.8 billion (1) in annual improper Medicare payments (1) The Medicare Recovery Audit Contractor (RAC) Program: An Evaluation of the 3-Year Demonstration, June 2008; as estimated by the GAO and OMB 6

7 MEDICARE FFS BY THE NUMBERS Healthcare providers participating in Medicare Fee-for-Service ( FFS ) program Annual claims processed Total annual Medicare FFS payments >1.0 million >1.2 billion ~$270 billion GAO/OMB estimated annual improper Medicare payments ~$10.8 billion Source: The Medicare Recovery Audit Contractor (RAC) Program: An Evaluation of the 3-Year Demonstration, June 2008 ( 7

8 WHAT RAC MEAN$ FOR PROVIDER$ Increased scrutiny Negative cash flow implications Potential for declining profit margins Administrative burden to comply with documentation requests Expensive and lengthy appeals processes Current and historical exposure (3-year look-back period always, but not before 10/01/07) Potential for significant financial exposure 8

9 GOOD NEWS SOME RAC IMPROVEMENTS Modifications made to final program due to criticisms of demonstration Presence of medical professionals (medical directors, coding specialists) to assist with reviews. (Demo not required to hire industry experts.) Must provide credentials upon request. Medical directors must discuss claim denials with providers if requested 9

10 NATIONAL RECOVERY AUDIT CONTRACTORS Region A: Diversified Collection Services, Inc. of Livermore, CA: ME, NH, VT, MA, RI, NY, CT, DE, NJ, PA, DC Region B: CGI Technologies & Solutions, Inc. of Fairfax, VA: MI, IN, MN, OH, IL, KY, WI CMS contact: Scott Wakefield = racb@cgi.com com Project Officer for Region B Region C: Connolly Consulting Associates, Inc. of Wilton, CT: NC, SC, FL, CO, NM, AL, AK, GA, LA, MS, OK, TN, TX, VA, WV Region D: HealthDataInsights, Inc. of Las Vegas, NV: MO, WY, ND, SD, UT, AZ, AK, CA, HI, ID, IA, KS, OR, MO, NE, NV, 10

11 ADDITIONAL CGI CONTACT INFORMATION 11

12 12

13 STAFF CREDENTIALS CGI TEAM MEMBERS Medical Doctor Certified Coding Specialist Registered Health Information Technician Registered Health Information Administrator Registered Nurse Certified Professional Coder Certified Professional Coder Hospital Registered Pharmacist 13

14 BASIC FACTS ABOUT THE RACS RACs review huge number of claims using automation burden to respond or appeal Medical record limits for each entity: Inpatient Hospital, IRF, SNFs, Hospice by NPI 10% of average monthly Medicare paid claims per 45 days Maximum of 200 medical records per 45 days RACs receive monetary gains contingency fee for each improper payment corrected so incentive to find over-payments 14

15 NEWS FLASH 01/29/10: CMS Expands FY 2010 RAC ADR limits to all Institutional Providers The limits announced in December 2009 applied only to requests for DRG validation purposes; poses; the same methodology will now be used for reviews of all institutional claim types. CMS will post the limits for physicians, non-physicians practitioners and DMEPOS suppliers at a later date. 15

16 NEWS FLASH 01/29/10: Limits will be based on servicing gprovider s Tax Identification Number (TIN) and first 3 positions of the ZIP code where physically located Provider A has TIN and 2 physical locations in ZIP codes and 12356; the 2 locations would qualify as a single campus unit for additional documentation limit purposes Provider B has TIN and physically located in as well as Would be considered as 2 entities for additional documentation purposes, and each location would have its own additional documentation limit 16

17 NEWS FLASH 01/29/10: 0 Limits set at 1% of all claims submitted for previous CY(2008), divided into 8 periods (45 days). RACs may go > 45 days between record requests, but in no case more often than every 45 days. A provider s limit applied across all claim types, including professional services Provider D billed 50, inpatient claims, 75,000 outpatient claims, 20,000 SNF covered stays, 20,000 home health episodes, 250,000 physician claims, 10,000 inpatient rehab claims and 1,000 hospice claims. Total claims = 426,000. The additional documentation limit would be (426000*.01)/8 = The provider s additional documentation limit would be 532 additional documentation requests every 45 days, if there were no cap in place (see next slide). 17

18 ADDITIONAL DOCUMENTATION LIMITS FY 2010: Through 03/10, the cap will remain at 200 additional documentation (AD) requests per 45 days for all providers/suppliers. However, from 04/ thru 09/2010,,p providers who bill in excess of 100,000 claims to Medicare (per TIN, across all processing contractors) will have a cap of 300 AD requests per campus unit, per 45 days. Also, in FY 2010 CMS will allow the RACs to request permission to exceed the cap. Permission to exceed the cap cannot be requested in the first 6 months of the FY. Expanded cap not automatic; RACs must request approval from CMS on a case-by-case basis and affected providers will be notified prior to receiving i additional requests. 18

19 A POWERFUL FINANCIAL INCENTIVE FOR RACS TO FIND OVERPAYMENTS The RAC program is CMS s first foray into contingent based contractor payment structures t t t t Highly incents contractors to find improper payments pay for performance f Contingency Fee Schedule (1) Region A 12.45% Region B 12.50% Region C 9.00% Region D 9.49% RACs earned over $187 mm in contingency fees during the demonstration ti (1) Federal Business Opportunities website: (click Final RFP ). 19

20 GOOD NEWS MORE RAC IMPROVEMENTS Reduction of fee-driven motivation. In the demo, RACs required to return contingency fee only if overpayment determination overturned on the first-level appeal. National program requires fees to be returned if determination is overturned at ANY level RACs must disclose focus areas when looking for overpayments 20

21 WHAT IS AN IMPROPER PAYMENT? Payments made for services that do not meet Medicare s medical necessity criteria Payments made for services that are incorrectly coded Providers failed to submit documentation when requested or enough documentation to support the claim Provider was paid twice because duplicate claims were submitted 21

22 HOW DO RAC REVIEWS WORK? These two review processes automated review and complex review are similar to those employed by the Medicare claims processing contractors to identify improper payments. Medicare Recovery Audit Contract (RAC) Program: An Evaluation of the 3-Year Demonstration, June 2008 There are 2 types of RAC reviews 1. Automated 2. Complex 22

23 HOW DO RAC REVIEWS WORK? Automated Reviews = RACs identified improper payments via automation where the provider clearly billed in violation of Medicare policy Certainty that service is not covered or is incorrectly coded and A written Medicare policy, Medicare article or Medicare-sanctioned coding guideline (e.g., CPT statement) exists 23

24 HOW DO RAC REVIEWS WORK? Automated Reviews Completed when improper payment can be identified without human analysis Facility not notified until an error is found and payment will be adjusted or denied Uses the facility submission UB-04 or electronic submissions and looks for coding errors or for missing validation of acceptance into state repository Payment due within 40 days or recoupment automatic ti (with ithinterest taccrued dfrom date of demand letter) 24

25 EXAMPLES OF REASONS FOR AUTOMATED RAC REVIEWS Coding errors HIPPS and modifiers (RUG scores and reason for assessment) ARD on MDS doesn t match ARD on the UB-04 Duplicate claims Bill submitted prior to MDS transmitted to state Pricing mistakes Missing codes Mistakes in coverage periods 25

26 HOW DO RAC REVIEWS WORK? Complex Reviews = identified a likely improper payment and request medical records from the provider to conduct more in-depth review Improper payment suspected, but medical record review needed to make a determination Performed by clinical personnel and medical directors Medical directors must discuss claim denial with the providers/facility if requested Providers will have days to provide requested medical records; RAC will have 60 days from receipt of records to make a final determination 26

27 EXAMPLES OF REASONS FOR COMPLEX RAC REVIEWS Diagnosis code inconsistent Inconsistency with therapy minutes and ADL score (RUA) Static therapy treatment (holding at the same RUG level for lengthy treatment periods) 27

28 MOST COMMON IMPROPER PAYMENT AREAS AS FOR SNFSS 40% Failed to meet Medicare criteria for skilled therapy SNF 38% Billed for excessive and/or multiple Top 38% units Errors 22% Other (no qualifying hospital stay, inadequate documentation) 28

29 GETTING THE DATA All FFS paid claims subject to RAC review except those that have already been reviewed by another Medicare entity (MAC, ZPIC, PSC) No Medicare Advantage claims No Medicare Part D claims RACs searches CMS data looking for: Coding errors Patterns and trends in the claims 29

30 THE ISSUES Issues reviewed by the RAC will be approved by CMS prior to widespread d review Approved issues posted to RAC website BEFORE widespread review 30

31 Entire document 53 pages long font =

32 EACH APPROVED ISSUE IS DETAILED 32

33 RAC Process NO Automated Review RAC makes a claim determination RAC decides whether medical records are required to make determinations CMS New Issue Approval Process New Issues posted to HDI provider website once CMS-approved (may request records for new issue process not posted to web site) CMS YES Complex Review RAC requests medical records Provider has 45 days plus 10 calendar days mail time to submit. RAC has up to 60 days to review medical records RAC makes a claim determination RAC issues Review Results Letter to provider (does NOT communicate improper amount or appeal rights including no findings ) Provider MAC RAC If no findings STOP 33

34 Automated Review Discussion Period RAC sends claim info to Carrier/FI/MAC Carrier/FI/MAC adjusts & issues Remittance Advice (RA) to provider. Code N432 Day 1 RAC issues Demand Letter which includes amount and appeal rights On Day 41, Carrier/FI/MAC recoups by offset Complex Review Discussion Period CMS Provider MAC RAC Provider can pay by check by day 30 or request early recoupment from MAC to avoid interest. t Provider can appeal by day 120. Appeal by day 30 will hold recoupment although interest is charged 34 unless outcome is in provider s favor.

35 OPEN CAREFULLY! 35

36 RESPONDING TO RECORD REQUESTS Stamp date and time received Calculate 45 calendar days from date of letter Can request an extension with explanation of need Notify RAC if significant discrepancy between date of letter and date of receipt Identify any internal issues in expeditiously getting the mail for processing 36

37 RESPONDING TO RECORD REQUESTS Was the request sent to the right place? CGI received a data file over a secured data line from each MAC/FI/Carrier containing facility/provider information. CGI uses this contact information, unless provider supplies an update via or call CGI and as of 1/1/ use the web site. Keep all contact information current. Check to make sure the RAC did not exceed the record request limit 37

38 RESPONDING TO RECORD REQUESTS Document Management Bates stamp number on each page Scan/copy everything produced to RAC RACs will accept imaged medical records on CD/DVD Include cover letter itemizing contents of box of documents or CD Send certified mail or, if regular mail, complete affidavit of service by mail time frame = 45 days plus an additional 10 days for mail 38

39 FINDING OUT REVIEW RESULTS LETTER Comes from the RAC to provider: reason for the review and details their findings Narrative description of improper payment issues Specific explanation of why services determined not to be covered or were incorrectly coded No review letter for automated demand letter from RAC amount, policy, summary, time frames for recoupment, and how to stop recoupment (appeal) 39

40 REVIEW RESULTS LETTER No appeal information in this letter A response letter to the RAC opens up the discussion period contact RAC immediately when there are issues you wish to discuss. No change in recoupment timing even if open up discussion period After the review results letter, RAC sends a demand letter (usually only a few days between letters) 40

41 DEMAND LETTER Arrives directly from the RAC Contains list of claims (over or underpaid) and the reason the claims denied In addition: Amount of denial and calculation method Reason original payment incorrect Cites regulatory basis Describes appeal rights Recoupment, payment and interest options and associated timelines 41

42 NOTIFICATION ON THE REMITTANCE ADVICE (RA) When RAC finds overpayment either during an automated or complex review, Remark Code N432 will appear on the RA If found, notify other members of RAC team Review other claims for the denial issue Adjust claims as needed d or contact t FI/MAC The RA with N432 will be followed by the demand letter Date of demand letter starts the timing for recoupment and appeals 42

43 KEY TIMEFRAMES Rebuttal / Period-of-Discussion 15 days from date of demand letter to submit rebuttal statement and accompanying evidence why recoupment should not be initiatedi i Discussion period allows for discussion of medical necessity denial with RAC CMS will let facility know of decision within 15 days of request Not an appeal of the overpayment Does not delay or stop recoupment 43

44 KEY TIMEFRAMES 30 days Full payment no interest Interest begins to accrue on 31 st day assessed for each full 30-day period If unable to pay the entire amount, contact to determine possibility of approval of repayment plan After 40 days Medicare will begin withholding applies to current and future claims until full overpayment and applicable interest has been recouped or acceptable repayment request received 44

45 STOPPING RECOUPMENT Even if overpayment not paid in full, recoupment can be stopped how? Medicare receives a valid and timely request for redetermination within 30 days of the demand letter If the appeal is later than 30 days, recoupment stopped at whatever point that an appeal is received however Medicare may not refund any recoupment already taken 45

46 STOPPING RECOUPMENT If redetermination decision is not favorable, Medicare begins to recoup no earlier than 61 st day from the date of the redetermination notice, or If decision partially favorable, begins recoup no earlier than the 61 st day from the date of the Medicare revised overpayment Notice/Revised i Demand Letter Can resume recoupment following reconsideration by the QIO 46

47 APPEAL TIME FRAMES FLOW CHART 47

48 IDENTIFY YOUR RAC RISKS Medicare daily rate exceeds peers How does the facility stand compared to others in your CBSA Are there patterns or trends that are easily identified same RUG category for several of the Medicare required assessments for the same resident High percentage of resident treated exactly to RUG minimum High utilization of combination categories 48

49 IDENTIFY YOUR RAC RISKS Exceeding RUG trends Inconsistent documentation from therapy to MDS to UB-04 Improper diagnosis codes High rehab index Exceptionally high h average ADL score Low ADL scores and a high Medicare rate 49

50 LEARN FROM OTHERS MISTAKES Know where to find other improper payments found by the RACs Demonstration findings: Permanent RAC findings: Will be listed on the RACs websites Look to see what improper payments have been found in OIG and CERT reports OIG reports: gov/reports CERT reports: 50

51 IDENTIFIED DENIAL REASONS FROM OTHER STATES S Prior level of function (PLOF) not measurable and objective Resident not a good candidate for skilled therapy due to advanced dementia, poor short-term term memory with inability to remember previous training sessions Adequate time for spontaneous recovery from a temporary loss of function was not given for PT/OT services 51

52 IDENTIFIED DENIAL REASONS FROM OTHER STATES Documentation did not support a significant decline in function for PT/OT and did not appear reasonable or necessary for the condition or diagnosis of the resident Documentation did not support the statutory requirement for the physician s certification of the plan of care was met Discrepancy in record regarding resident s function between nursing and PT/OT 52

53 IDENTIFIED DENIAL REASONS FROM OTHER STATES Resident did not make significant measurable progress or improvement with PT/OT Notes did not indicate a valid expectation of improvement when PT/OT were initiated Resident reached maximum benefit of PT/OT and care can be performed by supportive personnel Signature/credentials were illegible or missing and therefore unable to determine if the appropriate p personnel provided the treatment PT/OT 53

54 SOME MORE BENCHMARKS Medicare average ADL score = Less than 10% or MDSs at exact RUG minimums No more than 10% of MDSs with a low ADL score (4 to 6) Average Medicare rate ( 08 cost report data) Ohio = $ Michigan = $ Illinois = $ Comparison to RUG trends 54

55 2009 NATIONAL RUG TRENDS Ut tilization 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Ultra High Very High Medium Low 1st Q 09 34% 24% 43% 0% 2nd Q 09 36% 24% 40% 0% 3rd Q 09 38% 23% 39% 0% 4th Q 09 39% 23% 38% 0% OHIO 40% 24% 36% 0% MICHIGAN 43% 25% 32% 0% ILLINOIS 36% 25% 39% 0% Dat a compiled fr ms.hhs.gov/m rom CMS we MDSPubQIan ebsite - ndresrep/ Percentage of each level of intensity in the combination categories 55

56 2009 NATIONAL RUG TRENDS Utilization 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Ultra High Very High High Medium Low 1st Q 09 36% 31% 22% 11% 0% 2nd Q 09 38% 30% 20% 11% 0% 3rd Q 09 40% 30% 20% 10% 0% 4th Q 09 41% 30% 19% 10% 0% OHIO 45% 29% 17% 9% 0% MICHIGAN 46% 30% 17% 7% 0% ILLINOIS 38% 33% 21% 8% 0% Percentage of each level of intensity in the rehabilitation categories Data compiled from CMS website

57 STRATEGIES FOR AVOIDING THE AUDIT Audit using RAC targets and/or identified risks Internal (Consider staff carefully why??) External provider Identify corrective actions to implement for compliance Look at ICD-9 coding process Analyze effectiveness of Medicare meetings 57

58 PREPARATION Educate facility staff about MDS accuracy both in clinical sense and reimbursement Knowledge is power training on billing, coding and documentation critical! Clear policies for required documentation Routinely check MDS Validation Reports compare acceptance date with billing date Develop a pre-claim release at the end of the month for an internal QA check 58

59 LOOK AT YOUR RAC PROGRAM Establish internal RAC team who is lead Interdisciplinary i Team: Legal, Finance, Clinical, Compliance, IT Identify RAC point of contact (who and how) for internal and external RAC communications Develop central tracking mechanisms/database for all RAC - Incoming and Outgoing (who) Coordinate the tracking mechanism with communications structure record reviews, and appeal of recoupment deadlines

60 LOOK AT YOUR RAC PROGRAM Conduct self audits to identify ypotential problems Participate in RAC trainings and outreach Monitor news sources, CMS, associations, i and your own reports to stay abreast of trends If desired, development of unique forms for Redeterminations and other appeal levels once issues identified Make sure Corporate Compliance Committee active Develop a QA process to learn from findings

61 QUESTIONS?

62 THANK YOU FOR ATTENDING Stay up-to-date on the latest thinking about today s critical business topics via Plante & Moran s webinars that are delivered directly to your desktop. To view a complete calendar of upcoming Plante & Moran webinars, visit webinars.plantemoran.com Jane Belt Consulting Manager, Plante Moran Clinical i l Group Phone: jane.belt@plantemoran.com 62

63 PLANTE & MORAN CLINICAL GROUP Jane Belt Alicia lcarichey Melanie Nabozny Brenda Sowash Bobbi Reed Judy Vogel