1. Copyright © 2010. Balch & Bingham LLP. All rights reserved MSHIMA Annual Convention June 21, 2011 Medicaid RAC and the New Medicaid Audits Presented by Genie Stark Thomas, Esquire

2. Copyright © 2010. Balch & Bingham LLP. All rights reserved 2 Today’s Agenda I.Medicare Audit Landscape II.New Initiatives III.Medicaid RAC IV.Other Medicaid Activity Medi-Medi, MIC and MFCU

3. Copyright © 2010. Balch & Bingham LLP. All rights reserved 3 Medicare Audit Landscape

4. Copyright © 2010. Balch & Bingham LLP. All rights reserved 4 OIG Semi-Annual Report  OIG announced June 1, 2011: $3.4B in expected recoveries related to investigation, audits and other reviews.  Recoveries include approximately $222M from audits, $3.2B from criminal and civil actions.  OIG excluded 833 individuals and entities from participation.

5. Copyright © 2010. Balch & Bingham LLP. All rights reserved 5 AHA’s RACTrac Report – May 20, 2011  84% of participating hospitals reporting RAC activity in 1 st quarter 2011.  Lack of medical necessity is top denial reason.  The majority of these were for 1-day stays where care was provided in the “wrong setting”.  Denials for straight coding errors declined.

6. Copyright © 2010. Balch & Bingham LLP. All rights reserved 6 AHA RACTrac  Top Medical Necessity denials:  MS-DRG 312 – syncope and collapse – 16%  MS-DRG 313 – chest pain – 8%  MS-DRG 69 – transient eschemia – 6%  MS-DRG 249 – percutaneous CV procedure with non- drug eluting stent without MCC - 5%  MS-DRG 192 – COPD without CC/MCC (5%)

7. Copyright © 2010. Balch & Bingham LLP. All rights reserved 7 Appeals and Success Rates  AHA added category for denials reversed during discussion. 39% engaged in discussion, but 56% did not have reversals.  Claims with appeals: 71% were overturned in favor of the provider. 60% are still in the appeals process.

8. Copyright © 2010. Balch & Bingham LLP. All rights reserved 8 Administrative Burden  75% of hospitals report that RAC impacted the organization this quarter.  49% report increased administrative costs.  52% report problems with reconciling RAC recoupments and untimely RAC correspondence.  Training and education, tracking software, new internal task force – all are reported as administrative burdens.

9. Copyright © 2010. Balch & Bingham LLP. All rights reserved 9 Learning from RAC  Organization, process, preparation are keys to success  Proactive audits and behavior adjustments  Using audit information to identify process flaws and education gaps  Administrative costs are much greater than planned

10. Copyright © 2010. Balch & Bingham LLP. All rights reserved 10 New Initiatives

11. Copyright © 2010. Balch & Bingham LLP. All rights reserved 11 Medicare Strike Forces  Medicare Strike Force teams – arrested over 100 defendants in 9 cities – 2011  Collaborative efforts among OIG, DOJ, CMS, MFCUs, other OIGs, state agencies, law enforcement  Aggressive enforcement  Turn up the HEAT!

12. Copyright © 2010. Balch & Bingham LLP. All rights reserved 12 Parts C and D Audits  CMS has contracted with ACLR Strategic Business Solutions for Part D recovery auditing.  Goal is to implement during 3 rd quarter 2011.  CMS anticipates a dedicated website for Parts C and D.  ACLR touts its sampling methodology experience (from ZPIC/PSC audits) on its website.

13. Copyright © 2010. Balch & Bingham LLP. All rights reserved 13 Streamlining Efforts HHS Regulatory Overhaul announced May 26  References Exec Order 13563  Exec. Order directs each agency to develop a plan for retrospective review of existing regulations.  HHS:  will focus on elimination of rules deemed no longer justified or necessary, BUT  will also consider strengthening, complementing or modernizing rules where necessary, including creating new rules where needed.

14. Copyright © 2010. Balch & Bingham LLP. All rights reserved 14 Improved Alignment  CMS Alignment Initiative – launched to identify and address conflicting requirements of Medicaid & Medicare for dual-eligible beneficiaries  Comment requested  Ensuring access  Simplifying access  Eliminating regulatory conflicts  Ensuring care continuity  Eliminate cost-shifting

15. Copyright © 2010. Balch & Bingham LLP. All rights reserved 15

16. Copyright © 2010. Balch & Bingham LLP. All rights reserved 16 A. Background: The CMS’s fraud investigation landscape is significantly different today than in the past as a result of program changes, such as the implementation of the Medicare Prescription Drug benefit, competitive selection of contractors responsible for claims administration and program integrity, such as Medicare Administrative Contractors (MACs) and PSCs, expansion of Medi-Medi and Recovery Audit Contractor (RAC) programs, and advent of the Medicaid Integrity Program (MIP). CMS recognizes the need to significantly enhance the use of technology to improve its collaborative fraud fighting efforts as well as to establish a modernized data analysis capability for all of Program Integrity.

17. Copyright © 2010. Balch & Bingham LLP. All rights reserved 17 The Integrated Data Repository (IDR) goal – through incremental releases – is to be the centralized data repository for all Medicare data. The Program Safeguard Contractors (PSCs) cannot currently use the IDR exclusively because the source of claims data is the National Claims History (NCH). The limited NCH data record is inadequate to support the extensive fraud, waste and abuse investigations that need to be performed by PSCs. The Shared Systems data are the required data source for Program Integrity. Once the IDR has the required Shared Systems data, Program Integrity and their contractors will increase their ability to detect potential fraud, waste and abuse.

18. Copyright © 2010. Balch & Bingham LLP. All rights reserved 18 Medicaid RAC

19. Copyright © 2010. Balch & Bingham LLP. All rights reserved 19 Medicaid RAC  Contractor: PRGX USA, Inc.  Successor to PRG Schultz  www.prgx.com  CA RAC during Demonstration Project  Subcontractor RAC for Regions A, B & D  Claims from 1/1/2008 and forward

20. Copyright © 2010. Balch & Bingham LLP. All rights reserved 20 Medicaid RAC  Process:  Similar to current Medicaid audits  On-site and off-site reviews  Limits on medical record requests: No  Payment for medical records: No  Paper vs. electronic: Maybe  Time for record submission: Immediate if on-site, per letter if not (extension available)

21. Copyright © 2010. Balch & Bingham LLP. All rights reserved 21 Medicaid RAC  Issue awareness: quarterly work plan  Publicly available? anticipate after-the-fact  Use of extrapolation: authorized  Discussion period: similar opportunity  Appeals process: MS Medicaid appeals process – see manuals  Status on rollout: data testing now; kickoff mid- July, anticipate 8/2011

22. Copyright © 2010. Balch & Bingham LLP. All rights reserved 22 Medicaid RAC  What does this mean for providers?  How can providers reduce the administrative burden associated with these audits?  How can providers assess risk and proactively reduce denials?

23. Copyright © 2010. Balch & Bingham LLP. All rights reserved 23 Other Medicaid Activity

24. Copyright © 2010. Balch & Bingham LLP. All rights reserved 24 Medicare - Medicaid  “Medi-Medi” Program  Medicare – Medicaid alignment  MS Medicaid is participating  What does this mean for providers?  PERM

25. Copyright © 2010. Balch & Bingham LLP. All rights reserved 25 Federal MIC  Medicaid Integrity Contractors  Established by DRA of 2005 (2/8/2006)  Audit MIC, Education MIC, Review MIC  From Statement of Work:  Review of actions of individuals or entities furnishing items or services for fraud, waste or abuse;  Audit of claims for payment for items or services furnished, or administrative services rendered;  Identification of overpayments to individuals or entities receiving Federal Funds under this title.

26. Copyright © 2010. Balch & Bingham LLP. All rights reserved 26 Claims Data Review MIC Other Agency Provider referral to Audit MIC Other Agency Audit

27. Copyright © 2010. Balch & Bingham LLP. All rights reserved 27 Medicaid Integrity Contractors Process:  Request and review records, interview providers and personnel, access to facilities  At least 2 weeks to produce records – extensions available  Entrance conference  Audit MIC prepares draft audit report (findings)  Report shared 1 st with State and then with provider  Opportunity to comment/discuss  Finalized by CMS; overpayment identified and final report sent to State  State pursues collection

28. Copyright © 2010. Balch & Bingham LLP. All rights reserved 28 Medicaid Integrity Contractors  5 year lookback period  No reimbursement for medical records  Most are desk audits  Audit conduct per “Yellow Book” – Generally Accepted Government Auditing Standards  No limit on record requests  State appeal process

29. Copyright © 2010. Balch & Bingham LLP. All rights reserved 29 Medicaid Fraud Control Units  Use of payment suspension against providers when a credible investigation of fraud of is pending  5 day notice required – general notice, not specifics  Coordination with MIC, M-RAC, Medi-Medi and other auditors

30. Copyright © 2010. Balch & Bingham LLP. All rights reserved 30 Takeaway Points  More auditors than ever before  Pro-active audits  No claims data will escape scrutiny  Inter-agency collaborations will increase effectiveness and accuracy  The audit world is here to stay; implement processes to address

31. Copyright © 2010. Balch & Bingham LLP. All rights reserved 31 QUESTIONS?

32. Copyright © 2010. Balch & Bingham LLP. All rights reserved 32 Thank You! Genie Stark Thomas Balch & Bingham LLP One Jackson Place 188 East Capitol Street, Suite 1400 Jackson, MS 39201-2133 601-965-8177 gstarkthomas@balch.com www.balch.com