Recovery Audit Contractor Program

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Audrey James
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1 Recovery Audit Contractor Program

2 What is a RAC? Recovery Audit Contractor RAC Mission Detect and correct past improper payments so that future improper payments can be prevented: Providers can avoid submitting claims not in compliance CMS can lower its error rate Taxpayers and Medicare beneficiaries are protected RAC s paid contingency fee 9% to 12.5% depending on region Region B fee is 12.5% 2

future improper payments can be prevented: Providers can avoid submitting claims not in

3 3

4 RAC Auditors RAC Website Telephone Region A: Diversified Collection Services Region B: CGI Region C: Connolly, Inc. care.com Region D: HealthDataInsights Part A: Part B:

com 1-877-316-7222 Region C: Connolly, Inc. www.connollyhealthcare.com/rac RACinfo@connollyhealth care.

5 Where Did RAC S Come From? Medicare Modernization Act created three year demonstration project: CMS selected 3 states (NY, CA, FL) with highest Medicare utilization 98% of improper payments were overpayments - $980million! 34% of overpayment determinations were overturned on appeal Tax Relief and Healthcare Act of 2006 made program permanent and nationwide by

(NY, CA, FL) with highest Medicare utilization 98% of improper payments were overpayments -

6 Provider Breakdown Demonstration Program 6% 84% 4% 2% 2% 1% 1% Inpatient Hospital - $828 Million Outpatient Hospital - $44 Million Physician - $20 Million Ambulance / Lab / Other - $5 Million Inpatient Rehab Facility - $60 Million Skilled Nursing Facility - $16 Million Durable Medical Equipment - $6 Million 6

Million Ambulance / Lab / Other - $5 Million Inpatient Rehab Facility - $60

7 Error Type Demonstration Program 35% 40% 17% 8% Medically Unnecessary Other Incorrectly Coded Insufficient Documentation 7

8 How do RAC s Work? Review claims on a post-payment basis Use same Medicare policies as carriers, fiscal intermediaries and MAC s Review claims paid after October 1, 2007 Look back three years from payment date Staffed by nurses, therapists, coders and a physician Issues must be approved by CMS and posted to website prior to widespread review RAC losing on appeal must return fee 8

intermediaries and MAC s Review claims paid after October 1, 2007 Look back three years from

9 How Do RAC s Work? 2 Types of RAC Audits Automated Claim determined at the system level Must be certain that the service is not covered or incorrectly coded Demand letter sent to provider with amount and appeal rights Complex Pursuant to letter requesting records RAC s use proprietary software to determine normal limits; you are at risk if you fall outside of the norm 9

the service is not covered or incorrectly coded Demand letter sent to provider with amount

10 How Do RAC s Work? Record Request Limits per 45 day period Based on tax ID# and first 3 digits of zip code of physical location 1% of ALL claims submitted the previous calendar year divided by 8 (45 day periods) Caps Through March requests per 45 day period April to September requests per 45 day period for providers who bill more than 100,000 claims RAC s can request permission to exceed cap on a case by case basis 10

1% of ALL claims submitted the previous calendar year divided by 8 (45 day periods) Caps Through March

11 How Do RAC s Work? Automated Review Collection Process Day 1 RAC issues Demand Letter Day 30 Interest begins to accrue unless payment is made Day 41 Recoup by offset unless provider has paid in full or filed appeal by Day 30 Must appeal within 120 days 11

12 How Do RAC s work? Complex Review Collection Process RAC issues Medical Record Request Letter Provider has 45 calendar days to respond Provider submits medical records RAC has 60 calendar days from receipt of medical records to send Review Results Letter; if findings: Day 1 RAC issues Demand Letter, includes amount and appeal rights; interest begins to accrue after 30 days from determination unless payment is made Day 41 Recoups by offset unless provider has paid in full or filed an appeal by Day 30 12

submits medical records RAC has 60 calendar days from receipt of medical records to send Review Results Letter; if findings:

13 Appeal Process Level I Redetermination 42 CFR Fiscal Intermediary (FI) 120 calendar days after receiving denial letter to request File Appeal within 30 days to avoid recoupment Level II Reconsideration 42 CFR Qualified Independent Contractor (QIC) 180 calendar days after FI decision to request File Appeal within 60 days to avoid recoupment 13

File Appeal within 30 days to avoid recoupment Level II Reconsideration 42 CFR 405.

14 Appeal Process Level III ALJ Hearing 42 CFR Administrative Law Judge (ALJ) 60 calendar days after QIC decision to request Cannot avoid recoupment Level IV Medicare Appeals Council 42 CFR Medicare Appeals Council (MAC) 60 calendar days after ALJ decision to request 14

decision to request Cannot avoid recoupment Level IV Medicare Appeals

15 Appeal Process Level V Federal District Court 42 CFR Federal Judge 60 calendar days after MAC decision to request 15

16 What Can You Do? Know where previous improper payments have been found: Demonstration findings: Permanent RAC findings: listed on each RAC s website OIG reports: CERT reports: 16

17 What Can You Do? Proactive Plan Notify RAC of your point of contact (POC) Assemble a RAC Compliance Team Develop a written RAC plan Address when to rebill and appeal Perform coding and medical necessity reviews Conduct your own pre-rac audit Ensure you have proper documentation in file to support treatment and services Implement request and appeals tracking system Establish a mechanism for feedback/training Plan how to respond to patient and community patient is informed by CMS and results are public! 17

to rebill and appeal Perform coding and medical necessity reviews Conduct your own pre-rac audit Ensure you have proper

18 What Can You Do? Reactive Make sure demand letter is correct Make sure RAC has met all requirements Understand the sampling process Quantify the financial impact Contact patient Track all requests and submissions Submit complete and easy to follow records Consider appealing and time for filing appeal 18

requirements Understand the sampling process Quantify the financial impact

19 How Can You Learn More? RAC website: RAC Region B; CGI Provides daily updates, articles and webinars 19

gov Region B; CGI http://racb.cgi.com racb@cgi.

20 Panel Contact Information Steve Gracey Cindy Padilla Dave Engel Nancy Smith

com 513.241.8313 Dave Engel david@themalibugroup.com 513.583.

21 Exhibit A Sample Patient Communication Letter

22 Sample Patient Communication Letter Dear Patient, As part of our commitment to compliance, we are continuously auditing to ensure accuracy and adherence to Medicare regulations. On (date) we had a dispute with Medicare regarding your (service). Medicare has determined to take back the payment and therefore, we will be refunding your payment of $ (or indicate if supplemental insurance will be refunded). If you have any questions, please call our Medicare specialist, Susan Jones, at xxx-xxxx. We apologize for any confusion this may cause. Thank you for allowing us to serve your health care needs. * Decide if you are going to bill patient for denied claim. If not, then inform patient of this in patient letter. Also, if you receive an overpayment you may need to refund overpayment to patient. 22

23 Exhibit B Region B - Demand Letter

29 Exhibit C Region B Additional Documentation Request

34 Exhibit D Region B Issues as of 2/22/10

38 Exhibit E Articles

Recovery Audit Contractors (RACs) and Medicare. The Who, What, When, Where, How and Why?

Recovery Audit Contractors (RACs) and Medicare The Who, What, When, Where, How and Why? 1 Agenda What is a RAC? Will the RACs affect me? Why RACs? What does a RAC do? What are the providers options? What