RAC is Here to Stay

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RAC is Here to Stay

• Are You Prepared?

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Improper Payments

• RAC may attempt to identify improper payments
  that result from any of the following
• Incorrect payment amounts
• Non-covered services
• Incorrectly coded services
• Duplicate services
• Medicare claims through the complex post payment
  review process where it is probable that a
  duplicate primary payment was made
• Medicare claims through the complex post payment
  review process where it is probable that a
  Medicare Secondary Payer situation has occurred

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• The RAC may NOT attempt to identify improper
  payments arising from any of the following
• Services provided under a program other than
  Medicare Fee-for-Service
• Cost report settlement process
• Evaluation and Management (EM) services that are
  incorrectly coded (CPT codes 99201-99499)
• Claims more than 1 year past the date of the
  initial determination (medical necessity reviews)
  or more than 3 years past the date of the initial
  determination (other than medical necessity
  reviews)
• Claims Identified with a Special Processing
  Number
• These are involved in a Medicare demonstration or
  have other special processing rules and are not
  subject to review by the RAC

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• No random selection of claims
• The RAC may not target a claim solely because it
  is a high dollar claim
• No prepayment review

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2 Types of RAC Audits

• Automated review RAC makes a determination
  without evaluating the medical record
• Excessive unit audits two or more identical
  surgical procedures for the same beneficiary on
  the same day
• Incorrect discharge status code hospital codes
  the beneficiary as going home however a second
  claim from another provider shows the
  beneficiary was actually transferred to another
  hospital
• Complex review RAC makes a determination after
  evaluating the medical record

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OVER PAYMENTS

• Most overpayments (85) were collected from
  inpatient hospital providers, 6 from inpatient
  rehabilitation facilities (IRFs), and 4 from
  outpatient hospital providers.
• Most overpayments occur when providers submit
  claims that do not comply with Medicares coding
  or medical necessity policies.

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OVER PAYMENTS
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Net of Appeals Cumulative Through 3/27/08, Claim
RACs Only
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(Net of Appeals) Cumulative Through 3/27/08,
Claim RACs Only
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Top Coding Issues

• Reporting excisional debridement (86.22) w/o
  adequate medical record documentation to meet the
  definition of excisional.
• DRGs designated as CC or MCC with only one
  secondary diagnosis.
• Correct coding of discharge status for post acute
  care transfer (discharge status codes)
• Incorrect selection of principal diagnosis
• Example respiratory failure 518.81 was listed as
  the principal diagnosis but the medical record
  indicates that sepsis 038-038.9 was the principal
  diagnosis
• Example hospital reported a principal diagnosis
  of 03.89 septicemia. Medical record shows
  diagnosis of urosepsis, not septicemia or sepsis
  blood cultures were negative

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Unit Coding

• grams vs. milligrams
• Multiple procedures on one day (e.g.,
  appendectomy, colonoscopy)
• blood transfusions billing 1 service per pint
  rather than 1 service per transfusion session
• speech/hearing therapy billing 1 service per 15
  minutes rather than 1 service per session
• Neulasta billing 1 service per mg when the
  definition of the code is 1 service per 6 mg vial

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Top Sources of RAC Initiated Overpayment
Collections

• Top Medical Necessity Targets
• Inpatient admissions for procedures that are that
  do not require the inpatient setting (eg.
  laparoscopy, cholecystectomy)
• One-day stays that do not qualify for admission
  (Observation or OP is appropriate)
• Chest pain MSDRG 313
• Back Pain MSDRG 551
• Three-day stays solely to qualify for SNF care
• Inpatient rehabilitation when the service is
  medically unnecessary
• (For example, following a single knee replacement)

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Tips on Preparing for RAC Audits and Risk
Reduction Strategies
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Preparing for the RAC

• Designate a multidisciplinary RAC Readiness Team
  and identify leadership
• Accounting
• Case Management
• Coding
• Compliance
• Health Information Management
• Leadership
• Legal
• Patient Financial Services
• Physician Liaison
• Risk Management
• Quality Management
• Utilization Review

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Preparing for the RAC Internally

• Review internal control systems
• Gatekeeping
• Audits (coding and financial)
• Perform data analysis
• High risk case types, PEPPER/CERT reports

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Understand the RAC - Scope of work

• medical records, coding issues, extension request
  deadlines, demonstration lessons, targets and
  trends, audit and appeals process

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Refine the Process and ID Resources

• Define the RAC Team Process Work
• Prioritize RAC requests by time remaining to
  respond, financial impact, issue trends
• Identify RAC targets and practices with high
  potential for denial
• Developing dashboard and defining metrics
• Evaluate external resources needed
• Legal, consultants/auditors, case management
  reengineering, HIM/coding, vendors

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Identify Information Systems Issues

• Evaluate your current data systems many
  software tools offer coding checks and alerts
  that are underutilized
• Adapt current coding and compliance software -
  automate prevention activities for high risk
  areas (i.e. automatic alerts for one day stays
  (excluding transfers, deaths, against medical
  advice)

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Communication is Critical

• Create central repository for all communication
  between facility and RAC
• Customize RAC correspondence address to avoid
  inadvertent, automatic denials
• Correct internal mail inefficiencies to prevent
  delays
• Avoid potential appearance of non-compliance with
  medical record requests RACS (60 days)
• No appeal rights after 45 days of records request
  date
• Develop effective RAC Team process communication

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RAC Work Team

• Review/Understand
• Included and excluded claims
• Look-back period
• New issue validation requirements
• Review types (automated and complex)
• Identify
• Review OIG, GAO highlighted targets, CERT,
  PEPPER, demonstration reports and RAC trends
• Assess financial risk
• Calculate necessary financial reserves based on
  internal audit and look-back period exposure

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Healthcare Information Management

• Develop efficient request for RAC records process
• Keep master file of each request for permanent
  records and potential appeals
• Submit entire record (no evidence entry after
  second level of appeal)
• Augment (not alteration) of record as needed
  (e.g., surgeon documentation of medical necessity
  of inpatient cardiac implants)

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Healthcare Information Management

• Report unreasonable requests and limit violations
  to CMS
• Evaluate and improve medical record protocols
• Copying, compilation, storage, retention
• RACs-Anticipate increased volume, recoup
  authorized copying fees from RAC
• Send medical records electronically or certified
  mail/return receipt

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Track RAC Compliance

• Establish tracking system all required
  information
• System data entry protocols and privilege
  (security, access control)

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Educate Educate Educate

• Community
• Organizational stakeholders and departments
  impacted by the RAC program (aspects of
  documentation and coding)
• Medical staff
• Concentrate on medical necessity documentation
• RAC program, Medicare coverage, coding and
  documentation requirements, facility impact and
  necessary process changes

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Documentation Specialists and Coding

• Engage documentation specialists on medical
  necessity issues
• Develop a coding education and improvement plan
  based on internal audit results and data system
  evaluation (e.g., correct coding, charge entry
  when more than one service is performed)
• Review admissions, billing and documentation
  policies and procedures

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Care Management

• 7 day per week case management
• Preadmission review
• Effective gate keeping integration
• Concurrent review

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Quality/Performance Improvement

• Establish a permanent performance improvement
  program for audits, documentation and coding
• Address over and underpayment issues and
  establish systemic solutions based on assessment
  and internal audits results
• Perform biannual audits
• Monitor process improvement, assess new areas of
  RAC interest and potential exposure

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Risk Management

• RACS are part of ERM, total cost of financial
  risk to organization
• Crisis intervention plan with legal counsel and
  leadership in the event of a significant adverse
  finding

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Appealing a RAC Overpayment Determination
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Steps in the Process

• Initial RAC communication
• Receipt of RAC requests
• Responding to RAC requests
• Notification of outcome
• Appeals process

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Options in Responding to RAC Demand Letters

• Do nothing
• Refund overpayment
• Request ERP
• Appeal

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Decision to Appeal Will Depend Upon Certain
Factors

• Dollar amount of the overpayment
• Substantive nature of the claim
• Costs of appealing

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RAC Appeals Involve Overlapping Rules

• Interest
• Recoupment
• Extended Repayment Plans (ERPs)
• Medicare Administrative Appeals
• Five Stages of the Medicare Administrative
  Appeals Process
• Redetermination
• Reconsideration
• Administrative Law Judge
• Medicare Appeals Council
• Federal District Court

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RAC Appeals Timeline
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Demonstration Project RAC Appeal Success Rates

• 22.5 of RAC claims were appealed
• 33.4 of those claims appealed were overturned
• 7.6 of RAC claims overall successfully
  overturned on appeal

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Practical Tips for Managing Appeals
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• Include deadlines for interest, recoupment, ERPs,
  and appeals in your processes and RAC tracking
  database.
• Attempt to determine in advance some reasonable
  thresholds and parameters for what claims should
  be appealed
• Attempt to determine in advance some reasonable
  thresholds for applying for an ERP and have
  documentation required to apply for ERPs
• Prepare templates for filing redetermination and
  reconsideration stages of appeal
• Look, listen, learn, and adapt

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Opening the Door to Regulatory Scrutiny
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RAC Data Mining Risk

• The RAC Data Warehouse will be accessible to
  multiple auditors
• Quality Improvement Organizations (QIO)
• Program Safeguard Contractors (PSC)
• Medicare Integrity Program Contractors (MIPC)
• Medicaid Integrity Contractors (MIC)
• Medicaid Fraud Control Units (MFCU)
• Office of the Inspector General (OIG)
• Federal Bureau of Investigation (FBI)
• Department of Justice (DOJ)
• Private managed care and health insurers

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Other Potential Risks

• Reputational harm
• Exclusion from participation in federal and state
  health care programs
• OIG Corporate Integrity Agreements
• Claims for recoupment from private payors
• Civil and criminal penalties for health care
  fraud

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The Big Picture
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Check List

• Identify what risks exist in your organization
• Improve case management and gate-keeping
  functions
• Improve clinical documentation processes now
• Develop a plan and execute the plan
• Communicate with medical staff, senior leadership
  and governing board

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• Assemble your response team
• Select healthcare legal counsel for
  representation in RAC appeals
• Assign roles and responsibilities
• Develop tracking logs
• Educate leadership, physicians and board
• Review charge capture process, UM plan and annual
  UM plan evaluation

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RAC and Insurance Coverage

• Directors Officers Liability
• Fines and Penalties
• Data Security

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Call to schedule a 50 chart baseline audit today!

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