Preparing for Medicare s Recovery Audit Contractor (RAC) Permanent Program: Are you ready?
Presentation topics Premier Consulting Solutions (PCS) Background RevenueConnect RAC Overview The Demonstration Project RAC Permanent Program Our Approach to RAC Preparation and Implementation Conclusion Next Steps 1
Why Premier Consulting Solutions? Accelerated Performance PCS offers deep expertise and consulting capabilities in the areas of revenue cycle improvement, including RAC readiness and charge capture, strategic planning and service line analysis, which align with transformational consulting and service line solutions offerings. Connect with End-to-End Solutions PCS offers the skills and expertise to assist its alliance members in all areas of performance improvement: enhancing revenue and increasing margins, efficient management of key cost areas of labor and supplies, and improving its quality performance. 2
Why Premier Consulting Solutions? Core Benefits include: Access to Premier s Perspective database, the industry s largest clinical, operational and financial data resource including millions of patient records and comparative benchmarks Proven blueprint for Recovery Audit Contractor (RAC) preparedness Expertise in assessing RAC-related risk and managing RAC review and appeals process Long-term productive relationship with Centers for Medicare & Medicaid Services (CMS) with continuous feedback loop Extensive, specialized consulting personnel with an average of 20 years experience in management and clinical expertise Active support from more than 100 subject matter experts Access to tools and resources proven to realize and hold gains Proven, accelerated methodologies with customized design 3
RevenueConnect: Harnessing revenue expertise Pressure on revenue has never been greater with ongoing changes in reimbursement from pay-forperformance, value-based purchasing, payment bundling, and payment recovery audits. PCS combines expertise in Medicare RAC preparation and management with extensive experience in clinical process and revenue cycle management, and utilizes collaborative knowledge sharing among our alliance members to provide an unsurpassed triple threat to ensure maximum revenue retention. 4
RevenueConnect: Harnessing revenue expertise p Sustaining improvement across your organization requires more than short- term, temporary reactions. High-performing cultures require a framework of standard data tools and proven processes. Premier s Connect programs provide a comprehensive, integrated framework of product and service offerings targeting the needs of healthcare organizations. 5
Are you ready for RAC? This is how the RAC program will become part of your reality: Medicare identified as one of the top 3 Federal programs with improper payments totaling $10.8 billion in 2007 alone.* The RAC program was created through the Medicare Modernization Act of 2003 to identify these improper Medicare payments. In March 2005, Congress authorized the RAC Demonstration project for the purpose of identifying underpayments and overpayments and recouping overpayments. As of March 2008, RACs succeeded in correcting more than $1.03 billion in improper Medicare payments. The Tax Relief and Health Care Act of 2006 authorized the expansion of the RAC program to all 50 states by 2010. This is what you ll need to do to prepare: Develop an internal audit process to identify risk before the RACs arrive and manage it after they leave. Avoid submitting claims that do not comply with Medicare rules by tracking denied claims. Proactively identify cases that may be at risk in a RAC audit. Manage the appeal process for any cases in which you do not agree with the RAC's determination. Address improper payments by reviewing online reports of those discovered at other hospitals by RAC as well as in Office of Inspector General and Comprehensive Error Rate Testing reports. Define ways to encourage compliance based on over- and underpayment errors found. Create a RAC prevention program. *Source: Office of Management and Budget 6
Are you ready for RAC? Have you completed the following steps in order to prepare for your upcoming RAC audits and ongoing RAC management process? 7
RAC demonstration findings As of March 2008, the RAC Demonstration Project succeeded in correcting more than $1.03 billion in Medicare improper payments. Approximately 96% ($992.7 million) of the improper payments were overpayments collected from providers. The remaining 4% ($37.8 million) were underpayments repaid to providers. Source: The Medicare Recovery Audit Contractor (RAC) Program: An Evaluation of the 3-Year Demonstration, July 2008 8
RAC demonstration findings overpayments Overpayments collected by provider type: 85% from inpatient hospital providers 6% from inpatient rehabilitation facilities 5% from skilled nursing facilities, physician or other 4% from outpatient hospital providers Overpayments collected by error type: 40% medically unnecessary 35% incorrectly coded 8% missing or insufficient documentation 17% other Source: The Medicare Recovery Audit Contractor (RAC) Program: An Evaluation of the 3-Year Demonstration, July 2008 9
RAC demonstration financial impact RACs reported that, on average, about 65% of hospital providers Medicare revenues were not affected by the RAC Demonstration, and 25% of hospital providers only had up to 2.5% revenue impact. The remaining 10% of hospital providers had more than 2.5% revenue impact, meaning the $1.03 billion in improper payments came from only 10% of hospitals. Source: The Medicare Recovery Audit Contractor (RAC) Program: An Evaluation of the 3-Year Demonstration, July 2008 10
Potential financial impact Based on the assumption that 25% of the Medicare payment amounts were affected at a 2.5% rate: Estimate of financial impact to be calculated here for each respective hospital or health care system. 11
Recovery Audit Contractors On October 6, 2008, CMS announced the names of the new national RACs as follows: Region A: Diversified Collection Services, Inc. of Livermore, California. Region B: CGI Technologies and Solutions, Inc. of Fairfax, Virginia. Region C: Connolly Consulting Associates, Inc. of Wilton, Connecticut. Region D: Health Data Insights, Inc. of Las Vegas, Nevada. Additional subcontractors have been added to assist RACs in each of the four regions, including PRG Shultz, ihealth Technologies, Strategic Health Solutions, and Viant, Inc. 12
RAC permanent program CMS plans to implement the RAC permanent program gradually and recently confirmed a newly revised timeline: See the following page for original color coded phase-in schedule. 13
RAC permanent program 14
How hospitals should prepare To minimize the risk of RAC audit, hospitals should take steps now to ensure the highest level of admission and claim accuracy. Many of these steps are not anything new. Typical areas of risk include Medical Necessity screening, Case Management, Denials and Appeals management, and accurate Coding and Documentation. Hospitals may already have some or all of these systems and protocols in place, but may wish to revisit it them with a focus on the patterns of payment recovery that emerged during the RAC demonstrations. 15
The Premier approach We recommend the following seven steps to prepare for your upcoming RAC Audits: Form a Multidisciplinary i li RAC Task Force to oversee RAC preparation, management, and ongoing process improvement. Perform a high-level assessment of existing tools and processes (including the use of Premier s proprietary RAC risk assessment tool) to identify current RAC exposure for errors and payment recoveries. Conduct an internal coding and documentation audit to assess current RAC risk for accounts dating back to October 1, 2007, based on key risk areas identified during the RAC Demonstration Project. Develop a formal process to educate staff and physicians about the RAC permanent program, findings from the ongoing audit process, and process changes required to reduce the risk of future denials or payment recoveries. Develop a formal strategy to prepare for and manage the RAC process (notifications, chart requests, staffing requirements, tracking, etc.) and determine whether outside assistance is needed. Identify a formal tool/system to track the RAC Audit Process (notifications, chart requests, recoveries, appeals, etc.). Develop a formal RAC-specific appeals management process with case management, legal and other compliance leadership. 16
RAC analysis report from ClinicalAdvisor As part of our RAC risk assessment, we may also utilize Premier s proprietary ClinicalAdvisor RAC risk analysis tool to highlight those inpatient areas at risk for overpayment tto CMSbased on common errors identified din the demonstration ti project. The ClinicalAdvisor RAC tool can then drill down to the specific inpatient areas at risk for overpayment to CMS, and estimate the financial impact based on these errors.
Conclusion A valuable opportunity exists to proactively assess the status of your organization s current processes and determine requirements to minimize the risk of RAC errors and Medicare payment recoveries. Benefit and learn from the outcomes of the demonstration project by utilizing that information to prepare for your own RAC audits and assess your current RAC risk. It is essential to have an organized strategy and work plan to determine next steps, formally create a RAC Task Force, and determine how to best manage the Medicare RAC process. 18
Next steps In preparation for RAC, perform an assessment of processes that are already in place versus what should be in place to begin to identify any gaps or risk exposures. Once a comprehensive assessment has been completed, you should begin to develop a strategy and work plan to create a RAC Task Force and determine how to best manage the RAC Process based on gaps and opportunities identified in the assessment. 19
Questions and discussion 20
Contact information FOR MORE INFORMATION, CONTACT US: TODD HALPIN Principal, Premier Consulting Solutions Premier, Inc. 2320 Cascade Pointe Blvd. Charlotte, NC 28208 Phone: 801.243.9387 E-Mail: todd_halpin@premierinc.com MARLOWE DAZLEY Vice President, Premier Consulting Solutions Premier, Inc. 2320 Cascade Pointe Blvd. Charlotte, NC 28208 Phone: 801.243.3202 E-Mail: marlowe_dazley@premierinc.com Or contact Premier Consulting Solutions at PCS_info@premierinc.com or call the Premier Solution Center at 877.777.1552. 21