Medicare Recovery Audit Contractor (RAC) Planning for the Permanent Program. HFMA Southern California August 14, 2008

Transcription

1 Medicare Recovery Audit Contractor (RAC) Planning for the Permanent Program HFMA Southern California August 14, 2008

2 Contents Introductions Overview of the RAC Program RAC Background RAC Demonstration Findings RAC Process & Operational Impact Permanent Changes from the Demonstration Project Preparation for RAC Future of RAC MemorialCare Experience from a Revenue Cycle Perspective 2008 BearingPoint, Inc. RAC Program 2

3 Overview of the RAC Program

4 RAC Background In 2003 Medicare instituted its Comprehensive Error Rate Testing Program and has reduced its improper error rate from 9.8% in 2003 to 3.9% in 2007 as reported in the improper Medicare FFS Payments Report for November 2007 Medicare estimates that the 3.9% of claims that did not comply with one or more coverage, coding, billing, or payment rules equated to $10.8 billion in Medicare FFS overpayments and underpayments As part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, Congress directed the Department of Health and Human Services to conduct a 3 year demonstration program using Recovery Audit Contractors (RACs) to detect and correct improper payments in the Medicare FFS program In 2006, Congress required the Department of Health and Human Services (DHHS) to make the RAC Program permanent and roll it out nationwide no later than January 1, BearingPoint, Inc. RAC Program 4

5 RAC Background (continued) The Medicare Recovery Audit Program makes use of Recovery Audit Contractors (RACs) to audit for hospital billing and payment errors. The RAC pilot program was developed as a demonstration to identify improper Medicare payments made to healthcare providers not detected through existing error detection and prevention programs. The RAC chooses the facilities and cases to be reviewed based upon a proprietary process and software. The RAC review program is comprised of three tiers listed as follows: Tier 1: Part A DRG Reviews Medical records are requested and reviewed Complex Tier 2: Part A and Part B extrapolated payment errors Review based on electronic claims data. Medical record is not required Automated Tier 3: Part B DME, Drugs, and Renal Dialysis Medical records are requested and reviewed Complex Tier 4?: BearingPoint Clients report that some 3rd party payors in California are beginning RAC like processes hiring contractors to review paid claims for overpayments! 2008 BearingPoint, Inc. RAC Program 5

6 RAC Background RACs evaluated over $316B dollars of Medicare claims. Over 65% of those dollars evaluated were hospital based and 44% of those dollars represented NY/MA, 31% CA/AZ and 25% FL/SC. *From RAC Demonstration Evaluation Report includes appeals overturned through March 27, BearingPoint, Inc. RAC Program 6

7 RAC Demonstration Findings CMS determined RACs can find improper payments in Medicare as a total of $693.6M returned to Medicare Trust Funds.* The preliminary financial results for Claim RACs were as follows:** Overpayments collected from providers $980M Underpayments paid back to providers $37.8M The preliminary financial results for MSP RACs were as follows:** Overpayments collected from providers $12.7M Underpayments paid back to providers $0.0M*** The preliminary financial results distribution in the demonstration states:** Overpayments collected from FL/SC providers 40% Overpayments collected from CA providers 32% Overpayments collected from NY/MA providers 27% *From RAC Demonstration Evaluation Report includes appeals overturned through March 27, **From RAC Demonstration Evaluation Report ***MSP RACs were not task with identifying underpayments 2008 BearingPoint, Inc. RAC Program 7

8 RAC Demonstration Findings Top Services With RAC-Initiated Overpayment Collections (Net of Appeals): *From RAC Demonstration Evaluation Report includes appeals overturned through March 27, BearingPoint, Inc. RAC Program 8

9 RAC Demonstration Findings Top Services With Underpayments Refunded to Providers *From RAC Demonstration Evaluation Report includes appeals overturned through March 27, BearingPoint, Inc. RAC Program 9

10 RAC Demonstration Findings CMS determined that providers would not appeal every RAC overpayment determination*. In preliminary results for Claim RACs only 14% of RAC overpayment determinations from inception of program to March 28, 2008 have been appealed. Only 4.6% have been partially or fully overturned. Number of Claims with Overpayments 525,133 Number of claims appealed any level 73,266 Number of claims with decision in provider s favor 24,376 Percent of appealed claims in provider s favor 33% Percent of claims overturned on appeal 4.6% *From RAC Demonstration Evaluation Report includes appeals overturned through March 27, BearingPoint, Inc. RAC Program 10

11 RAC Demonstration Findings FL/SC providers had the most success with appeals with 7.2% of overpayments being overturned compared to 2.1% for CA/AZ. Provider Appeals of RAC-Initiated Overpayments: Cumulative Through 3/27/08, Claim RACs Only *From RAC Demonstration Evaluation Report includes appeals overturned through March 27, BearingPoint, Inc. RAC Program 11

12 RAC Demonstration Findings CMS determined that RAC had limited financial impact of most providers*. In preliminary results for Claim RACs, improper payments as a percentage of Medicare Part A revenue for hospital providers in fiscal years was less than 2.5% in over 84% of the hospitals in CA, FL and SC and over 94% in NY and MA. Percent of Hospital Providers Medicare Revenue Affected by RAC Percent NY/MA FL/ SC CA/ AZ No Offsets 0-2.5% 2.5-5% 5-10% >10% *From RAC Demonstration Evaluation Report includes appeals overturned through March 27, BearingPoint, Inc. RAC Program 12

13 RAC Demonstration Findings CMS tasked Gallup Organization to conduct telephone interviews with a sample of 589 providers between May and July 2007 who had participated in the RAC program to determine providers satisfaction. Interview focused on the fairness and reasonableness of CMS s effort to recoup overpayments and if in the future RACs will help ensure more accurate billing practices. The results showed 74% of respondents found CMS s effort fair and reasonable and 71% thought RAC reviews correctly applied Medicare policies BearingPoint, Inc. RAC Program 13

14 RAC Demonstration Project Typical Operational Impact Due to the nature of the RAC process there has been a significant operational impact to hospitals in the demonstration states: Resource Intensive and Time Consuming Some hospitals receive RAC request letters per day. Medical records must be copied and sent to RAC within 45 days of receipt of request (or technical denial occurs) Effective monitoring process needed to ensure submission due dates are met Additional physician training and education is required to properly comply with RAC needs Improper governance can add to complexity of processing appeals Additional Expense Legal: Providers engage legal advice in reviewing and drafting appeal documents. Legal counsel must be engaged once the appeal reaches the ALJ level Physician(s): Called as expert witness when appeal reaches the ALJ level Identification of Technical and Operational Deficiencies Medical Record documentation incomplete for key focus DRGs CDM and clinical systems not appropriately aligned for charge capture, hard coded CPT/HCPCS and claim editing Billing editor lacks ability to identify and prevent billing errors Disparate systems prevent accurate capture of MSP information Clinical protocols and pathways may not be compliant with Medicare regulations Impacts To Be Determined or Negotiated Prior Years Medicare Cost Report 3 rd Party Vendor Revenue Based Contracts 2008 BearingPoint, Inc. RAC Program 14

15 RAC Permanent Program Changes from Demonstration Project Based on feedback from hospitals in the demonstration states and hospital associations across the nation, the following changes were implemented in the permanent program Limits to review period Only dates of service post 10/1/2007 are auditable RAC can only look-back at most 3 years and not prior to 10/1/07 Can review claims within current fiscal year RAC required to hire oversight staff Medical Director Certified Coders RAC only earns fees if provider does not win on any appeal level Established a RAC oversight committee to monitor the RACs CMS will set the number of medical records that RACs may request Reason for review listed on request for records letters and overpayment letters Photocopy vouchers must be paid within 45 days of medical record receipt 2008 BearingPoint, Inc. RAC Program 15

16 Prepare for RAC What, How and When?

17 Create the Foundation Based on findings in the demonstration program, hospitals need to prepare for the permanent program. Develop a RAC task committee Identify committee members roles and responsibilities Identify RAC hub Who will manage the program through each of the 6+ levels How will the program be administered Deployment Workflow Management Medical Records Requests Appeal Process Database Management What will the tool be What are the data sets Who owns and manages it Create communication plan Who needs to know What is the message, method and frequency of messaging 2008 BearingPoint, Inc. RAC Program 17

18 Evaluate the Impact to Your Organization Based on findings in the demonstration program, it is recommended that hospitals do a RAC dress rehearsal Perform a complete risk assessment Audit Clinical Documentation for the high risk areas Review Charge Description Master for correct coding and charge capture Evaluate Charge Capture processes and procedures in high volume / high risk outpatient areas Perform Systems Analysis Order entry Clinical Financial Review of all claims editing tools (front-end and back-end) Audit policies for: One Day Stays Observation Patients Transfer DRGs Discharge Status Re-examine your physician education programs and communication methods 2008 BearingPoint, Inc. RAC Program 18

19 Manage the Program With proper program management, the burdensome process can be managed effectively Infrastructure to manage the medical records requests Determine if records will be stored on paper or electronically Assess copy charges Capability to manage every aspect of the program Who owns each area How to ensure that deadlines are not missed Determine the appeal thresholds Dollar Value Type of claim / service provided Track the data What is requested and when What is determined to be: OK, Overpaid, Underpaid What is the level of appeal Track reason for audits and results by reason, claim type, dollar amount, date of service, service area, etc Report to your local and national organizations Use reported risks to implement preventative measures going forward 2008 BearingPoint, Inc. RAC Program 19

20 The Future of RAC

21 RAC is here to stay or is it? Many RAC claims are still being appealed how many do you have still outstanding? 2002 OIG workplan and forward The program is time consuming today. In the future, bill appropriately and we will not have this type of program What permanent changes have you made within your organization? What else can you do to be prepared? 2008 BearingPoint, Inc. RAC Program 21

22 MemorialCare Experience RAC Process - A permanent RAC program from a Revenue Cycle Perspective

23 MemorialCare System Non-profit 5 hospital health system 1,500 Licensed beds 10,000 Employees 3,300 Medical Staff Members 200,000 ER visits 85,000 Discharges $146M Community Benefit 2008 BearingPoint, Inc. RAC Program 23

24 RAC Planning Discussion Risk Assessment Areas to assess: Acute Inpatient Medical Necessity 1 day stays Acute Inpatient DRG Reductions Automated Denials- multiple procedures on same day Acute Inpatient Rehab- Joint Replacement RAC Tracking Process Flowchart RAC Tracking Tool RAC Costs Final Thoughts 2008 BearingPoint, Inc. RAC Program 24

25 RAC Risk Assessment Why do a risk assessment? 1. Identifies problem areas before the program begins. Helps in developing action plan for those areas. 2. Starts the discussion of financial impact to organization. 3. Generates interest in the program. 4. Starts the process of reviewing current resources to address the long term RAC requirements Think HIGH RISK!!! 2008 BearingPoint, Inc. RAC Program 25

26 RAC Risk Assessment Acute Inpatient Medical Necessity 1 Day Stays Steps: 1. Run Medicare claims data from October 2007 thru June 2008 using at least the sample fields to the right 2. Crosswalk facility data to those high risk MS-DRGs listed in the PEPPER report, CHA Data Suite, individual hospital RAC demonstration data and other sources. 3. Link identified high risk DRGs to CMS MS-DRG Table 5 to pull the relative weight of the DRG. 4. Get Medicare base rate from your Reimbursement Department Sample Fields Pat ID Admit Date Discharge Date Length of Stay Discharge Status Admit Dx Princ Dx Secondary Dx 1-10 Princ Proc Proc 1-10 MS-DRG 2008 BearingPoint, Inc. RAC Program 26

27 RAC Risk Assessment Acute Inpatient Medical Necessity 1 Day Stays RAC Risk Assessment Potential Net Revenue Impact by Risk Area October 2007-June 2008 Base Rate $7, Report Example- 1 Day non-surgical admissions normally attributed to the ED Medical Necessity Denials *High Risk Medical MS-DRGs for Medical Necessity(1day stay cases with identified DRGs) MS-DRG DRG Desc Total Cases Relative Weight ^Total 1 Annualized 313 Chest pain $146,007 $194, Heart failure & shock w MCC $26,429 $35, Heart failure & shock w CC $7,094 $9, Heart failure & shock w/o CC/MCC $24,542 $32, Esophagitis, gastroent & misc digest disorders w/o MCC $59,816 $79, Esophagitis, gastroent & misc digest disorders w MCC $6,696 $8, Chronic obstructive pulmonary disease w/o CC/MCC $11,403 $15, Chronic obstructive pulmonary disease w MCC $0 $0 191 Chronic obstructive pulmonary disease w CC $0 $0 069 Transient ischemia $30,824 $41,098 * Based on RAC Demonstration Data, Industry Reports, PEPPER, CHA 67 $312,810 $417,081 Notes: ^ Total = (Relative Weight *Base Weight) * Total Cases 1 Annual = Total Cases * (12/9) 2008 BearingPoint, Inc. RAC Program 27

28 RAC Risk Assessment Acute Inpatient Medical Necessity 1 Day Stays RAC Risk Assessment Potential Net Revenue Impact by Risk Area October 2007-June 2008 Base Rate $7, Report Example- 1 Day surgical admissions normally attributed to Invasive Cardiology Medical Necessity Denials *High Risk Procedure MS-DRGs for Medical Necessity(1 day stay cases with identified DRGs) MS-DRG DRG Desc Total Cases Relative Weight ^Total 1 Annualized 244 Permanent cardiac pacemaker implant w/o CC/MCC $59,828 $79, Perc cardiovasc proc w non-drug-eluting stent w/o MCC $152,242 $202, Perc cardiovasc proc w/o coronary artery stent or AMI w/o MCC $110,124 $146, Permanent cardiac pacemaker implant w CC $53,514 $71, Perc cardiovasc proc w drug-eluting stent w MCC or 4+ vessels $60,997 $81, Cardiac defibrillator implant w/o cardiac cath w/o MCC $423,452 $564, Cardiac pacemaker device replacement w/o MCC $0 $0 242 Permanent cardiac pacemaker implant w MCC $0 $0 245 AICD lead & generator procedures $21,751 $29, Cardiac defib implant w cardiac cath w AMI/HF/shock w/o MCC $0 $0 226 Cardiac defibrillator implant w/o cardiac cath w MCC $124,158 $165, Perc cardiovasc proc w non-drug-eluting stent w MCC or 4+ ves $17,626 $23, Cardiac pacemaker revision except device replacement w CC $18,497 $24, Cardiac defib implant w cardiac cath w/o AMI/HF/shock w/o MC $88,138 $117, Cardiac pacemaker revision except device replacement w/o CC $15,743 $20,991 * Based on RAC Demonstration Data, Industry Reports, PEPPER, CHA 23 $1,146,070 $1,528,093 Notes: ^ Total = (Relative Weight *Base Weight) * Total Cases 1 Annual = Total Cases * (12/9) 2008 BearingPoint, Inc. RAC Program 28

29 RAC Risk Assessment Acute Inpatient Medical Necessity 1 Day Stays Once you have generated a patient work list you need to decide who is going to review the Medical Records for medical necessity and appropriate level of care. Internal Physician Advisor/Medical Director vs. outside company that specializes in medical necessity screening Things to consider: Cost Compliance Competence 2008 BearingPoint, Inc. RAC Program 29

30 RAC Risk Assessment Acute Inpatient Medical Necessity 1 Day Stays Once your audit is complete, the results should be shared with the Chief Financial Officer, Case Management and Department Directors to : Clarify level of care criteria for any disputed claims Evaluate second level review criteria/process at your facility Provide physician education Special Note: Until the actual RAC process begins it will be difficult to calculate any reserves based on this risk assessment BearingPoint, Inc. RAC Program 30

31 RAC Risk Assessment Acute Inpatient DRG Reductions Think HIGH RISK!!! 1. Based on a review of MemorialCare accounts where the DRG was reduced the following trends were identified: RACs love accounts with CCs Not all cases were 1 day LOS, but if you have CC or MCCs with a 1 day LOS, you might want to start there 2. Use existing reports that are generated as part of your HIM Coding Compliance program. What are the monthly or quarterly findings saying? 2008 BearingPoint, Inc. RAC Program 31

32 RAC Risk Assessment Acute Inpatient DRG Reductions DRG Sample DRG Description 389 G.I. obstruction w CC 375 Digestive malignancy w CC 194 Simple pneumonia & pleurisy w CC 309 Cardiac arrhythmia & conduction disorders w CC 253 Other vascular procedures w CC 187 Pleural effusion w CC 674 Other kidney & urinary tract procedures w CC 092 Other disorders of nervous system w CC 071 Nonspecific cerebrovascular disorders w CC 543 Pathological fractures & musculoskelet & conn tiss malig w CC 908 Other O.R. procedures for injuries w CC 312 Syncope & collapse 330 Major small & large bowel procedures w CC 372 Major gastrointestinal disorders & peritoneal infections w CC 2008 BearingPoint, Inc. RAC Program 32

33 RAC Risk Assessment Acute Inpatient DRG Reductions Once you have generated a patient work list you need to decide who is going to review the Medical Records for accuracy of coding. HIM Department vs. outside coding company that specializes in coding compliance Things to consider: Cost Compliance Competence 2008 BearingPoint, Inc. RAC Program 33

34 RAC Risk Assessment Acute Inpatient DRG Reductions Once your audit is complete, the results should be shared with the Chief Financial Officer and HIM Manager to: Educate coding staff Integrate findings into Compliance Plan Perform ongoing re-evaluation Special Note: Until the actual RAC process begins it will be difficult to calculate any reserves based on this risk assessment BearingPoint, Inc. RAC Program 34

35 RAC Risk Assessment Other Assess for automated claims level errors: Endoscopy Procedures-Multiple billed on same day OP Rehab- assessments, visits without time increments being billed multiple times on same day Pharmacy- Matching ordered dose to correct HCPCS II and charge description Inpatient Rehab Facilities Single joint replacement- Review CMGs A0801-A0806 for the following: Review for documentation of medical necessity for intensive rehab services 2008 BearingPoint, Inc. RAC Program 35

36 RAC Tracking Process Things to consider when developing a tracking process: Develop a RAC Coordinator position (FT/PT)- Responsibilities include: 1. Central contact for correspondence to and from RAC, FI, QIC etc. 2. Enters documentation into RAC Tracking tool 3. Coordinates deadlines with Medical Records, Case Management and outside entities Identify and document actual staff accountable for: 1. Pulling and mailing Medical Records (Certified, FedEx, UPS) 2. Mailing correspondence to each level of appeal (Certified, FedEx, UPS) 3. Coordinating hearings with ALJ and medical testimony experts Develop Tracking Tool 1. Develop Excel or Access tool 2. Look at tracking tools being developed by established Revenue Cycle vendors 2008 BearingPoint, Inc. RAC Program 36

37 RAC Tracking Process Request through 1 st Level Appeal RAC Request Received by RAC Coordinator (RC) 1. RC Log into RAC Tracker 2. Enter patient demographics 3. Notify Medical Records of chart request 45 Days to send chart from date of letter 60 Days for RAC Determination Chart copy sent to RAC for Review 1. MR Log Date Sent Receive RAC Determination. Agree with RAC? no yes yes 15 Days from initial RAC Determination to rebut Rebuttal-Optional 1. SCAN RAC Determination 2. Enter Recoupment Amount 3. Change Account Status 4. Forward fax/mail denial to entity performing rebuttal 1. Receive RAC Rebuttal Response 2. RC Scan response to rebuttal 3. RC Enter date on letter 4. Agree with RAC? Typically 30 Days For RAC to respond to rebuttal 120 Days from date of initial determination to submit 1 st level appeal no yes 1st level appeal to FI (Palmetto-GBA) Notify entity performing appeal Fax/Mail RAC rebuttal to entity Receive FI Response 1. RC Scan response to appeal 2. RC Enter date on letter Agree with FI? no FI has 60 days from appeal date to respond 2008 BearingPoint, Inc. RAC Program 37

38 RAC Tracking Process 2nd through 5th Level Appeal yes Receive FI Response 1. RC Scan response to appeal 2. RC Enter date on letter Agree with FI? no 2 nd level appeal to QIC Notify entity performing appeal Fax/Mail FI letter to entity Provider has 180 days from redetermination date to appeal Scan correspondence 1. Enter recoupment amount (Initial RAC Review) 2.Change account status 3.Close account yes yes yes Receive QIC Response RC Scan response to appeal RC Enter date on letter Agree with QIC? no 3rd level appeal to ALJ Notify entity performing appeal Fax/Mail FI letter to entity Receive ALJ Response 1. RC Scan response to appeal 2. RC Enter date on letter Agree with ALJ? no 4th level appeal to MAC Notify entity performing appeal Fax/Mail FI letter to entity Receive MAC Response 1. RC Scan response to appeal 2. RC Enter date on letter Agree with MAC? no 5th level appeal to District Court Notify entity performing appeal Fax/Mail FI letter to entity QIC has 60 days from appeal date to respond Provider has 60 days from redetermination date to appeal ALJ has 60 days from appeal date to respond Provider has 60 days from redetermination date to appeal MAC has 90 days from appeal date to respond Provider has 60 days from redetermination date to appeal Receive District Court Response RC Scan response to appeal RC Enter date on letter yes 2008 BearingPoint, Inc. RAC Program 38

39 RAC Tracking Sheet Develop a RAC tracking work sheet FY2008 RAC Activity Tracking Trend Report Current Month: July 2008 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 FY08 Total RAC Requests # of Open Cases # of Closed Cases Total # of Cases Open Status # of RAC Class cases # of REB Class cases # of Palmetto GBA Class cases # of QIC Class cases # of ALJ Class cases # of DAB Class cases Total Open Class Cases Closed Status # of RAC Class cases # of REB Class cases # of Palmetto GBA Class cases # of QIC Class cases # of ALJ Class cases # of DAB Class cases Total Closed Class Cases Process Status # of Process Status -- AWR -- Cases # of Process Status -- FAV -- Cases # of Process Status -- Other -- Cases Total # of Process Status -- Cases Financial Impact 1 - Retraction has Occurred $ Impact (46,945.42) (28,369.98) (447,997.20) (101,411.89) (201,563.07) (826,287.54) 2 - Retraction Pending $ Impact (2,579.39) (17,693.57) (44,786.11) (1,090.17) (39,836.16) (105,985.40) Total Retraction $ Impact (49,524.80) (46,063.55) (492,783.31) (102,502.06) (241,399.23) (932,272.94) 3 - Repayment has Occurred $ Impact , , , , Repayment Pending $ Impact 1, , , , Total Repayment $ Impact 1, , , , , , Net Financial Impact $ (48,481.41) (41,189.06) (480,429.94) (101,241.20) (213,426.57) (884,768.18) 2008 BearingPoint, Inc. RAC Program 39

40 RAC Tracking Spreadsheet RAC Activity Tracking Legends Class Legend Appeal Status Legend Process Status Legend Financial Impact Legend Class Class Description Appeal Status Appeal Status Description Process Status Process Status Description Financial Impact Financial Impact Description RAC Records sent to RAC, records are being reviewed, hospital awaiting RAC decision O Open AWR Agree w/ RAC 0 No Financial Impact REB Records submitted, possible appeal, and Rebuttal sent to SAC C Closed DNQ Does Not Qualify for an Appeal 1 Retraction has occurred 1 st Appeal sent to Palmetto GBA, hospital *P-GBA 1 awaiting appeal decision FAV FAVORABLE Decision - no appeal needed 2 Retraction Pending Appeal denied. Records reviewed and submitted QIC 2 for 2 nd Appeal LOSTA Lost Appeal 3 Repayment has occurred ALJ 3 2 nd Appeal denied. Records reviewed and submitted to ALJ for 3 rd Appeal. MRS Medical Records Sent 4 Repayment Pending DAB 4 Records reviewed and submitted to DAB for 4 th Appeal MSAD Missed Appeal Deadline MSDOC! Missing Documents Needed: PRIORITY NPAL Need Palmetto GBA appeal letter PAS Palmetto-GBA Appeal Sent PMTI Payment Increased PDRT Pending Retraction RBOP Rebill- IP to OP RR Repayment Received UNP Underpayments 2008 BearingPoint, Inc. RAC Program 40

41 RAC Tracking Spreadsheet Fields Field # Field Description 1 CLASS 2 APPEAL STATUS 3 PROCESS STATUS 4 Financial Impact 5 Patient Name 6 MRN 7 Pat Acct # 8 Acute Care Visit Acct# 9 Acute Care Visit Scanned 10 Admit Date 11 Discharge Date 12 Original DOS 13 LOS 14 RAC date mm/yyyy 15 DRG or CMG 16 DRG Description 17 Charges 18 OrigInal Medicare payment 19 Original RA Date 20 RA Scanned 21 Date of RAC MR Request 22 Date Due to be sent to RAC 23 Date MR Sent to RAC 24 Date of RAC Results 25 RACResults 26 Modified DRG or CMG 27 Expected Modified Payment 28 Date of Adjusted Payment 29 Retraction or Repayment RA Scanned Field # Field Description 30 Date of Overturn 31 Estimated Net Impact 32 Name of Person Conducting the Rebuttal 33 Date Rebuttal Due to be sent to RAC 34 Date Rebuttal Sent 35 Date RACResponds to Rebuttal 36 Rebuttal Decision 37 Name of Person Conducting the 1st Level Appeal 38 Due Date for 1st Level Appeal 39 Date Appeal sent to Palmetto GBA 40 Date Palmetto GBA Responds to 1st Appeal 41 1st Level Appeal Decision 42 Name of Person Conducting 2nd Appeal (QIC) 43 Date 2nd Appeal Due to be sent to QIC 44 Date 2nd Appeal sent to QIC 45 Date QIC Responds to 2nd Appeal 46 2nd Level Appeal Decision 47 Name of Person Conducting ALJ 48 Date 3rd Appeal Due to be sent to ALJ 49 Date notified 50 Date of Request 51 ALJ Hearing Date 52 Name of ALJ 53 ALJ Decision Date 54 ALJ Decision 55 Name of Person Conducting 4th Appeal (MAC) 56 Date 4th Appeal Due to be sent to MAC 57 Date 4th Appeal sent to MAC 58 Date MAC Responds to 4th Appeal 2008 BearingPoint, Inc. RAC Program 41

42 Example of Potential RAC Appeals and Tracking Costs Outside Inside Monthly Total Yearly Total Cost Cost Comment Chart Requests $18,000 $18,000 $30/Chart mailing cost Interchangeable Rebuttal Based on demonstration results Medical Necessity $2,250 $2,250 Letter Template+ $15 mailing costs Coding $2,250 $2,250 Letter Template+ $15 mailing costs $4,500 $4,500 1st Level Medical Necessity $81,000 $12,750 $525/Outside Fees + $15 mailing costs/$70/inhouse + $15 mailing costs Coding $13,500 $13,500 $75/Coding Review + $15 mailing costs $94,500 $26,250 2nd Level Medical Necessity $2,115 $2,115 Letter Template+ $15 mailing costs Coding $2,115 $2,115 Letter Template+ $15 mailing costs $4,230 $4,230 3rd Level Medical Necessity $40,143 $40,143 $350/Outside Fees + $15 mailing costs Coding $40,143 $40,143 $350/Outside Fees + $15 mailing costs MD Expert Witness $10,998 $10,998 $100/Case $91,283 $91,283 4th Level Medical Necessity 7 86 $16,299 $16,299 $175/Outside Fees + $15 mailing costs Coding 7 86 $16,299 $16,299 $175/Outside Fees + $15 mailing costs $32,598 $32,598 RAC Coordinator $67,600 $67,600 RAC Process Tracking Chart Copy Fee Repayment ($14,400) ($14,400) Total Expense $298,311 $230, BearingPoint, Inc. RAC Program 42

43 Future Tool to Manage RAC IQ RAC TRAC Overview IQ-RAC Trac provides an integrated workflow-driven solution to enable staff to organize, manage and report RAC response and appeal activities, store relevant information and document the steps taken to appeal RAC denials. The system allows organizations to more effectively analyze, track, and manage RAC from initial RAC request letter to RAC disposition to all levels of appeals. Scalability This end to end solution handles the process from the initial RAC medical records request through the submission of automated appeal letters. The tool can be customized to fit all organizations from community hospital to the academic medical center to a large health system. IQ-RAC Trac can scale up or down as needed from one location to numerous. IQ RAC TRAC comes in a MS Access version and a web version/ Reporting IQ-RAC Trac provides detailed reports on the reasons for RACs targeting your organization, the cases you re winning and those you re losing. These reports help decision makers know when to fight a denial and where to change internal processes to avoid RAC contract scrutiny in the future. In addition to managing your hospital, IQ-RAC Trac has reports designed to report on the American Hospital Association s data metrics 2008 BearingPoint, Inc. RAC Program 43

44 IQ RAC TRAC Dashboard The IQ RAC TRAC Dashboard provides account status information: Red Account is 10 days from due date Amber Account is 10 days from due date Green No action required 2008 BearingPoint, Inc. RAC Program 44

45 IQ RAC TRAC Appeal Process and Letters IQ RAC TRAC provides the ability to generate appeal letter templates which can be customized based on the nature of the audit and the reason for the appeal 2008 BearingPoint, Inc. RAC Program 45

46 Q&A Questions/Comments? 2008 BearingPoint, Inc. RAC Program 46

47 BearingPoint Contact Information Suzanne Whitworth Managing Director Atlanta, Georgia Telephone: Will LaBahn Senior Manager Chicago, Illinois Telephone: Ken Bulow Senior Manager Los Angeles, California Telephone: Jeff Glover Senior Manager Portland, Oregon Telephone: BearingPoint, Inc. RAC Program 47

48 RAC Final Thoughts Per CMS June 2008 Evaluation- Only 14% of RAC determinations were appealed. All providers need to take an active role in appealing unjust payment retractions Per July 29, 2008 CMS/RAC Provider conference call, it was mentioned (unofficially) that the permanent RAC contractor will be announced sometime in September. RAC activity to begin shortly after the first of the year BearingPoint, Inc. RAC Program 48