Preparing for RAC Auditscampus.ahima.org/audio/2007/RB091107.pdfShe also authored 45 ICD-9-CM, CPT-4 and HCPCS instructor training material for Universities nationally, including hands-on

© Copyright 2007 American Health Information Management Association. All rights reserved.

Preparing for RAC Audits

Audio Seminar/Webinar September 11, 2007

Practical Tools for Seminar Learning

Disclaimer

AHIMA 2007 Audio Seminar Series i

The American Health Information Management Association makes no representation or guarantee with respect to the contents herein and specifically disclaims any implied guarantee of suitability for any specific purpose. AHIMA has no liability or responsibility to any person or entity with respect to any loss or damage caused by the use of this audio seminar, including but not limited to any loss of revenue, interruption of service, loss of business, or indirect damages resulting from the use of this program. AHIMA makes no guarantee that the use of this program will prevent differences of opinion or disputes with Medicare or other third party payers as to the amount that will be paid to providers of service. CPT® five digit codes, nomenclature, and other data are copyright 2006 American Medical Association. All Rights Reserved. No fee schedules, basic units, relative values or related listings are included in CPT. The AMA assumes no liability for the data contained herein. As a provider of continuing education, the American Health Information Management Association (AHIMA) must assure balance, independence, objectivity and scientific rigor in all of its endeavors. AHIMA is solely responsible for control of program objectives and content and the selection of presenters. All speakers and planning committee members are expected to disclose to the audience: (1) any significant financial interest or other relationships with the manufacturer(s) or provider(s) of any commercial product(s) or services(s) discussed in an educational presentation; (2) any significant financial interest or other relationship with any companies providing commercial support for the activity; and (3) if the presentation will include discussion of investigational or unlabeled uses of a product. The intent of this requirement is not to prevent a speaker with commercial affiliations from presenting, but rather to provide the participants with information from which they may make their own judgments.

Faculty

AHIMA 2007 Audio Seminar Series ii

Stacie L. Buck, RHIA, CCS-P, LHRM, RCC

Stacie has served in several different roles during her 14-year career in health information management including as a medical records coordinator, medical coder, a revenue analyst, an internal auditor, corporate compliance officer, and consultant. Currently, Stacie is Vice-President for Southeast Radiology Management.

Stacie is on the editorial advisory board for the HCPro newsletters Mammography Regulation Report, Radiology Administrator’s Compliance Insider, Health Care Auditing Strategies and she is a frequent contributor to Strategies for Health Care Compliance and to Compliance Monitor Q & A’s Ask the Expert. In addition, she is the author of the recently released Radiology Technologist’s Coding Compliance Handbook and is a Contributing Editor for The Radiology Manager’s Handbook: Tools & Best Practices for Business Success. Stacie also is an audio conference presenter for HCPro, the Coding Institute and AHIMA.

Stacie is an adjunct instructor and advisory board member for the health information management program at Indian River Community College in Florida and she serves in the AHIMA Mentoring program. Recently Stacie was the recipient of several awards including the 2005 AHIMA Rising Star Award, FHIMA Outstanding Professional Award & FHIMA Literary Award.

Stacie is currently President of the Florida Health Information Management Association (FHIMA), and a member of AHIMA and the Suncoast Health Information Management Association (SHIMA). She serves on the AHIMA Physician Practice Council.

Stacie graduated Magna Cum Laude from Florida International University earning a Bachelor of Science degree in Health Information Management and prior earned an Associate of Arts degree in Business Administration.

Susan Von Kirchoff, MEd, RHIA, CCS, CCS-P

Formerly with a national healthcare consulting firm, Susan has seen most aspects of the healthcare environment. She has 11 years of health information experience in the areas of ICD-9-CM and CPT-4 coding for inpatient and outpatient coding and reimbursement.

Susan has authored and published study guides to assist healthcare professionals in successfully passing the National Certified Coding Specialist Exam and Physician Based Exam. She also authored 45 ICD-9-CM, CPT-4 and HCPCS instructor training material for Universities nationally, including hands-on training material and mock examinations. Susan has taught ICD-9-CM, CPT-4, and HCPCS courses via compressed video with computerized instruction.

With a Masters in Education and a B.S. degree in Health Information Management from Arkansas Tech University, Russellville, Susan is a Registered Health Information Administrator (RHIA), Certified Coding Specialist (CCS), Certified Coding Specialist-Physician based (CCS-P) and an active member of the Arkansas Health Information Management Association where she serves as President.

Table of Contents

AHIMA 2007 Audio Seminar Series

Disclaimer ..................................................................................................................... i Faculty .........................................................................................................................ii Objectives ..................................................................................................................... 1 Recovery Audit Contractors ............................................................................................. 1 RAC Expansion............................................................................................................... 2 Why RACs?

Improper Payments Collected.............................................................................. 4 Overpayments.................................................................................................... 7 Examples ............................................................................................... 9

RAC Process ............................................................................................................11 MSP RAC ..........................................................................................................11 Claims Review RAC............................................................................................12 Statement of Work ............................................................................................13 Safeguards .......................................................................................................14 Obtaining Medical Records .................................................................................14 Provider Appeals ...............................................................................................15 Full vs. Partial Denial .........................................................................................16 Communication .................................................................................................16 Overpayments...................................................................................................17

Impact on Providers ......................................................................................................18 Key Dates in the RAC Demonstration ..............................................................................18 What are facilities saying about their RAC experience? .....................................................19 What can I do to prepare? .............................................................................................19 Additional Informqtion` .................................................................................................20 Audience Questions Appendix ..................................................................................................................23 CE Certificate Instructions


AHIMA 2007 Audio Seminar Series 1

Notes/Comments/Questions

Objectives

Identify the reason for RAC auditsUnderstand the current RAC focus areasPrepare hospitals, physicians and outpatient facilities for RAC implementationIdentify best practices in dealing with RAC audits.

1

.

Recovery Audit Contractors

MMA of 2003 called for the use of RACs to:• Identify underpayments and

overpayments• Recoup overpayments• Started as pilot program to

determine if cost effective means of adding resources to ensure correct payments

• CA, FL, NY pilot states - 2005

2





Program mission is to reduce Medicare improper payments through the efficient detection and collection of overpayments, the identification of underpayments and the implementation of actions that will prevent future improper payments.

3

RAC Expansion

Section 302 of the Tax Relief and Health Care Act of 2006 • makes the RAC Program permanent• requires the Secretary to expand the

program to all 50 states by no later than 2010.

• By 2010, CMS plans to have 4 RACs in place.

• New RAC jurisdictions match the DME MAC jurisdictions.

4




RAC ExpansionExpansion will include:• Part A providers in

SC, MA, and AZ• Providers in six states serviced

by Mutual of Omaha. • The expansion to the new states will only

affect Part A inpatient and outpatient claims.

• The RAC demonstration contracts will still expire in March 2008 and CMS will complete a new full and open competition to award RACs for the nationwide expansion.

5


Contractors identify and collect Medicare claims overpayments not identified by carriers, FIs and DMERCsContractor compensation based on % of recoveries

6




Why RACs?

Less than 5% of claims are examined as part of the MRPClaims error rates have ranged from 6%-10% over the past several yearsConcern that MTF may not be adequately protected

7

Improper Payments Collected

October 1, 2005-September 30, 20068




Improper Payments Collected

October 1, 2005-September 30, 2006 9

Improper Payments





Improper Payments


Improper Payments





Overpayments Collected


Overpayments Identified

14




Average Overpayment Amount FY 2006

Florida• Focus on physician claims

• Average demand for overpayment $135.00• Inpatient hospital claims - small # of

claims reviewed• Average demand for overpayment $5,800

New York• Focus on inpatient/outpatient hospital claims

• Average demand for overpayment per provider for inpatient services $164,372.

• Average demand for overpayment per provider for outpatient services $32,364. 15

Average Overpayment Amount FY 2006

California• Focus on inpatient hospital claims

• Average demand for overpayment per provider $75,856

• Focus on DME and Physician Claims• Average demand for overpayment per

physician/supplier $216.00

16




Examples of Services with Overpayments

INPATIENT HOSPITAL SERVICES Overpayments Collected

(in Millions)

Wound debridement and skin graft, exc. Hand musculoskeletal and connective tissue disease (217) Provider billed for “excisional” debridement but record failed to meet definition to code.

$13.9

Skin graft &/or debridement for skin ulcer or cellulitis (263) Provider billed for “excisional” debridement but record failed to meet definition to code.

$3.9

•In accordance with Coding Clinic, Third Quarter, 1991, the attending physician must document in the medical record that an excisional debridement was performed to report code 86.22. For coding purposes, excisional debridement, 86.22, is assigned only when the procedure is performed by a physician.•Excisional debridement is the surgical removal or cutting away of devitalized tissue, necrosis, or slough. Depending on circumstances such as the patient's condition, availability of a surgical suite, or extent of area to be debrided, excisional debridement can be performed in the operating room, emergency room, or at the patient's bedside.

17


INPATIENT HOSPITAL SERVICES Overpayments Collected (in Millions)

Medical back problems (243) NOT MEDICALLY NECESSARY: Services could have been provided as an outpatient (probably represent cases where the provider admitted the beneficiary for 3 days in order to qualify for SNF coverage)

$2.0

Severity of Illness and Intensity of services to meet MEDICAL NECESSITY for DRG 243 would require the following diagnosis and treatment:SI: Dislocation of major joint, fracture of spine, femur, pelvis

IS: IV Fluids > 125 mL/h

SI: Crushing injury with abnormal lab values i.e. Hemoglobinuria or Myoglobinuria

IS: Rehab screening i.e. SNF Therapy initiation (ADL, Bed mobility/Transfers/Ambulation

18





NON-INPATIENT HOSPITAL SERVICES Overpayments Collected (in Millions)

Blood transfusion service (36430) Provider billed one service per pint of blood but definition of this code is one service per transfusion session

$2.4

Example:An emergency room provided one transfusion session during which 2 pints of blood were administered to the beneficiary. The hospital billed for 2 units of (36430). From a CPT coding perspective, code 36430, Transfusion, blood or blood components, should be reported only one time per transfusion, regardless of how many units are administered. CPT Assistant, March 2001, Page: 10

19


NON-INPATIENT HOSPITAL SERVICES Overpayments Collected (in Millions)

Injection, pegfilgrastim 6 mg (J2505) Provider billed one service per 1 mg but definition of this code is one service per 6mg vial.

$0.5

Example:A provider administered 6 mgs of Neulasta to the beneficiary but billed for 6 units of (J2505). According to the definition of the code, six units of (J2505) would be 36 mg of Neulasta.

20




RAC Process

Claims from at least one year prior will be reviewedData analysis to identify areas of investigationRequest claims history information from carriers/FIsIdentify and recover overpaymentsApplication of NCDs/LCDsProviders permitted to appealCollection policies remain unchangedUnderpayments will be forwarded to Medicare contractors for processing and payment

21

MSP RAC

Will identify situations where another employer or insurer should have been primary for the claim• Will NOT identify situations involving WC,

Auto, Liability, VA benefits or Black Lung

22




Claims Review RAC

Review claims paid to identify situations where Medicare paid incorrectly• 3 fiscal years claims data

Use proprietary software experiences and resources to identify overpayments as well as the CMS MRP which includes reviewing MRs (onsite reviews may be conducted)• Performance of data analysis to identify areas of

investigation and will request claims history information from carriers and intermediaries

23

Claims Review RAC

Will not conduct prepayment reviewsWill not actively look for fraud (Program Safeguard Contractors)Will not identify overpayments related to coding of E/M services* • CMS excluded these services from RAC review

while CMS considered a proposal by the AMAWill not audit Hospice and Home Health Services• Excluded for administrative simplification

purposes.Will not review claims previously reviewed by another Medicare Contractor

24




Statement of Work

RAC may not attempt to identify over/underpayments arising from:• Services provided under a program other than FFS• Cost report settlement process• E/M services that are coded incorrectly• Claims paid or denied in the current FY• Claims where MC regulations indicate that the

program does not have authority to reopen• Claims where provider is without fault for overpayment• Random selection of claims• Claims identified with a special processing number• Prepayment review

25

Statement of Work

RAC may attempt to identify over/underpayments that result from:• Incorrect payment amounts• Non-covered services• Services not medically necessary• Incorrectly coded services

• DRG miscoding• Complications

• Duplicate services• Unnecessary E/M Services• E/M and global surgery payment rules• Bundled services• Complex payment calculations

26




Safeguards

RACs are not permitted to use random selectionRandom selection can only be used to establish an error rateMust rely on targeted review – data analysisMay not target a claim solely because it is high $$$ - must be reason to suspect overpayment

27

Obtaining Medical Records

May obtain records by onsite visit or mail/faxRACs will pay for medical records:• IP PPS claim (DRG)• LTC hospital claims

RACs are not required to pay for other records, but may do so if they chooseIf records not received in 45 days, RAC can assess overpayment

28




Provider Appeals of RAC -Initiated Denials

RAC appeal process is the same for physicians under Part B and Part A non-inpatient claims.Part A Inpatient hospital claims-RAC appeals will go to the FI that processed the claim vs. the first level of appeal going to the QIO

29

Appeals of RAC Denials

30




Full vs. Partial DenialFull denial occurs when:• Submitted service was not reasonable

and necessary and no other service would have been reasonable and necessary

• No service providedPartial denial occurs when:• Submitted service was not reasonable

and necessary but lower level service necessary

• Service was upcoded (lower level performed)

31

Communication

RAC will document rationale for determination• List review findings including a

description of Medicare policy or rule that was violated

• Statement as to whether violations resulted in overpayment or did not affect payment

32




Communication Complex reviews• Results of all complex reviews will be

communicated to provider• Inform provider of coverage/coding/payment

policy or article violated

Automated reviews• Notify provider of review resulting in

overpayment• Not required to notify of review not resulting in

overpayment• Inform provider of coverage/coding/payment

policy or article violated33

Overpayments

RACs will pursue overpayments identifiedFor Part B or DME claims no recoupment for overpayments under $10Written demand letter sent to providerIntent to Refer demand letter (offset)Medicare contractor can recoup from future paymentsOffer repayment through installment agreements

34




Impact on ProvidersRight to discuss issues with RACAppeal rights – RACs first levelRepayment process remains unchangedCMS establishing internal controls to prevent determinations that do not comply with Medicare policyEducation to providers will be ongoing during processTargets of RACs will be communicated to providersBuilt in mechanisms to ensure RAC is not reviewing same claims as Medicare contractors (RAC database) 35

Key Dates in the RAC Demonstration

YR MONTH DESCRIPTION

2005 January CMS announces RAC Demonstration, CMS releases RFP for CA, FL, NY

March 28 CMS signs contracts for Claim and MSP RACs in CA, FL

April RACs start receiving claims from CMS

2006 January RACs begin releasing significant overpayment notifications

February 23 CMS signs contract for MSP RAC in NY

September 30 Close of FY 2006

November CMS releases FY 2006 RAC Status Document

2007 September 30 Close of FY 2007

November CMS plans to release FY 2007 RAC Status Document

2008 March 27 3-year demonstration ends

September CMS plans to release RAC Demonstration Report to Congress

September 30 Close of FY 2008

November CMS plans to release FY 2008 RAC Status Document36




What are facilities saying about their RAC experience?

37

What can I do to prepare?

Start auditing now! • RACs will always be examining past claims

(1-3 years)

Identify and correct deficiencies • Educate physicians on documentation

requirements.• Educate coding and billing staff as needed

Familiarize yourself with your LCDs as well as any NCDs for services you provide

38




For additional information

www.cms.hhs.gov/rac

39

Audience Questions




Audio Seminar Discussion

Following today’s live seminarAvailable to AHIMA members at

www.AHIMA.orgClick on Communities of Practice (CoP) – icon on top right

or sign on to MyAHIMAAHIMA Member ID number and password required – for members only

Join the Coding Community from your Personal Page then under Community Discussions, choose the Audio Seminar Forum You will be able to:

• Discuss seminar topics • Network with other AHIMA members • Enhance your learning experience

AHIMA Audio Seminars

Visit our Web site http://campus.AHIMA.orgfor information on the 2007 seminar schedule. While online, you can also register for seminars or order CDs and pre-recorded Webcasts of past seminars.




Upcoming Seminars/WebinarsFY08 ICD-9-CM UpdateFaculty: Lizabeth R. Fisher, RHIA, and

Mady Hue, RHIA, CCS

• September 18, 2007 andSeptember 20, 2007

FY08 DRG UpdateFaculty: Karen Scott, MEd, RHIA, CCS-P, CPC and

James S. Kennedy, MD, CCS

• September 25, 2007

1

Thank you for joining us today!Remember − sign on to the

AHIMA Audio Seminars Web site to complete your evaluation form

and receive your CE Certificate online at:

http://campus.ahima.org/audio/2007seminars.html

Each person seeking CE credit must complete the sign-in form and evaluation in order to view and

print their CE certificate

Certificates will be awarded for AHIMA and ANCC

Continuing Education Credit

Appendix


CE Certificate Instructions

To receive your

CE Certificate

Please go to the AHIMA Web site

http://campus.ahima.org/audio/2007seminars.html click on

“Complete Online Evaluation”

You will be automatically linked to the CE certificate for this seminar after completing

the evaluation.

Each participant expecting to receive continuing education credit must complete the online evaluation and sign-in information after the seminar, in order to view

and print the CE certificate.

Documents

Preparing for RAC Auditscampus.ahima.org/audio/2007/RB091107.pdfShe also authored 45 ICD-9-CM, CPT-4 and HCPCS instructor training material for Universities nationally, including hands-on