Recovery Audit Contractor Audits: What You Need to Know

Transcription

1 Recovery Audit Contractor Audits: What You Need to Know August 19-21, 2009 Gulfport Hattiesburg Meridian Jackson Kosciusko Presented by: Jeff Moore Phelps Dunbar LLP

2 Materials PowerPoint Presentation Index of Exhibits to PowerPoint Presentation 1. Medicare Recovery Audit Contractors: Effect on Part B Providers, prepared by Amanda B. Wallis, Esquire, Phelps Dunbar LLP 2. Recovery Audit Contractor Contact Information 3. CMS RAC Program Information from the Connolly Healthcare Website 4. Provider Contact Information Worksheets from the Connolly Healthcare Website 5. Medical Records Submission Requirements from the Connolly Healthcare Website 6. Key Connolly RAC Personnel 7. CMS-Approved Audit Issues published on the Connolly Healthcare Website 8. RAC Medical Record Request Limits published by CMS (for FY 2009) 9. Sample Region C Recovery Audit Contractor Demand Letter for Complex Reviews 10. Sample Region C Recovery Audit Contractor Demand Letter for Automated Reviews 11. Flow Chart of Medicare Appeals Process 12. Medicare Appeals Process Brochure published by CMS dated January Medicare Learning Network Matters No.: MM6183 Revised Dated September 12, 2008 addressing the Limitation on Recoupment for Provider, Physicians and Supplier Overpayments 14. Sample RAC Tracking Spreadsheet 2

3 What The RAC Auditors Want To Do To You! RAC Auditor Physician 3

4 Recovery Audit Contractor Program Mission RACs detect and collect PAST improper payments so CMS and carriers, fiscal intermediaries and Medicare Administrative Contractors (MACs) may implement actions that will prevent FUTURE improper payments Educational as well as financial purposes Providers can avoid submitting claims that do not comply with Medicare rules CMS can lower its payment error rate Tax payers and future Medicare beneficiaries are protected $10.4 Billion in Medicare overpayments in

5 Authority for RAC Audits and RAC Contingency Fees Medicare Modernization Act of 2003, Section 306 Required the 3-year RAC demonstration program ( ) Tax Relief and Health Care Act of 2006, Section 302 Required a permanent and nationwide RAC program by January 1, 2010 RACs are paid contingency fees ranging between 9 and 12.5% of improper payments identified (depends on terms of negotiated RAC contract) RACs must refund fees on improper payments reversed on appeal 5

6 RAC DEMONSTRATION PROJECT 6

7 RAC Demonstration Project The RAC demonstration project initially included California, Florida and New York, and was expanded to include Massachusetts, South Carolina and Arizona Approximately $992.7 million in overpayments were returned to the trust fund between Approximately $37.8 million in underpayments were returned to health care providers 96% of the improper claims were identified as overpayments, as compared to 4% identified as underpayments 7

8 Breakdown of $992.7 Million Demonstration Project Recovery Provider or supplier type Inpatient hospital 85% Inpatient rehab 6% Ambulance/laboratory 5% Physicians 2% Skilled nursing facilities 2% Basis for recovery 40% medical necessity 8% lack of documentation 35% improper coding 17% other 8

9 Top Physician Services Identified in Demonstration Project with RAC-Initiated Overpayment Collections (Net of Appeals) Through 3/27/08 Description of Item or Service Amount Collected Less Cases Overturned on Appeal (Million Dollars) Number of Claims with Overpayments Less Cases Overturned on Appeal Pharmaceutical injectables (incorrect coding) ,930 Neulasta (medically unnecessary) Vestibular function testing (other error type) ,805 Duplicate claims (other error type) ,165 Source: The Medicare Recovery Audit Contractor (RAC) Program: An Evaluation of the 3-Year Demonstration, The Centers for Medicare and Medicaid Services, June

10 RAC PROGRAM IN GENERAL AND TIMING OF AUDITS 10

11 Who is Covered by the RAC Audits? If you bill Medicare fee-forservice programs, your claims will be subject to review by the RACs (Part A and Part B) Hospitals Physicians Solo practitioners Group practices Skilled nursing facilities Inpatient rehabilitation facilities Hospices Home health agencies Clinical laboratories Durable medical equipment suppliers Any other Medicare provider or supplier that bills Medicare on a fee-for-service basis 11

12 RAC Time Frames Mississippi is located in RAC Region C Claims are available for analysis as of August 1, 2009 RACs and CMS have scheduled provider outreach programs for Mississippi hospitals and physicians on September 24 in Jackson and September 25 in Hattiesburg September 24, 2009, 1:00 p.m. to 5:00 p.m., Jackson, Mississippi TelCom Center September 25, 2009, 1:00 p.m. to 5:00 p.m., Hattiesburg, Mississippi Lake Terrace Convention Center The earliest RACs may send correspondence to physicians in Mississippi is August 1, 2009 According to CMS, RACs may not begin reviewing claims until there is provider outreach program in the state CMS will post the RAC Provider Outreach Programs on its website at 12

13 Two Types of RAC Audits Automated Review Occurs when a RAC makes a claim determination at the system level without a human review of the medical record Example Duplicate claims or pricing mistakes Complex Review Occurs when a RAC makes a claim determination utilizing human review of the medical record Example Levels of evaluation and management codes, vs

14 CMS RAC Review Phase-In Strategy as of June 24, 2009 Earliest possible dates for RAC reviews in Mississippi Automated Review Black & White Issues (August 2009) DRG Validation Complex Review (October/November 2009) Complex Review for Coding Errors (October/November 2009) DME Medical Necessity Reviews Complex Review (Fiscal Year 2010) Medical Necessity Reviews Complex Review (Calendar Year 2010) 14

15 RAC Auditor for Mississippi Connolly Consulting, Inc. Phone No Fax No Send mail correspondence to: Connolly Healthcare RAC Office The Navy Yard Corporate Center One Crescent Drive, Suite 300-A Philadelphia, PA Website: Connolly s subcontractor Viant Payment Systems, Inc. Facts about Connolly Connolly was listed in Inc. Magazine s list of the 5,000 fastest growing companies in the United States Connolly s top areas of focus during the demonstration project included excisional debridement and surgical procedures in the wrong setting 15

16 CMS Contact Information for RACs RAC website: RAC Or Connie Leonard (410) CMS Contact for Region C Amy Reese (410)

17 RAC Medical Record Request Limits for Fiscal Year 2009 Physicians Solo practitioner: 10 medical records per 45 days Partnership 2-5 individuals: 20 medical records per 45 days Group of 6 to 15 individuals: 30 medical records per 45 days Large group (16+ individuals): 50 medical records per 45 days If medical records are not produced within 45 days, RAC will automatically deny claim and it will be considered an overpayment. See Exhibit 5 for how to submit medical records to the RAC and Exhibit 8 for medical record request limits. Request limits are based on tax ID numbers, not NPI RACs may review records on-site or request that hard copies of records be forwarded to the RAC. Records may be submitted to the RAC on CD or DVD if the physician or Group Practice passes a testing process for transferring records with their RAC. CMS is considering whether to move to a percentage threshold when requesting records from physicians (e.g. 1% of average monthly Medicare paid claims per 45 days with a 50 record cap) If you cannot meet the 45-day deadline, contact RAC and request an extension. 17

18 RAC Review Process Claims reviewed on a post-payment basis RACs use the same Medicare policies as carriers, FIs and MACs NCDs, LCDs, CMS manuals RACs may not review claims paid prior to October 1, 2007 RACs may not look back more than 3 years at paid claims. Therefore, the look-back period will not be applicable until after October 1, Example of look back period: On December 1, 2010, the RAC wants to look at a claim paid by Medicare on November 1, Paid claim is 3 years and 1 month old. RAC may not review this claim. RACs must employ staff consisting of nurses, therapists, certified coders and a physician medical director (Dr. James Lee, D.O.) 18

19 Extrapolation Process Process available to the RACs according to the CMS RAC Statement of Work Extrapolation process was not utilized during the demonstration project How extrapolation works For the physician s universe of Medicare claims for a specific time period, RAC will examine a random sampling of a statistically valid subset of the cases and the RAC can then extend the identified error rate within the subset of claims to the entire universe of Medicare claims. For example, if the error rate of 25% is found with an average overpayment of $500 per claim, then 25% of the universe of 1,000 Medicare claims is 250, which multiplied by $500 per claim is $125,000. RAC can avoid auditing each of the 1,000 records and still claim significant overpayments. The bottom line is that RAC can do less work and make more money through the extrapolation process. 19

20 Collection Process Carriers, FIs and MACs issue remittance advices with remark code N432: adjustment based on recovery audit Carrier, FI and MAC recoup by offset from current or future Medicare payments unless provider has submitted a check for the overpayment or files a valid timely appeal Demand letter is issued by the RAC, not the MAC, FI or carrier Must include detailed reasons supporting the denial RAC offers the provider an opportunity to discuss the improper payment determination with the RAC (outside the normal Medicare claims appeal process) RAC Discussion Period or Rebuttal 20

21 Options If You Agree with the RAC s Determination Pay by check on or before Day 30 (interest is not assessed) and do not appeal Allow recoupment (overpayment plus interest) on Day 41 and do not appeal Request or apply for extended payment plan (overpayment plus interest) and do not appeal Interest rate on overpayments through June 2009 was 11%. Interest rate from July to December 2009 has been reported to be 11.75%. 21

22 Options If You Disagree with the RAC s Determination Pay by check on or before Day 30 (interest not assessed) and file appeal by Day 120 Allow recoupment (overpayment plus interest) on Day 41 and file appeal by Day 120 Stop recoupment by filing an appeal prior to Day 30 (interest will be owed if you lose appeal) Request or apply for extended payment plan (overpayment plus interest) and appeal by Day

23 STEPS TO PREPARE FOR RAC AUDITS 23

24 Preparation for RAC Audits Establish a RAC Team Identify the focus of the RAC auditors in the Demonstration Project (see Slide 9), issues approved for review on the RAC website (see Exhibit 7) or issues being reviewed in other RAC regions around the country Identify your own weaknesses in terms of claims denials and improper payments Develop a process for responding to RAC medical record requests Develop an Excel spreadsheet or purchase software to track key deadlines during RAC audits 24

25 Form a RAC Team Appoint a RAC liaison or lead person in your office to oversee and coordinate the RAC audit RAC Team should include some of the following individuals if available: Office Administrator Compliance Officer Coders and Billers Health Information Management Personnel Physician Representative RAC Team is scalable based on size and complexity of the physician practice 25

26 Identify Areas of Focus by the RAC Issues to be reviewed by Connolly in RAC program must first be approved by CMS and posted on Connolly s website. Target areas applicable to physicians as identified by Connolly on its website: Blood transfusions CPT Codes 36430, 36440, 36450, and (excluding claims with any modifiers) should be billed as one (1) per session, regardless of the number of units transfused on that date of service. Untimed codes CPT Codes (excluding modifiers KX, and 59) where the procedure is not defined by a specific timeframe (untimed codes), the provider should enter a one (1) in the units billed column per date of service. IV hydration therapy Based on the definition of CPT (excluding claims modifier 59), the maximum number of units should be one (1) per patient per date of service. Beginning January 1, 2009, Code was replaced with Code Bronchoscopy services CPT Codes 31625, 31628, and should be billed with a maximum number of units of one (1) per patient per day of service (excluding claims with modifier 59) should only be reported with one unit per date of service. One in a lifetime procedures By virtue of the description of the CPT code, these codes can be performed only once per patient lifetime. Pediatric codes exceeding age parameters Newborn/pediatric CPT codes being applied/billed for patients which exceed the age limit defined by the CPT code. J2505: Injection, Pegfilgrastim, 6 mg. By definition HCPC Code J2505 represents 6 mg per unit. The code should be billed at one (1) unit per patient per date of service. 26

27 Identify Areas of Focus by the RAC (cont d) Issues currently affect South Carolina only. Because South Carolina is in Region C, these issues will most likely affect Mississippi once the audits begin in this state. Physicians should review these issues when conducting self audits to prepare for the RACs. Look at the issues reviewed by the RAC related to physician services during the demonstration project (see Slide 9). Look at physician issues identified by RACs in Regions A, B and D on their respective websites. If one RAC is looking at a certain physician issue, it is highly likely the other RACs will look at the same issue (see Exhibit 2). 27

28 Physicians and Group Practices Should Identify Their Own Weaknesses with Respect to Coding and Improper Payments Physicians should review and track their denials to identify patterns Physicians and Group Practices should consider performing an internal audit to identify coding and documentation deficiencies, or should engage an outside consultant to identify coding deficiencies and areas of weakness If a consultant is engaged to perform a RAC readiness audit, the group should consider engaging the consultant through legal counsel to preserve the attorney-client privilege RAC readiness audits will assist physicians in improving their coding and documentation on a prospective basis to reduce improper payments 28

29 Adopt a Procedure for Responding to Medical Record Requests Provide your RAC with the precise address and name of the contact person the RAC should use when sending medical record request letters (see Exhibit 4) Call your RAC or send your RAC a letter with this information Submit your contact information through the RAC s website which must be up and running by no later than January 1, 2010 Check on the status of your medical record submissions to the RAC Did the RAC receive the medical records Call the RAC Use the RAC website Develop a rapport and working relationship with the RAC Ensure that personnel responsible for gathering the medical records do so in a timely manner to meet the 45-day deadline 29

30 Tracking the Audit and Appellate Process Physician should create an Excel spreadsheet or purchase a software program that allows them to track the dates of medical record requests, audit findings and key appellate dates. Contact the American Medical Association to determine if they can provide you with names of software vendors. Sample RAC tracking spreadsheet is attached to this PowerPoint as Exhibit

31 Additional Steps to Prepare and Respond to RAC Audits Educate Employees Educate employees on the audit process Conduct monthly meetings to discuss the status of the audit Educate physicians and non-physician practitioners on documentation requirements Engage Legal Counsel If you engage a consultant to audit the RAC s findings, have legal counsel engage the auditor to protect the audit under the attorney-client privilege Legal counsel may provide assistance in high dollar appeals Review the RAC Audit Findings Review the RAC s findings to determine whether an appeal is appropriate Do not assume that the RAC s findings are correct Adopt a Corrective Action Plan Conduct seminars or educational sessions for physicians, billing and coding staff on corrective actions to avoid improper billing Plan should reduce improper billings on a prospective basis 31

32 RAC APPEALS PROCESS 32

33 Appealing RAC Auditor Findings Rebuttal Not part of appeals process Filed with RAC within 15 days of RAC s determination of overpayment Rebuttal is a claim denying the RAC s allegation that the provider or supplier was overpaid Rebuttal process is of limited benefit Many providers skip this level of appeal and go straight to a Redetermination request. 33

34 Five Levels of Medicare Claims Appeal Redetermination Appeal to local Medicare Administrative Contractor, Fiscal Intermediary or Carrier 120 days to request appeal 60 days for decision Content of the appeal document must include beneficiary s name, HICN, specific service and/or item under appeal, date of service and name and signature of appellant or representative Review is de novo appellate body will review the evidence and law without deference to the previous ruling Submit clear and concise position paper thoroughly documenting why an overpayment does not exist Reconsideration QIC consultant used by CMS to review claims 180 days to request 60 days for decision Review is de novo Content of appeal document is the same as for a Redetermination except you must include the name of the MAC or Carrier Early and full presentation of evidence to QIC You are prohibited from submitting new evidence after the Reconsideration level of appeal except for good cause, so introduce all evidence at this level Submit clear and concise position paper thoroughly documenting why an overpayment does not exist 34

35 ALJ Hearing File appeal with Office of Medicare Hearings and Appeals 60 days to request In-person hearing Video teleconference Telephone On the record (briefs and records only) De novo review Amount in controversy must be equal to or greater than $ days for decision Must include certificate of service on Medicare beneficiary 35

36 Medicare Appeals Council 60 days to request 90 days for decision Generally, providers do not have a good success rate at this level of appeal. 36

37 Federal District Court File a Complaint 60 days to file Amount in controversy must equal of exceed $1,220 in Fiscal Year 2009 Very expensive if you get to this level of appeal 2-3 year process if you appeal through the Federal District Court level 37

38 Position Paper to be Submitted with Your Appeal Develop a clear and concise, but thorough position paper documenting why an overpayment does not exist Position paper should be a clear, concise persuasive argument including medical record documentation and cites to appropriate legal authorities, including, but not limited to, local coverage determinations, national coverage determinations, CMS manuals and applicable trade publications and authorities supporting your position that the claim is appropriate Position paper should be written in a manner such that it is geared to those that will be reading the file, which will likely be nursing staff and non-clinical personnel. If the overpayment is based on extrapolation methodology, you must address the substantive issues of the overpayment as well as attack the RAC s statistical process. 38

39 RAC Demonstration Project Appeal Statistics Providers appealed 22.5% of the RAC s determinations Only 7.6% of these appeals were successful Provider Appeals of RAC-Initiated Overpayments Through 8/31/08, Part B Claims Only Claim RAC Claims with Overpayment Determinations # appealed to FI # appealed to QIC # appealed to ALJ # appealed to DAB # appealed (all levels) % appealed (all levels) # favorable to provider (all levels) % favorable to provider (all levels) % of all claims overturned on appeal Connolly 31,937 2, , % 1, % 4.6% HDI 134,811 31,113 4,332 2, , % 16, % 12.3% PRG 83,433 12, , % 2, % 3.2% RAC not known 1 n/a 0 6, ,398 n/a % n/a All RACs 250,181 45,927 12,228 3, , % 21, % 8.6% Source: The Medicare Recovery Audit Contractor (RAC) Program: Update to the Evaluation of the 3-Year Demonstration, The Centers for Medicare and Medicaid Services, January This table includes 7,398 Part B appeals that cannot be attributed to a specific RAC. 39

40 Recoupment Redetermination Begins 41 st day after overpayment demand unless appealed Reconsideration If appeal Redetermination findings within 60 days of decision, no recoupment will begin If you do not appeal by day 60 following the Redetermination decision, recoupment could begin on day 61. Begins 76 th day after Redetermination unless appealed If you appeal and lose, recoupment will begin 30 days after the Reconsideration decision. Interest earned only on amounts recouped Interest is in the amount of 11-12% If there is recoupment and the physician wins the appeal, physician gets recoupment back plus interest in the amount of 11-12% Cannot stop the recoupment process after the first 2 levels of appeal (Redetermination and Reconsideration) 40

41 Cost/Benefit Analysis when Deciding to Appeal Emotional versus objective analysis Is it an episodic or systematic error? If episodic and quantifiable, consider not appealing If it is a systematic error, then there may be repetitive demands for repayment Extrapolation cases can be very expensive and you should consider appealing to reduce the error rate (will likely require a consultant who is an expert in statistics) Consider the disruption to your practice of appealing as well as potential costs if you have to engage consultants and legal counsel Consider how many levels of appeal you are willing to pursue First 2 levels of appeal may be handled by office staff Levels 3-5 may require the assistance of consultants and attorneys 41

42 Helpful Answers to RAC FAQs RACs will use their own proprietary software and systems as well as their knowledge of Medicare rules and regulations to determine what claims and providers/suppliers they want to review. RACs will review E&M services on physician claims under Medicare Part B. In certain situations, CMS is required to pay interest to a provider or supplier when an appeal decision is favorable to that provider or supplier. RACs will identify underpayments and overpayments. If a RAC identifies both overpayments and underpayments, the RAC will offset the underpayment from the overpayment. If the RAC identifies only an underpayment, the RAC will inform the carrier or intermediary who will proceed with the claim adjustment and payment to the provider. RACs are not currently required to reimburse physicians for reproduction of medical records. RACs are not currently required to reimburse physicians for reproduction of medical records. CMS will use calendar days (not business days) when determining the number of days a provider has to submit medical records. If a provider self-discloses a payment error and the claims processing contractor confirms that a payment error exists and the sampling/extrapolation methodology used was correct, then these claims will not be reviewed by the RAC. 42

43 THANKS FOR YOUR PARTICIPATION! ANY QUESTIONS? 43

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