1. Medicare Recovery Audit Contractors (RACs) Preparing for RAC Audits

2. Presentation Outline I. Background I. Background A. What are the RACs? B. When are the RACs coming to Georgia? C. RAC Focus Areas C. RAC Focus Areas II. Case Studies II. Case Studies III. How to Prepare for RACs III. How to Prepare for RACs IV. GHA Initiatives to Assist Member Hospitals with RACs IV. GHA Initiatives to Assist Member Hospitals with RACs

3. What are RACs? Medicare Modernization Act of 2003 created a 3-year demonstration project in NY, FL, CA Medicare Modernization Act of 2003 created a 3-year demonstration project in NY, FL, CA Recover Medicare overpayments and identify underpayments—payment mistakes Recover Medicare overpayments and identify underpayments—payment mistakes RACs are paid on a contingency fee basis RACs are paid on a contingency fee basis During FY 2007, RACs identified and corrected $371 Million dollars of Medicare improper payments in the demonstration states During FY 2007, RACs identified and corrected $371 Million dollars of Medicare improper payments in the demonstration states Over 96% were overpayments Over 96% were overpayments

4. Why Congress Believes RACs are Necessary… The Improper Medicare FFS Payments Report for November 2007 estimates that 3.9% of the Medicare dollars paid did not comply with one or more Medicare coverage, coding, billing, or payment rules. The Improper Medicare FFS Payments Report for November 2007 estimates that 3.9% of the Medicare dollars paid did not comply with one or more Medicare coverage, coding, billing, or payment rules. This equates to $10.8 billion in Medicare FFS overpayments and underpayments annually. This equates to $10.8 billion in Medicare FFS overpayments and underpayments annually.

5. Overpayments by Error Type in Demonstration Project 42% Incorrectly coded 42% Incorrectly coded 32% Medically unnecessary service or setting 32% Medically unnecessary service or setting 9% No/Insufficient Documentation 9% No/Insufficient Documentation 17% Other 17% Other Source: CMS RAC Status Document FY 2007, February 2008

6. Average Overpayment Amounts FY 2007 Per Claim Per Provider Inpatient Hospital/SNF $10,618$549,447 Outpatient Hospital $273$38,136 Physician$160$834 DME$85$1,511 Total$11,136$589,928 Source: CMS RAC Status Document FY 2007, February 2008

7. Permanent RAC Program CMS will contract with a permanent regional RAC in 4 regions (the RAC for Georgia is Connolly Consulting) CMS will contract with a permanent regional RAC in 4 regions (the RAC for Georgia is Connolly Consulting) RACS can review claims for: RACS can review claims for: Inpatient hospital Inpatient hospital Outpatient hospital Outpatient hospital Skilled nursing facilities Skilled nursing facilities Physician, ambulance, and lab services Physician, ambulance, and lab services Durable medical equipment Durable medical equipment

9. Permanent RAC Program RACs cannot look for any improper payments on claims paid before October 1, 2007 RACs cannot look for any improper payments on claims paid before October 1, 2007 RACs can review claims during the current fiscal year RACs can review claims during the current fiscal year Each RAC must use certified coders Each RAC must use certified coders RACs must pay back contingency fee if their decision is reversed on any level appeal RACs must pay back contingency fee if their decision is reversed on any level appeal

10. Types of RAC Reviews Automated Review Automated Review Proprietary software algorithms used to identify clear errors that resulted in improper payments Proprietary software algorithms used to identify clear errors that resulted in improper payments Complex Review Complex Review Medical records requested to further review the claim Medical records requested to further review the claim RACs must use Medicare coverage, coding or billing policies in effect at the time when the claim was adjudicated

11. RAC Focus Areas in Demonstration States Excisional Debridement Excisional Debridement Back Pain Back Pain Outpatient vs. Inpatient Surgeries Outpatient vs. Inpatient Surgeries Transfer Patients Transfer Patients Inpatient Rehab, especially knee and hip replacements Inpatient Rehab, especially knee and hip replacements Joint replacement patients and patients in inpatient rehabilitation facilities that should have been treated in a lower intensity setting such as a SNF Joint replacement patients and patients in inpatient rehabilitation facilities that should have been treated in a lower intensity setting such as a SNF Wrong diagnosis or principal procedure codes Wrong diagnosis or principal procedure codes

12. Outpatient Hospital Areas of RAC Focus Colonoscopy Colonoscopy Speech Language Pathology Services Speech Language Pathology Services Infusion Services Infusion Services Neulasta (boosts white blood cell counts to reduce chance of infection in patients undergoing chemotherapy) Neulasta (boosts white blood cell counts to reduce chance of infection in patients undergoing chemotherapy)

13. Short Stay Claims Validate whether the admissions met Medicare’s medical necessity criteria Validate whether the admissions met Medicare’s medical necessity criteria One-day stays by chest pain patients were targeted by RACs in demonstration states One-day stays by chest pain patients were targeted by RACs in demonstration states Many three-day stays were denied because they were inappropriately extended in order to qualify for Medicare Part A coverage of post-acute skilled nursing care Many three-day stays were denied because they were inappropriately extended in order to qualify for Medicare Part A coverage of post-acute skilled nursing care

14. Some Case Examples from the Demonstration States (Note: These slides are optional depending on how the CEO wants to present this information to the board members) (Note: These slides are optional depending on how the CEO wants to present this information to the board members)

15. Excisional Debridements Hospital coder assigned a procedure code of 86.22 (excisional debridement of wound, infection, or burn) Hospital coder assigned a procedure code of 86.22 (excisional debridement of wound, infection, or burn) In the medical record, the physician writes “debridement was performed” In the medical record, the physician writes “debridement was performed”

16. Excisional Debridements Coding Clinic 1991 Q3 states “unless the attending physician documents in the medical record that an excisional debridement was performed (definite cutting away of tissue, not the minor scissors removal of loose fragments), debridement of the skin that does not meet the criteria noted above or is described in the medical record as debridement and no other information is available should be coded as 82.26 (ligation of dermal appendage).” Coding Clinic 1991 Q3 states “unless the attending physician documents in the medical record that an excisional debridement was performed (definite cutting away of tissue, not the minor scissors removal of loose fragments), debridement of the skin that does not meet the criteria noted above or is described in the medical record as debridement and no other information is available should be coded as 82.26 (ligation of dermal appendage).”

17. Excisional Debridements The RAC determines that the claim was incorrectly coded and issues repayment request letter for the difference between the payment amount for the incorrectly coded procedure and the payment amount for the correctly coded procedure. The RAC determines that the claim was incorrectly coded and issues repayment request letter for the difference between the payment amount for the incorrectly coded procedure and the payment amount for the correctly coded procedure.

18. Wrong Principal Diagnosis Principal diagnosis on claim did not match the principal diagnosis in the medical record Principal diagnosis on claim did not match the principal diagnosis in the medical record Example: Respiratory failure (code 518.81) was listed as the principal diagnosis but the medical record indicates that sepsis (code 038-038.9) was the principal diagnosis Example: Respiratory failure (code 518.81) was listed as the principal diagnosis but the medical record indicates that sepsis (code 038-038.9) was the principal diagnosis

19. Wrong Principal Diagnosis The RAC issued overpayment request letter for the difference between the amount for the incorrectly coded services and the amount for the correctly coded services The RAC issued overpayment request letter for the difference between the amount for the incorrectly coded services and the amount for the correctly coded services Most common DRGs with this problem: Most common DRGs with this problem: DRG 475 Respiratory System Diagnoses DRG 475 Respiratory System Diagnoses DRG 468 Extensive OR Procedure Unrelated to Principal Diagnosis DRG 468 Extensive OR Procedure Unrelated to Principal Diagnosis

20. Wrong Diagnosis Code Hospital reported a principal diagnosis of 03.89 (septicemia) Hospital reported a principal diagnosis of 03.89 (septicemia) Medical record shows diagnosis of urosepsis, not septicemia or sepsis; Blood cultures were negative Medical record shows diagnosis of urosepsis, not septicemia or sepsis; Blood cultures were negative Did not meet the coding guidelines for “septicemia”. Urinary tract infection causes the claim to group to a lower payment DRG Did not meet the coding guidelines for “septicemia”. Urinary tract infection causes the claim to group to a lower payment DRG

21. Wrong Diagnosis Code RAC issued a repayment request letter for the difference between the payment amount for the incorrectly coded procedure and the correctly coded procedure RAC issued a repayment request letter for the difference between the payment amount for the incorrectly coded procedure and the correctly coded procedure

22. Colonoscopy The hospital billed for multiple colonoscopies for the same beneficiary the same day The hospital billed for multiple colonoscopies for the same beneficiary the same day Beneficiaries never need more than one colonoscopy per day. The excessive services are not medically necessary. Beneficiaries never need more than one colonoscopy per day. The excessive services are not medically necessary. The RAC issued overpayment request letters for the difference between the billed number of services and 1. The RAC issued overpayment request letters for the difference between the billed number of services and 1.

23. Outpatient Hospital Speech Therapy The outpatient hospital billed for each 15 minutes of speech therapy The outpatient hospital billed for each 15 minutes of speech therapy The code definition specifies that the code is per session, not per 15 minutes The code definition specifies that the code is per session, not per 15 minutes The units billed exceeded the approved number of sessions per day. The excessive services billed are medically unnecessary The units billed exceeded the approved number of sessions per day. The excessive services billed are medically unnecessary RAC issued overpayment request letters RAC issued overpayment request letters

24. Coping with the RACs Comply with RAC medical record requests. If you don’t submit them on time, the RAC automatically classifies the claim as an overpayment and makes a recovery. Comply with RAC medical record requests. If you don’t submit them on time, the RAC automatically classifies the claim as an overpayment and makes a recovery. Develop an internal tracking system for medical records requested for review by the RAC Develop an internal tracking system for medical records requested for review by the RAC

25. Review Your PEPPER Reports Program for Evaluating Payment Patterns Report (PEPPER) Program for Evaluating Payment Patterns Report (PEPPER) Formerly Prepared by QIO, then Support QIO- no one knows if they will continue Formerly Prepared by QIO, then Support QIO- no one knows if they will continue Identifies claims patterns that are outliers relative to other hospitals in the state Identifies claims patterns that are outliers relative to other hospitals in the state “Top 20” list of DRGs that are prone to certain billing areas “Top 20” list of DRGs that are prone to certain billing areas Other problem areas which vary by state Other problem areas which vary by state

26. Hospital Next Steps Look at potential areas of risk Look at potential areas of risk Establish single point of contact for RAC Establish single point of contact for RAC Establish RAC committee—include key hospital stakeholders (finance, UR, Case Management, compliance, legal, medical records, etc.) Establish RAC committee—include key hospital stakeholders (finance, UR, Case Management, compliance, legal, medical records, etc.) Review records before sending to RAC Review records before sending to RAC Support your claim Support your claim Understand the parameters Understand the parameters For Providers For Providers For the RAC For the RAC

27. Hospital Next Steps Plan to participate in the AHA’s RACTrac to report your hospitals experience with the RAC Plan to participate in the AHA’s RACTrac to report your hospitals experience with the RAC www.AHARACTrac.org www.AHARACTrac.org www.AHARACTrac.org Data will provide both the AHA and GHA the data they need to advocate on behalf of the hospitals and to identify trends in reasons for denials Data will provide both the AHA and GHA the data they need to advocate on behalf of the hospitals and to identify trends in reasons for denials Implement a system for charging RACs for copying costs of medical records (.12/page) Implement a system for charging RACs for copying costs of medical records (.12/page)

28. GHA Next Steps Establish RAC Task Force Establish RAC Task Force Establish relationship with RAC—the RAC for Georgia will be Connolly Consulting Establish relationship with RAC—the RAC for Georgia will be Connolly Consulting Facilitate information exchange between CMS, RAC, and hospitals Facilitate information exchange between CMS, RAC, and hospitals Monitor RAC activities with Georgia providers Monitor RAC activities with Georgia providers Georgia is scheduled to begin RAC Activity August 1, 2009 or later Georgia is scheduled to begin RAC Activity August 1, 2009 or later

29. GHA RAC Task Force A multi-disciplinary cross-section of GHA members including CEOs, CFOs, legal counsel, compliance officers, case/utilization managers, medical records, and others A multi-disciplinary cross-section of GHA members including CEOs, CFOs, legal counsel, compliance officers, case/utilization managers, medical records, and others Task Force will provide guidance and feedback to GHA as we develop strategies and tools to assist members in dealing with RACs Task Force will provide guidance and feedback to GHA as we develop strategies and tools to assist members in dealing with RACs

30. Questions or Comments? Feel Free to Contact GHA Staff for assistance Feel Free to Contact GHA Staff for assistance Robert E. Bolden—rbolden@gha.org, (770) 249-4505 Robert E. Bolden—rbolden@gha.org, (770) 249-4505Bolden—rbolden@gha.org Liz Schoen, lschoen@gha.org, (770) 249-4564 Liz Schoen, lschoen@gha.org, (770) 249-4564lschoen@gha.org www.gha.org www.gha.org www.gha.org