Analysis and Review of Medicare Outpatient Chemotherapy Claims

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The Medicare Recovery Audit Contractor (RAC)
ProgramA discussion of the provider experience
and RAC preparedness Kathleen Christensen,
PCS
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RAC in a Nutshell

• Contingency-based engagement with a private firm
• Legislated to be Permanent
• No Random Selection
• Automated Reviews v Complex Reviews
• Appeal Process
• Technical Denials
• Common Working File

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Back in 2005 what can we expect?

• Duplicate Claims / Services
• Open Dialog
• Clear and Obvious Issues
• Supporting Resources Unclear
• Hospital staff, management tools, etc.
• Wait and See Attitude
• Not sure what to expect

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Highlights of Our Experience

• Dealing with the RAC costs time and money
• Sometimes the RAC makes blatant mistakes
• Using Part B rules on Part A services
• Applying new LCD guidelines on old claims
• Working together helps Hospitals, Trade Groups,
  local Congress members

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Reality

• RAC is going to cost you time and money!
• Another burden for an already busy staff
• Paybacks
• Internal and external resource requirements

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Reality

• Great variation in claims affected
• FTE may be required to manage the communication
  with RAC, FI and internal communication
• Recognized importance of appropriately
  questioning edit criteria
• Minimum simple edits
• Process smoothed out over time

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Reality

• Busy fax machine, lots of communication
• Confusion among staff
• Administrative issues
• Education learning curve
• No structured communication among hospital
  community
• Dirty Laundry syndrome

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Demonstration Learnings

• Fighting back is Important!
• Minimal industry surprises
• Need for tracking tool
• Need for provider communication
• Need for virtually dedicated point person at the
  hospital
• You DO want to know now.

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Demonstration Learnings

• Need for RAC Hospital response team
• Need for RAC industry response team
• Dont leave the Hospital OUT IN THE COLD
• Importance of the Hospital Association to raise,
  negotiate and resolve edit criteria amongst RAC
  and Medicare regulatory community

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Lets do the math .

• Assumptions
• 1200 hospitals in the states of CA, FL, NY, MA,
  SC and AZ
• Hospital exposure 89 of total payment
  identified
• 992 million is the exposure of overpayment
• 89 of 992 million / 1200 hospitals
• 700K per hospital

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How Claims are Targeted and Reviewed
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Identification Can Result From

• Incorrect payment amounts
• Non-covered services including those that are not
  reasonable and/or necessary
• Incorrectly coded services
• Duplicated services

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Claims that Cannot be Pursued

• Randomly selected claims
• Services not under Medicare Fee-for-service
• Claims more than 3 years past date of initial
  determination
• Claims paid before October 1, 2007
• For example, if RAC is live Jan. 2009 claims from
  Oct. 2007- Jan. 2009 can be reviewed

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Preventing Overlap

• Excluded claims - have been or are being reviewed
  by another entity and will never be available for
  RAC to review
• Suppressed claims - are part of an ongoing
  investigation and will normally be released by
  the suppression entity
• RAC cannot interfere with an ongoing fraud review

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Responding to Record Request

• Make sure hospital has point of contact to keep
  track of all mailings
• Records not received within 45 days can be
  declared an overpayment
• RAC will issue one additional contact before
  issuing a denial

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Claims Review Process
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Automated Review

• Automated review
• When there is certainty service is not covered or
  is incorrectly coded
• Based on a written policy or guideline
• If RAC is certain that reporting is incorrect but
  there is no policy they can ask CMS for approval
• Regulatory support must be provided

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Complex Review

• Complex review
• High probability but not certainty that service
  is not covered, or
• Absence of written Medicare policy
• These can be challenged by standard practice in a
  community
• All results must be communicated to provider

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Examples

• Automated Review
• Duplicate services
• Pricing mistakes
• Complex Review
• DRG assignment
• Coding errors
• Medical necessity
• Interpretation of documentation

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Review Results

• Letter of results will be sent within 60 days
• Include an explanation of procedures for recovery
  of overpayment
• Medicare has the right to recover overpayment and
  charge interest if not paid within 30 days
• Providers have the right to request extended
  repayment schedule

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Types of Denial

• Full Denial Service not reasonable and
  necessary, no other service would have been
• Partial Denial Service not reasonable and
  necessary but lower level service was
• Service was up-coded or other incorrect code was
  used (e.g., discharge status)
• Pricer failed to reduce payment on multiple
  surgery case

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Potential Fraud

• Potential fraud will be reported to CMS
• Potential quality issues will be reported to the
  QIO

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Underpayments

• RAC will report findings of underpayment to
  appropriate contractor
• Provider does not have to correct and resubmit
  the claim
• Defined as payment group or line billed at low
  level that should have been billed at a higher
  level
• Lines provider failed to include are not
  considered underpayments

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Other Underpayment Issues

• RAC does not have to review cases sent from
  providers requesting review
• Providers do not have any official right to
  appeal underpayment determinations

BOTTOM LINE RAC doesnt work hard to find
underpayments, so its up to you!
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Top RAC Overpayment Issues
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Handling the Targeted Issue

• Hospital communication with RAC
• Internal Hospital communication
• External Hospital communication within the
  Industry
• External Hospital communication with RAC
• Preparing for Different Issues
• Automated Reviews
• Complex Reviews
• Handling the Rumor Mill, Misinformation, etc.

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Top RAC Underpayment Issues
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Appeal Process

• Hospital can send rebuttal to RAC within 15 days
  of determination, RAC can either change
  determination or provider can move to Appeals
  Process
• Five Levels of Appeal
• Redetermination
• Reconsideration
• ALJ (Administrative Law Judge)
• Medicare Appeals Council
• Federal District Court

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Financial Impact pending Appeal Decisions
Amount overturned on appeal 46 million
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More on the Appeal Process

• Anecdotal evidence of success
• Results of appeal process not yet finalized
• Education / Advisory Role for the Hospital
• Role of Documentation
• Sample Claim Review
• ROI of Knowing Now

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Appeals Update
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Provider Satisfaction

• Survey coordinated with the Gallup organization
• 74 of respondents found CMSs efforts to recoup
  overpayments to be fair and reasonable
• 71 of respondents thought that RAC reviews
  correctly applied Medicare policies
• 589 providers were selected from 4,200 who had
  received at least one request for documentation
  or overpayment recoupment

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Independent Validation

• AdvanceMed brought in September, 2007 to validate
  RAC findings
• Claims reviews conducted at CMSs request
• Additional claims selected randomly
• Validates new issues RAC wishes to pursue for
  improper payments

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Lessons Learned by CMS

• RACs are able to find a large volume of improper
  payments
• Providers do not appeal every overpayment
  determination (14)
• Overpayments collected were significantly greater
  than program costs
• RACs are willing to spend time on provider
  outreach activities, developing strong
  relationships with provider organizations

Source http//www.cms.hhs.gov/RAC/Downloads/RAC
20Evaluation20Report.pdf
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Lessons Learned by CMS

• It is administratively possible to have a RAC
  work closely with a Medicare claims processing
  contractor
• RAC efforts did not disrupt Medicare law
  enforcement or anti-fraud activities
• It is possible to find companies willing to work
  on a contingency fee basis
• Need for provider communication

Source http//www.cms.hhs.gov/RAC/Downloads/RAC
20Evaluation20Report.pdf
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Changes Going Forward

• RAC issue validated prior to targeting
• RAC issue shared to provider organization prior
  to targeting
• RACs must hire a medical director
• RACs must hire certified coders
• RACs to pay back contingency when overturned on
  ANY level of appeal
• 3-year look back period
• Maximum look-back date of 10/1/2007

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Changes Going Forward

• Web portal to provider community by 2010
• Any RAC review in excess of 10 medical records
  must be validated by CMS/independent authority
• To address the issue of accuracy for claims not
  deemed worth appealing, CMS will issue each
  permanent RACs accuracy score following random
  review
• ??? Rebilling outpatient services when Inpatient
  stay deemed not medical necessary
• CMS will expand the RAC program gradually

Source http//www.cms.hhs.gov/RAC/Downloads/RAC
20Evaluation20Report.pdf
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and perhaps most importantly

• These cost data indicate that the RAC
  demonstration was a cost-effective program,
  successful in returning improper payments to the
  Medicare trust funds.
• RAC demonstration had a limited financial impact
  on most providers
• 94 of NY hospitals had Medicare revenue
  impacted by
• What is your margin?
• Future Improper Payments Can be Avoided
• .use these findings to help reduce their local
  error rates by analyzing whether any of these
  improper payments are occurring

Source http//www.cms.hhs.gov/RAC/Downloads/RAC
20Evaluation20Report.pdf
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The Demonstration State Experience
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Prevalent Target Areas from CMS

• ---- Hospital Inpatient Claims ----

Of the 65 million collected in FY 2006
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Prevalent Target Areas from CMS
Of the 65 million collected in FY 2006
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Prevalent Targets

• Inpatient
• Short LOS Medical Necessity
• Excisional Debridement
• Respiratory System Diagnosis with Ventilator
  Support
• Unrelated OR Procedure
• Sepsis v UTI
• Medical Back Problems
• Coagulation Disorders
• Miscellaneous Other DRG pairs

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Inpatient Excisional Debridement

• Most significant early contributor to RAC
  recoupment
• Sample Medicare DRGs targeted prior to MS-DRGs
• 217 Wound Debridement Skin Graft Procedures
• 263 Skin Graft and/or Debridement w CC
• 440 Wound Debridement

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Inpatient Excisional Debridement

• Definition of excisional debridement not met
• Lack/Incomplete documentation and/or
  interpretation
• DRG downward SIW impact generally greater than
  one (1)

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Inpatient Respiratory System Diagnosis w/
Ventilator Support

• Questioning sequencing of 518.81 as Principal vs.
  
• CHF, Pneumonia, COPD, Sepsis
• Potential Heart Failure and Shock
• Downward SIW impact upwards of 2
• Anecdotal evidence of successful defense

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Inpatient Unrelated OR Procedure

• Why are procedures being performed that are
  unrelated to the reason for admission?

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Inpatient Sepsis vs. UTI

• Principal diagnosis of Sepsis (03.89)
• Role of blood cultures
• Coding Guidelines
• Role of Documentation
• Physician Education

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Inpatient Medical Back Problems

• DRG Medical Back Problems
• 1,2,3 day stay
• Questioning medical necessity
• Questioning pre-admit workup for admission to SNF

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Inpatient Coagulation Disorders

• DRG 397 Coagulopathy
• Questioning coagulation disorder due to
  circulating anticoagulants
• Coumadin is not a circulating anticoagulant
• PDX of 286x questioned in lieu of hemorrhaging DX
  and adverse effect E-code

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Inpatient Medical Necessity

• Examples Chest Pain, Back Pain, One day stay
  ICD, Stent, Angioplasty
• Denying admission per Interqual criteria
• Questioning Inpatient admission to perform
  outpatient procedure

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Inpatient Medical Necessity

• Surgical procedures not on the APC inpatient-only
  list treated as one day stay inpatients
• Pacemaker insertion, Cardiac procedures
• Applying todays standard of care to older claims

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Inpatient Other Issues

• Incorrect discharge status
• Cases with three day length of stay transferred
  to a SNF
• Cases readmitted within 72 hours

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Outpatient Target Areas

• Over-reporting units
• Payable drugs (e.g., Neulasta)
• Infusion and transfusion
• Physical Therapy units and modifier reporting
• Lab, Radiology, Surgeries
• Medically Unbelievable Edits

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Outpatient Target Areas

• Modifier Reporting
• Modifier 59, 76, 77
• RT/LT
• Modifier 25
• Paid LCD / NCD
• Misreporting of services
• E.g., wrong usage of a drug HCPCS
• Outliers

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Outpatient Heavy Hitters

• Neulasta (Pegfilgrastim) Units
• Change in reporting from 1 mg to 6 mg
• Units on Infusion/Transfusion
• 36430 and Infusion codes with unit 1
• These codes are encounter-specific
• Speech therapy (92507) units 1

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Taking Action The Hospital Community

• Developing an Effective RAC Response
• Phase 1 Risk Assessment Education
• Phase 2 RAC Team Infrastructure
• Phase 3 Organization/Association Collaboration

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Taking Action The Hospital Community

• Proactive Approach to known Industry issues
• Education
• Documentation, InterQual, Coding guidelines
• RAC Preparedness
• Opportunities for Economies of Scale
• Speaking for the Hospital Industry
• Communicating Amongst Yourselves
• There is strength in unity

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How to Prepare for RAC
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Taking Action The Hospital

• Developing an Effective RAC Response
• Phase 1 Risk Assessment Education
• Phase 2 RAC Team Infrastructure
• Phase 3 Claim Reviews Appeals

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As you balance your workload

• Its starting soon and its a very big deal
• October, 2008 - January, 2009
• 1 billion identified overpayment in the
  demonstration project

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PHASE 1 Risk Assessment Education

• Before the RAC enters your state
• Risk Assessment Analyze your inpatient and
  outpatient data for areas of known risk
• Education Learn all you can about what the RACs
  have been doing and finding in other states
• Take Action Correct claims and issues as
  warranted

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PHASE 1 Risk Assessment Education

• Look at your PEPPER data
• Data Mine known RAC issues .then disclose it!
• Look into known Charge Master/billing issues
• Chart audits of focused DRGs
• Documentation improvement
• Establish data tracking tool
• What has your FI or other 3rd party payers been
  looking at?

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Phase 2 RAC Team Infrastructure
Set up a team and establish a primary POC (point
of contact) and back-up

• Compliance Officer
• Department/Point of Service Supervisors
• HIM Coding
• CDM Coordinator

• Patient accounting / Billing
• Case Managers
• Medical Staff

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Phase 2 RAC Team Infrastructure

• Phone numbers, faxes, addresses
• Identify person responsible for specific issues
• e.g., HIM will review inpatient coding issues
• Utilization Management will review inpatient
  denials

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Phase 2 RAC Team Infrastructure

• Identify Staffing needs
• Develop your written policies procedures
• Update it often
• Share it
• Continue educating staff physicians about the
  RAC

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PHASE 3 Claim Reviews Appeals
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PHASE 3 Claim Reviews Appeals
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PHASE 3 Claim Reviews Appeals

• At the On-set of RAC Activity
• Manage RAC activity Implement a RAC claim
  management tool
• AHA proposing claim-level RAC tracking tool free
  of charge
• Database tools now available for efficient RAC
  tracking
• A Must to track, trend and monitor RAC impact
  and hospital performance
• RACTrac-compatible requirement!

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PHASE 3 Sample Tasks

• 1. Enter the claim into your hospital RAC
  tracking tool
• 2. What is the issue - pull the claim(s)
• 3. Qualify the issue
• - state assoc, internal resources, consultants
• 4. Internal review meeting w/RAC team (already
  in place)
• - HIM, Lab dept, pat accts, etc.
• 5. Hospital response to RAC - respect the
  deadlines
• 6. Hospital response internally
• - determine scope, risk assessment
• 7. Determination re appeal threshold - may
  evolve/moving target

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PHASE 3 Claim Reviews Appeals

• AHA RACTrac initiative
• Industry tracking needs from the demonstration
  project
• Need for transparency
• At the On-set of RAC Activity
• Respond Review and respond to all requests made
  by the RAC
• Analyze Continue to proactively review current
  claims and admissions against known areas of risk

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PHASE 3 Claim Reviews Appeals

• Follow-up and Follow-Through
• Monitor RAC Outcomes
• Educate Management and Staff on identified issues

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Leverage Technology

• Data Mining
• Quantify and Prioritize Risk
• Automate Review Processes
• Provide a vehicle and forum for communication

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Tips for Managing RAC

• Know your risk areas through regular auditing and
  monitoring activities
• Implement documentation improvement efforts
• Review ADR and CERT requests
• Resolve billing/charging issues

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Tips for Managing RAC

• Assign a Hospital point of contact ASAP
• Integrate RAC activity into existing roles,
  capacities
• Strengthen internal communication
• Establish appeal threshold

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Tips for Managing RAC

• Develop an Admissions Review Program
• If you have one make sure its capturing all
  admission streams
• Share your experiences within the Provider
  Community
• Use your Hospital Associations
• Strategize your appeals efforts
• Utilize outside auditors
• Appeal everything you should

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Final Thoughts

• RAC is here to stay its another permanent
  oversight program
• If you arent already, manage your Inpatient and
  Outpatient billing processes
• police yourself
• Costly in many ways
• Silver lining Underpayments surface!

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Questions?
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Contact Information

• Kathleen Christensen
• Phone [phone] x 411
• Email kchristensen_at_providercs.com

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