Medicare Audits and Appeals Scott McBride, Partner Baker & Hostetler Jason Pinkall, Senior Counsel Tenet Healthcare Corporation

We’re here for the money...We’re here for the money... Payment Demands 2

RACs are paid a contingency fee for identifying Medicare overpayments and underpayments RACs started as a demonstration project in California, Florida, and New York in Recovery Audit Contractors

Some stats –Over 3 years, over $1 billion recovered –96% of improper payments were overpayments –22.5% of overpayment determinations were appealed –7.6% of overpayment determinations were reversed –85% of overpayment recoveries were from inpatient hospital services 4 Recovery Audit Contractors

Concerns raised over the RACs –Qualifications of the reviewers –Caps on number of records requested –Decisions inconsistent with Medicare policies –Payment incentive to RACs even if recovery is later overturned CMS made some adjustments 5 Recovery Audit Contractors

6 Rollout of permanent program by 2010 –CMS split the country into four regions and selected one RAC to be responsible for each region  Diversified Collections Services, Inc. (Region A)  CGI Technologist and Solutions, Inc. (Region B)  Connolly Consulting Associates, Inc. (Region C)  HealthDataInsights, Inc. (Region D)

Diversified Collection Services, Inc. CGI Technologies and Solutions, Inc. Connolly Consulting Associates, Inc. HealthDataInsights, Inc. 7 RAC Jurisdictions

Types of review –Automated Review  Data mining to find inaccurate payments (e.g., duplicate services) –Complex Review  Medical record review to determine if payment is accurate (e.g., medical necessity) 8 Recovery Audit Contractors

Areas of review –One-day stays –Level of care (inpatient rehabilitation) –Units of services –DRG groups 9 Recovery Audit Contractors

Consolidation of PSCs and MEDICs Coordination of claims processing and benefit integrity activities Ensure integrity of ALL Medicare-related claims –Parts A, B, C, D, Home Health, DME, Hospice and coordination of Medi-Medi data matches Use “innovative data analysis methodologies” for early fraud detection and prevention 10 Zone Program Integrity Contractors

Zone 1 – SafeGuard Services Zone 2 – NCI, Inc. (previously AdvanceMed) Zone 3 – Cahaba Safeguard Administrators Zone 4 – Health Integrity Zone 5 – NCI, Inc. (previously AdvanceMed) Zone 6 – Cahaba Safeguard Administrators Zone 7 – SafeGuard Services 11 Zone Program Integrity Contractors

Activities –Performing data analysis and data mining –Conducting medical reviews in support of benefit integrity –Supporting law enforcement and answering complaints –Investigating fraud and abuse –Recommending recovery of federal funds through administrative action –Referring cases to law enforcement 12 Zone Program Integrity Contractors

Unannounced or limited notice Review of claims –Prepayment or post payment  Potential for payment suspension –Probe sample or statistical sampling and extrapolation Employee or beneficiary interviews 13 ZPIC Audits

Referral to law enforcement Referral to overpayment recoupment Provider education 14 ZPIC Audits

A Medicare contractor may not use extrapolation to determine overpayment amounts…unless… –There is a sustained or high level of payment error; or –Documented educational intervention has failed to correct the payment error 15 Statistical Sampling

Sustained or high level of payment error can be determined by: –Error rate determinations by MR unit, PSC, ZPIC –Probe samples –Data analysis –Provider / supplier history –Information from law enforcement investigations –Allegations of wrong-doing by current or former employees of provider or supplier –Audits or evaluations conducted by the OIG 16 Statistical Sampling

Additional factors to consider –Number of claims in universe –Dollar values associated with claims –Available resources –Cost effectiveness of expected sampling results 17 Statistical Sampling

Medicare Prescription Drug, Improvement, and Modernization Act of 2003 Consolidated Fiscal Intermediaries (FI) and Carriers 18 Medicare Administrative Contractors

Conducting data analyses comparing providers to peers Outliers receiving audit requests High error rates can result in prepayment reviews 19 Statistical Sampling

Plan Ahead Develop a plan of action before a demand is made or an investigation begins Train and instruct employees and personnel Establish a team Designate person as audit point of contact 20 Managing the Payment Dispute

21 Plan Ahead Develop audit policies and procedures Monitor audit targets Know who receives audit letters Conduct internal audits Managing the Payment Dispute

Do your due diligence Determine the scope of the issues Conduct factual due diligence Understand the regulatory/reimbursement scheme 22 Managing the Payment Dispute

Appeals Process 23 Appeals

24 Medicare Claims Appeals Process

Level 1 – Redetermination To the MAC On the record 120 days to appeal Only 30 days to stop recoupment Interest accrues Decision within 60 days 25 Medicare Claims Appeal

Level 2 – Reconsideration To the Qualified Independent Contractor On the record 180 days to appeal Only 60 days to stop recoupment Interest accrues Decision within 60 days All evidence must be submitted 26 Medicare Claims Appeal

Level 3 – Administrative Law Judge To an ALJ In person, video, or phone 60 days to appeal Cannot stop recoupment Amount in controversy requirement Decision within 90 days 27 Medicare Claims Appeal

Level 4 – Medicare Appeals Council To the MAC Can request a hearing and briefing 60 days to appeal 28 Medicare Claims Appeal

Level 5 – Federal Court To Federal District Court Briefing and request for hearing 60 days to appeal Amount in controversy requirement 29 Medicare Claims Appeal

Manage the appeal Be prepared to appeal Understand reasons for denial Interest Recoupment Sampling issues 30 Managing the Payment Dispute

31 Managing the Payment Dispute Manage the appeal Internal and external reviews Position papers Contractor participation Evidentiary issues Involvement of legal counsel

32 Managing the Payment Dispute Consider legal defenses Without fault Limitation of liability Treating physician rule Reopening rules Constitutional challenges

33 Managing the Payment Dispute Manage the appeal Track payment disputes and appeals Cost benefit analysis Corrective action

34 Case Example Medicare claims appeal processMedicare claims appeal process –Provider received notice by PSC that all claims in audit were not medically necessary

Scott McBride, Baker & Hostetler Jason Pinkall, Tenet Healthcare Corporation 35 Questions?