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Is Your Agency Prepared for a RAC Audit? Susan Carmichael, MS, RN, CHCQM, COS-C, FAIHQ Executive Vice President, Quality and Standards Chief Compliance.

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Presentation on theme: "Is Your Agency Prepared for a RAC Audit? Susan Carmichael, MS, RN, CHCQM, COS-C, FAIHQ Executive Vice President, Quality and Standards Chief Compliance."— Presentation transcript:

1 Is Your Agency Prepared for a RAC Audit? Susan Carmichael, MS, RN, CHCQM, COS-C, FAIHQ Executive Vice President, Quality and Standards Chief Compliance Officer Select Data History, Expectations, and Strategies to Assist The Home Health Leader to Prepare for the RAC Attack

2 Learning Objectives Discuss what we might learn from the RAC history Illustrate the purpose of the RAC audits Outline the appeal process Identify potential RAC targets Suggest preventive strategies Suggest strategies to help prepare for RAC audits

3 What is a RAC: Recovery Audit Contractor “The RACs detect and correct past improper payments so that CMS and carriers, fiscal intermediaries (FI), and Medicare Administrative Contractors (MAC) can implement actions that will prevent future improper payments” (NGS, NAHC Convention, LA, 10/2009)

4 RAC Program The RAC program has been mandated by: – Section 302 of the Tax Relief and Health Care Act of 2006 and – Overseen by CMS and – Statute approved contingency-based payments to RACs The RAC rationale is to protect the Medicare trust fund as improper payments of the past are seen as exhausting the fund

5 3 year Demonstration Project (March/05 – March/08) Required by the Medicare Modernization Act, Section 306 Found over $1.3 Billion dollars “improper payments” in 6 states $900+ million in overpayments (96%) $ 32+ million in underpayments Demonstration states: Florida, California, Massachusetts, South Carolina, Arizona, and New York

6 The drive behind the RAC CMS processes $2 Billion in claims for 1 Billion providers Baby Boomer have arrived RACs have been cost effective in demonstration: – $0.20/$1.00 recovered – RACs recovered on 96% of all claims audited = $1.3 Billion

7 RAC Jurisdictions

8 Who are the RACs? RAC A Website Region A: Diversified Collection Services info@dcsrac.com1‐866‐201‐0580 Eugene Winter, MD RAC B Website Region B: CGI 1‐877‐316‐7222 Percival Seaward, MD, CMSA RAC C Website Region C: Connolly, Inc. 1‐866‐360‐2507 James Lee, DO, R.Ph RAC D Website Region D: HealthDataInsights Part A: 866‐590‐5598 Part B: 866‐376‐2319 Ellen R. Evans, MD

9 What does a RAC do? RAC review process RACs review claims on a post-payment basis RACs use same policies as carriers, FIs, and MACs: National Coverage Determinations (NDC) and Local Coverage Determinations (LDC), and CMS Manuals RACs are required to employ a staff consisting of nurses, therapists, certified coders, and a physician medical director (CMD). Must provide credentials of reviewers upon request. Two types of review: – Automated (no medical record needed) – Complex (medical record required)

10 RAC Reviews There will be two types of RAC reviews; automatic reviews and complex reviews. Each type of review is meant to have a different focus. The automatic reviews require no person to review the records because the audits are driven by a computer generated algorithm with a focus on the easier incorrect claims, where an obvious overpayment exists; e.g. duplicate claim. The complex reviews are more time consuming requiring the RAC team of clinicians and coders to actually review the medical records of the audited claims. A record request will be sent to an agency. The focus of this audit is more indepth, expected to involve areas of medical necessity, therapy, and coding errors,

11 RAC Review Process How many records will be open to review? – Look back period limited to three years – RACs will not be able to review claims prior to 10/1/2007 – RACs able to look back three years from date claim was paid – Home Health Care: 1% of average monthly Medicare services every 45 days, maximum 200 claims – Hospice: 10% of average monthly claims every 45 days with a maximum of 200

12 What does a RAC do? The review process RACs are required to employ a staff consisting of nurses, therapists, certified coders, and a physician medical director (CMD). Must provide credentials of reviewers upon request. RACs must return the contingency fee if the provider prevails at any step of the appeal process CMS has hired a program validation contractor (located in Erie, PA) to produce accuracy scores for each RAC RACs can apply extrapolation to collect overpayments

13 Extrapolation? RAC math can exacerbate damage… Extrapolation of the error rate means applying a statistical sampling methodology retroactively and prospectively, assuming that existing trend will continue or has occurred in the past. In this case, a denial rate will be applied. Source: Beacon Health, February 5, 2010

14 5 LEVELS OF APPEAL The Appeal Process

15 Five levels in the RAC Appeal Process: Medicare offers a five level appeal process and the RAC process is no different. Redetermination by an FI, carrier, or MAC Reconsideration by a QIC Hearing by an Administrative Law Judge (ALJ) Review by the Medicare Appeals Council Judicial Review

16 Level 1 Redetermination 42 CFR 405.940-58 Level 1: Redetermination is an examination of a claim by a FI or MAC using different personnel than those who made the initial determination. The appeal must be filed within 120 days from the date of receipt of the initial claim determination. To make the request, download form CMS - 20027, available at pofPage Include any supporting documentation that would aid in the redetermination decision. There is no minimum monetary threshold and expect a decision within 60 days. (Contractor may extend timeframe by 14 days)

17 Level 2 Reconsideration 42 CFR 405.960-78 Level 2: Reconsideration can be filed if there is dissatisfaction with the findings of the redetermination. In requesting a reconsideration, which will be completed by a QIC, follow all instructions on the Medicare Redetermination Notice received. Clearly explain why there is disagreement and include any support documentation for review. If evidence is not included at this appeal stage, it may be excluded from all further appeals. Must file within 180 calendar days (or 60 days to avoid recoupment) There is no minimum monetary threshold and a decision is usually completed within 60 days of the reconsideration request. If the QIC cannot render a decision within that timeframe, a notice will be sent stating the right to elevate the case to an ALJ.

18 Reconsideration: reviews involving Medical Necessity Medical necessity reviews must be performed “by a panel of physicians or other health care professionals, and be based on clinical experience, the patient’s medical records, and medical, technical, and scientific evidence of record to the extent applicable” 42 CFR 405.908 (a)

19 Reconsideration Binding Authority The QIC is bound by National Coverage Decisions, CMS rulings, and applicable laws and regulations The QIC is not bound by Local Coverage Decisions, Local Medical Review Policies, or CMS program guidance such as program manuals. (The QIC is not bound to follow coverage decisions of the Intermediary regarding Hospice)

20 Level 3: ALJ Hearing 42 CFR 405.1000-64 Level 3: Administrative Law Judge Hearing may be requested within 60 days of receipt of the reconsideration provided the dollars in dispute exceed $130. For post-payment audit cases, the intermediary can begin to withhold after the QIC issues its reconsideration decision. Follow the directions closely for this appeal, such as notifying all parties of the QIO reconsideration and so note it on the written request for the ALJ. These hearings may be held by telephone or video-teleconference or a face to face hearing may be requested. That decision is at the discretion of the ALJ. CMS, after notifying the ALJ, of their intent, may attend the hearing. A decision is usually rendered within 90 days of the hearing request. 42 CFR 405. 1016

21 ALJ Hearing Discovery Remember that discovery is only permitted when CMS elects to participate in the hearing as a party Providers, under 42 CFR 405.1037, can request a copy of QIC notes and the ALJ hearing file CMS (or its contractors) may participate in an ALJ hearing without joining as a party (42 CFR 405.1010

22 Level 4 Appeals Council Review 42 CFR 405.1100-40 Level 4: Appeals Council Review if there is dissatisfaction with the results of the ALJ hearing. The request for this level of appeal must be made within 60 days of receipt of the ALJ decision and must clearly list the issues being contested. The ALJ decision letter will identify the exact procedures to follow when filing the request to the Appeals Council. There is no specific monetary requirement required for this step and the Council will usually issue a decision within 90 days. If the Council fails to act within 90 days, the appellant may request that the appeal, other than an ALJ dismissal, be escalated to federal district court. 42 CFR 405.1132

23 Level 5 Judicial Review 42 CFR 405.1136 Level 5: Judicial Review in the US District Court would require a disputed claim in excess of $1260.00. A request for this level of appeal must occur within 60 days of receipt of the decision from the Appeals Council.

24 Appeal Timeframes /Downloads/AppealsprocessflowchartAB.pdf.

25 Appeals Agency needs to evaluate the financial net gain of appeal Agency needs to evaluate future potential ramifications First three steps of the appeal usually most viable Rebuttal should occur during first 15 days after demand letter is issued Rebuttal is best when new documentation is available but not usually effective for medical necessity denials

26 Appeal Strategies Treating Physician Rule: CMS Ruling 93-1: With respect to Part A claims states that treating physician opinion is evidence, but not presumptive, so there remains a need to make a case specific argument why the physician’s opinion is the best evidence. (No similar rulings seen with respect to Parts B, C, and D). Providers should consider the argument that the opinion of the treating physician is the best evidence.

27 Appeal Strategies: Consider a Challenge to the Statistics The Guidelines for conducting statistical extrapolations are set forth in the Medicare Program Integrity Manual (CMS Publication 100-08, Chapter 3, 3.10.1 through

28 Appeal Strategies Arguing the Merits Preparation of Rationales Impact of NCDs and LCDs Expert Involvement Reviewer Credential Issues: The RAC teams must have clinicians (not necessarily home health RNs) and credentialed coders (not necessarily home health coders)

29 Appeals involving Position Papers Legal analysis of the denial Medical expert involvement Do you expect evidenced-based arguments in highlighted portions of the record.

30 What is different? Though RAC appeals process is same as other CMS appeals, RACs will offer an opportunity for the provider to discuss the improper payment determination. This does not alter timeline. Issues reviewed by the RAC will be approved by CMS prior to widespread review Approved issues will be posted to a RAC Website before widespread review

31 Responding to a RAC Request Notify your designated RAC Respond to the letter of request: 45 days Submit clinical record copies: via photocopies, CDs, or DVD Track the records submitted on the RAC website or phone Can request reimbursement for copies RAC response within 60 days

32 Suggestions for RAC Information Submission Have your RAC contact information nearby and already have reviewed the RAC site Do not wait the 45 days to submit the requested clinical records. Assemble the RAC Response Team Start to review the record(s) and the issue(s) under focus. Duplicate the information submitted Maintain the RAC Log and track info/records submitted

33 The Collection Process Same as for carrier, FI, and MAC identified overpayments Carriers, Fis, and MACs issue Remittance Advice -Remark Code N432: Adjustment based on Recovery Audit” -Carrier, FI, and MAC recoups by offset unless provider has submitted a check or a valid appeal



36 We Can Learn from History Know where previous improper payments were found: -In 1995 -1999 Operation Restore Trust recovered $524 million in fines, recoveries, and audit disallowances, and settlements -Achieved a 45% drop in improper payments -Is credited with preventing $11 billion in inappropriate claims paid

37 We Can Learn from History and ORT ORT Findings included: Homebound criteria not met Services without Physician orders Lack of adequate documentation for care Inappropriate visits and unnecessary services

38 We Can Learn from History and ORT 140 Physicians signed POCs for claims not allowed: -65% physicians relied on agency to prepare POC -60% of physicians denied knowledge of homebound requirement for home health care -8% admitted no knowledge of patient condition

39 Focus on High Risk Areas Agencies with high volume of claims Agencies with history of survey and claim problems Agencies with outliers, LUPAs, and exceeding therapy thresholds Agencies with coding inconsistencies and errors

40 Again: RAC Targets Services are medically unnecessary or there is delayed implementation ( Focus: Therapy ) Patients are not Homebound Services are incorrectly coded and sequenced Failure to provide claim supportive documentation Duplicate claims submitted Medicare secondary pay or improper payments Lack of order centricity

41 Preparing for the RAC Attack 1. Establish a RAC Response Team 2. Choose a RAC Team leader 3. Review ORT and CERT findings of the past 4. Study problem areas/vulnerabilities posted on both the CMS and RAC websites 5. Study NCDs, LCDs, and Medicare Benefit Policy Manual (CMS Publication 100-2, Chapter 7)

42 Preparing for the RAC Attack 6. Monitor Physician exclusions 7. Analyze agency practices in the high risk areas; look for vulnerability 8. Calculate and track case mix weights 9. Analyze QA findings 10. Educate and reeducate personnel

43 Preparing for the RAC Attack 11. Look at HR practices: -Hiring and orientation -Make certain qualifications of personnel meet all federal rules and state licensing or certification requirements - Knowledge and support of the Corporate Compliance Plan with emphasis on no tolerance for fraudulent behavior -Certifications and Continuing Education -Personnel knowledge of home health requirements -Annual Evaluations and clinical competency reviews

44 Preparing for the RAC Attack 12. Look at evidence-based practices utilized at agency Look at Best-Practices used 13. Look at QA of outcomes based on the above especially admissions and medical necessity Comments by physicians re POC Admissions/recertifications and Medical Necessity Review RFA>discipline specific careplan> POC> clinical notes> physician orders> outcomes

45 Preparing for the RAC Attack and Medical Necessity Focus on reasonable and necessary care by looking at current illness Focus on ICD-9 Coding and sequencing with adequacy of substantiation for every code Look at needs of patient and clinician interventions Look at the patient environment and support services Look at med profile: new, changed, review

46 Preparing for RAC Attack and Medical Necessity Clearly document patient knowledge of disease Clearly document patient teaching/learning Identify involvement of caregivers/family/friends Verify goals are clear, measureable, and worthy of an episodic payment

47 Preparing for RAC Attack and Medical Necessity Full or partial denial because the clinical documentation: Did not support the medical necessity of the skilled services billed Did not demonstrate a reasonable potential for change (improvement) in the medical condition or Sufficient time had been allowed for teaching or observation of response to treatment in prior episodes of care.

48 Preparing for a RAC Attack: Therapy and Your Diagnoses 14. Therapy services: How many therapy visits are you averaging per episode? Percentage of patients Low Utilization episodes – 6, 7, 8 visits? (how frequently)  Of the patients who receive therapy, what is the distribution (%) across the ranges?  How does your agency compare with your peers regionally or nationally?  Do response levels on functional M items correlate with therapy referrals? High-Low levels of impairment?

49 Take a Look at Therapy continued… Do therapy treatment plans and progress notes have: Clear functional goal statements? Any recerts with no changes? Document progress toward goals objectively?  How is care coordinated among therapists? Among all disciplines?  How can you support “reasonableness and medical necessity?” What is the patient treatment: diagnoses? Restoration/maintenance of function affected by illness? Frequency and duration of services consistent with home care client’s: medical history, disease, prior to end of episode level of function, and risk identification.

50 Take a Look at Therapy continued… Is therapy consistent with the nature and severity of the condition? Any examples of PT discharge as soon as thresholds met? Therapy services must be provided, expecting that the condition of the patient will improve in a reasonable period of time. Documentation of medical necessity should be documented through evaluation, treatment plan, and progress notes. Has your agency identified high risk diagnosis, number of visits, or number of episodes?

51 Preparing for a RAC Attack: ICD-9 Coding 15. Coding services: In the demonstration project over 1/3 or 33% of findings were linked to coding Look at Primary Diagnosis and documentation support/congruence with OASIS integrated assessment. Do the same for co-morbidities.

52 Coding Specificity and Co-morbidities The following are diagnoses/co-morbidites that should be included and coded on a plan of care of a patient with these DX: DM CAD COPD CHF PVD Blindness HTN Upper and lower limb amputation status Chronic diseases such as Parkinsons, MS, Lupus Hx of neoplasm if care is directed toward a current neoplasm Source: The Coding Clinic

53 Preparing for the RAC Attack and Dependent Services 16. Look at Dependent Services; home health aide and medical social worker services These services can be denied if there is no identified medical necessity These services are automatically denied if the qualifying service is denied

54 Preparing for the RAC Attack Note: HHA services must have frequency and duration approved by physician Aide services cannot be paid simultaneously for both Medicare and Medicaid RN assigns all tasks on aide assignment as “PRN” only Note: MSW denials include: Having MSW apply for patient Medicaid MSW services to families/CG instead of patient

55 Preparing for a RAC Attack: Billing 17. Conduct internal billing audits: Audit when RAPS are dropped/compliance Look for duplicate bills Look for order centricity Look for 1 visit bills Look at outlier payments; insulin injection payments Choose Medicare rules and verify compliance

56 RAC ATTACK The quality of your documentation will dictate reimbursement. The quality of your documentation determines if you will survive an audit. When all is said and done …….. It is not the revenue you generate that is as important, as the revenue you will keep.

57 CMS Example of CMS website and RAC announcements……. Be a frequent visitor to the CMS website and also the RAC website particular to your region


59 Who are the RACs? Region A- Diversified Collection Services, Inc (DCS) 2815 Southwest Blvd. San Angelo, Tx 76904 RAC website: Phone: 866.201.0580 Email: Medical Director: Richard Pozan, MD

60 Who are the RACs? Region B- CGI Technologies and Solutions (CGI) 1001 Lakeside Ave. Suite 800 Cleveland, OH 44114 Phone: 877.316.7222 Email: (customer support) Percival Seward, MD, CMSA (FCS), FACS 216.416.6352

61 Who are the RACs? Region C- Connolly Healthcare The Navy Yard Corporate Center One Crescent Drive, Suite 300-A Philadelphia, PA 19112 Phone: 866.360.2507 Email: James Lee, DO, R.Ph 203.529.2454

62 Who are the RACs? Region D- Health Data Insights 7501 Trinity Park Las Vegas, NV 89128 Phone: 888.700.3282 Email: (customer support) Ellen R. Evans, MD 702.243.8730 ext 1208

63 Thank you Susan Carmichael MS, RN, CHCQM, COS-C EVP, CCO, Select Data (714) 524-2500x235

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