Automated Denials of Related Physicians Claims: With CMS reaching deeper into their pockets, will Physicians be farther in Hospitals corner?

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1 Automated Denials of Related Physicians Claims: With CMS reaching deeper into their pockets, will Physicians be farther in Hospitals corner? Fotheringill & Wade, LLC On August 8, 2014, the Centers for Medicare & Medicaid Services (CMS) published an addendum to its Medicare Program Integrity Manual, Transmittal 534. That Transmittal gives some of CMS contractors authority to use documentation they found lacking for one claim to deny related claims. CMS did not limit the universe of related claims, but physician claims were an example they cited and clearly a focus of this effort. In some cases, a related claim can be denied without a second review i.e. an automated denial. The looming threat to physicians whose claims could be denied with the click of a mouse and no chance to submit documentation provides an opportunity to renew physicians commitment to hospitals documentation improvement efforts, but only if hospitals provide meaningful education programs. Groundhog Day If you feel like you have seen this before, it may be because you have. In February, CMS released Transmittal 505, authorizing three of its contractors MACs, RACs, and ZPICs to deny related physician claims automatically when hospital claims were denied. Barely a month later, CMS rescinded Transmittal 505 noting that it would not be replaced at [that] time. The scant justification was the need to clarify CMS s policy, but there has been ample speculation that discontent from the physician community prompted CMS sudden change of mind. CMS did not, however, change its heart. CMS reframed the policy and brought it back with the publication of Transmittal 534, this time

2 giving related claim denial authority to the MACs and ZPICs (more on RACs below). The More Things Change In its first attempt, CMS opted to dispense with any nuance. While denials were at reviewers discretion, the policy merely defined a related claim and stated that, where one claim was denied, any claim expressly including a physician claim that met the definition of related could be denied without any further document development or review. The new version of the related claim denial concept does not differ widely from the rescinded version. While the mechanics have changed a little, the basic thrust is the same: Physicians are at risk for sharing in hospitals revenue pain for denied claims. the More They Stay the Same The current plan scheduled to take effect September 8 has a little more meat to it, but not much. Instead of simply declaring open season on related claims, CMS set up a three step process a contractor has to complete before it can review any group of related claims. 1. The contractor proposes a related claim review to CMS. 2. CMS reviews the proposal. 3. If the proposal is approved, the MAC posts notice of its intent to conduct the review within 1 month of initiation. (We interpret that as intending to read at least 1 month prior to initiation) This framework leaves almost endless questions. What does CMS expect to see in each proposal? Will the contractor have to make its case for how the claims are related? Will every physician who contributed to an inpatient stay be subject to denial or just the admitting physician? Will the contractor have to justify its choice between automated denials and actual re reviews? How much of a check will CMS actually be?

3 It s All Relative Even with the definition of related claim in the Transmittal, It is still not clear what related claims are. According to CMS, If documentation associated with one claim can be used to validate another claim, those claims may be considered related. That boils down to the lack of any need for another ADR, but, again, there is plenty of room for interpretation. For an inpatient stay of any length, for example, there may be any number of related claims submitted, from the admitting physician to consultants to physical therapists. Just how far down the rabbit hole contractors will be able to plunge is unclear. What is clear is that, whatever related claims come to mean in practice (which may vary from contractor to contractor), they will be a substantial potential recovery source for Medicare and thus a substantial potential revenue threat to the professionals submitting those claims. The key word, here, is potential. Untapped Potential? It is important to remember that Transmittal 534 allows contractors to deny related claims. It does not require them to do so. Moreover, some claims, while related (in that the same set of records does the job), will still require manual intervention, a different set of eyes looking for a different set of facts. Particularly for those manual intervention claims, it may be that the MACs who are plainly told they will not get any extra money will decide not to conduct the reviews. Claims that can be denied automatically may be a different story, but still the review process will come with a cost that MACs may not want to bear. The big threat in, as always, is the Recovery Auditors. The transmittal does not contain any of the approval mechanism above for RACs. It merely incorporates their Statement of Work by reference. Given the protracted contracting process for the new RACs, we do not yet know what that SOW will look like, much less its instructions regarding related claims.

4 It is also uncertain whether or not RACs will be in the related claim business at all. While they will not have to request additional documents if they are reviewing related claims, one stark contrast to the rescinded Transmittal 505 is that the language granting the discretion to deny does not include the RACs. Perhaps CMS envisions MACs running automated denial programs based on RAC denials of hospital claims, with no direct RAC involvement (and thus no extra contingency fee for CMS to pay). One thing we do know is that, if RACs begin hunting related claims on their own, their contingency fee payment structure will likely create an incentive to conduct the reviews that the flat fee MACs do not have. Promised changes in the RAC program such as not paying their fees until after the second level of appeal will likely only serve as more incentive to cast a bigger net. What s Up, Doc? The nutshell version of everything above is that there is a looming threat to physician revenue that is tied directly to hospital revenue. Even if not all contractors actually use this authority, at least some will. That threat may help hospital executives achieve a long sought goal: Getting physicians to commit more fully to documentation improvement. The adage, If it isn t documented, it didn t happen, is not entirely accurate skillful appeals can sometimes bridge documentation gaps but it certainly is true that the weaker documentation is, the less likely payment is. Hospitals have tried for years to teach doctors how to document better, but every teacher needs a willing student. We have heard from clients that, while physician s hearts are in the right place, their lack of skin in the game lessened their incentive to take documentation improvement seriously. With CMS latest attempt at linking physicians and hospitals revenue, the documentation message should resonate a little more loudly with doctors. That creates a valuable opportunity for hospitals to step up their documentation improvement game. If physicians demand more

5 paperwork help, hospitals need to be meet that demand. That may mean devoting more resources to an already successful program, or it may mean bringing in consultants with documentation improvement expertise. Either way, if hospitals get the buy in they have longed for, they need to be prepared to have something to sell.