1. AHA RAC Advocacy Initiatives April 28, 2013

2. Overview of Audit Concerns Recovery Auditors are biased due to contingency fee payments Recovery Auditors are not targeting widespread payment errors –RACTrac: only 38% of audits result in an overpayment determination. –RACTrac: over 40% of denials are appealed – 72% of claims appealed are overturned in favor of the provider. CMSs proposed rule that prevents hospitals from rebilling for full Part B payment for medically necessary, wrong setting denials outside of the timely filing window is inappropriate Auditors are making subjective decisions on short-stay cases, despite lack of clear policy guidance

3. Additional Audit Concerns Medical record request limits are inappropriately being used to target high-dollar inpatient claims Burden of case-by-case appeals is very heavy, relative to the minimal RAC investment per denial –A single auditor can produce dozens of appeals per day, while hospitals must appeal every incorrect denial through a 2+ year, one-claim-at-a-time appeal process. –RACTrac: 72% of appealed RAC denials are overturned in favor of the hospital.

4. Overburdened Appeals System Providers are becoming more proactive about appealing improper denials by RACs –Hospitals are appealing 42 percent of RAC denials. –These appeals are overturned in favor of the hospital 72 percent of the time. Appeals system is overburdened, but no additional resources for processing appeals are on the horizon –QIC regularly sending out letters that they cannot meet 60-day window for making determination, offering escalation to ALJ. –ALJs are overburdened and providers are experiencing delays in receiving determinations. FI/MAC and QIC are largely perceived as being less willing to overturn improper denials than ALJs

5. CMS Changes Rebilling Policy CMS published in Monday, March 18 Federal Register (Vol. 78, No. 52): –Administrators Ruling (pps. 16614 – 16617) http://www.gpo.gov/fdsys/pkg/FR-2013-03-18/pdf/2013- 06159.pdf http://www.gpo.gov/fdsys/pkg/FR-2013-03-18/pdf/2013- 06159.pdf –Proposed Rule (pps 16632 – 16646) http://www.gpo.gov/fdsys/pkg/FR-2013-03-18/pdf/2013- 06163.pdf http://www.gpo.gov/fdsys/pkg/FR-2013-03-18/pdf/2013- 06163.pdf CMS terminates Part A to Part B Rebilling Demonstration

6. CMS's Longstanding Policy on Rebilling Hospitals permitted to bill for only a limited list of Part B inpatient services, –provided the services are billed within 1 year of the provision of the services (i.e., the timely filing period) AHA, five hospital systems sued HHS last year. –Legal claim: CMSs policy is not consistent with Medicare law that requires payment for all reasonable and necessary care –Requested remedy: Court should overrule CMSs policy and order full reimbursement to hospitals for the care they provided AHAs view of CMSs recent actions: –CMSs interim policy change is a victory for hospitals; its long- term proposed solution is not. –It is essential to continue the AHA litigation.

7. Administrators Ruling Establishes interim policy –Effective March 13, 2013 –Remains in effect until CMS issues final rule What is the interim policy established by the Ruling? –When a Medicare review contractor denies a Part A claim because the inpatient admission was not reasonable and necessary, a hospital may submit a Part B inpatient claim for reasonable and necessary services that would have been payable had the beneficiary originally been treated as an outpatient instead of an inpatient –Except for those services that specifically require outpatient status (e.g., outpatient visits, emergency department visits and observation services) –Limits scope of ALJ consideration of appeals of inpatient claims to Part A payment

8. CMS proposes to pay hospitals for all reasonable and necessary Part B services that would have been payable had the beneficiary originally been treated as an outpatient instead of an inpatient –Except for services provided after an order for admission that specifically require an outpatient status WHEN? –An Medicare review contractor denies a Part A claim because the inpatient admission was not reasonable and necessary, OR –The hospital determines, after a beneficiary is discharged, that his or her inpatient admission was not reasonable and necessary Proposed Rule on Rebilling

9. CMS proposes to apply the timely filing restriction to the rebilling of all Part B inpatient services –Requires that rebilled claims for Part B services must be filed within 1 year from the date the services were originally provided The Problem for Hospitals: –Recovery audit contractors typically reviews claims that are more than a year old, so CMSs proposal would again leave hospitals without fair reimbursement for the care they provide to Medicare patients Deadline to comment: May 17, 2013 –Sample comment letter is available for members online at www.aha.org/RACwww.aha.org/RAC Critical Difference in Proposed Rule

10. AHA Advocacy on Audit Concerns Mar 2013: Revised RAC bill is reintroduced in US House Nov 2012: AHA, four hospital systems filed rebilling lawsuit against HHS Oct 2012: Introduction of H.R. 6575 in US House; AHA submitted recommended RAC and program integrity changes to HHS OIG Sept 2012: AHA highlighted problems with inconsistent MAC and RAC audit protocols during meetings with GAO Aug 2012: The AHA OPPS comment letter made preliminary recommendations re: short-stay vs. observation cases. June 2012: AHA submitted audit recommendations to Senate Finance Committee

11. RAC Bill Reintroduced H.R. 6575, Medicare Audit Improvement Act of 2012 was introduced last October in US House of Representatives –Bill was not adopted prior to end of Congressional session H.R. 1250 – the Medicare Audit Improvement Act – was introduced in the U.S. House of Representatives on March 19, 2013 –Institutes combined cap across RACs, MACs, CERT of 2 percent of a hospitals claims, as well as limits by claim type (inpatient, outpatient) –Financial penalties for auditors that fail to adhere to program guidelines or who deny a claim that is eventually overturned on appeal –Makes publicly reported information on auditor performance available including number of claims audited, denied and claims overturned on appeal –Permit rebilling for denied inpatient claims; remove timely filing requirement for denied claims –Physician validation of all claim denials –Stronger statutory language to protect hospitals due process rights for claims older than one year

12. AHA Next Steps on RACs Work with providers to engage Congress on H.R. 1250 Continued advocacy with CMS and Congress on rebilling; Monthly meetings with CMS on RAC operational fixes; RACTrac: Data collection for Q1 2013 just ended. Results will be available is approximately six weeks at www.aha.org/ractrac; and www.aha.org/ractrac AHAs 2012 Audit Education Series resources are still available online for AHA members. –AHA has compiled member advisories and webinars into a single resource, i.e. a RAC Toolkit, for members

13. RACTrac: Medical Record Requests Wednesday, February 15 Naval Heritage Center 9:30 AM Source: AHA RACTrac Survey, January 2013. Survey results collected from 2,335 participating hospitals; 1,233 hospitals participated in Q4 2012. Number of Medical Records Requested from Participating Hospitals, through 4 th Quarter 2012

14. RACTrac: Complex Audit Outcomes Wednesday, February 15 Naval Heritage Center 9:30 AM Outcomes of Audits and Percentage of Hospitals Reporting Short-Stay as Most Common Reason for Denial, through 4 th Quarter 2012 Almost $1.3b in denials through Q4 2012 Source: AHA RACTrac Survey, January 2013. Survey results collected from 2,335 participating hospitals; 1,233 hospitals participated in Q4 2012.

15. RACTrac: Appeals of Denials Wednesday, February 15 Naval Heritage Center 9:30 AM RAC Denial Appeals Rate and Outcomes, 2 nd – 4 th Quarter 2012 Source: AHA RACTrac Survey, January 2013. Survey results collected from 2,335 participating hospitals; 1,233 hospitals participating this quarter.

16. RACTrac: Resource Utilization for RAC (From Q4 2012 Survey) Percent of Participating Hospitals* Reporting Average Cost Associated in Managing the RAC Program, 4 th Quarter 2012 * Includes participating hospitals with and without RAC activity Source: AHA RACTrac Survey, January 2013. Survey results collected from 2,335 participating hospitals; 1,233 hospitals participated in Q4 2012.

17. AHA RAC and Audit Resources AHA is Helping Hospitals Improve Payment Accuracy Main AHA RAC Page: www.aha.org/racwww.aha.org/rac –Newly updated to make it easier to find the information providers need AHA RACTrac Page: www.aha.org/ractrac; www.aharactrac.comwww.aha.org/ractrac www.aharactrac.com AHA Audit Series: www.aha.org/auditserieswww.aha.org/auditseries Email RAC Questions: racinfo@aha.orgracinfo@aha.org

18. For more information visit AHAs RAC Website: http://www.aha.org/RAC racinfo@aha.org RACTrac Support: Ractracsupport@providercs.com 1-888-722-8712 http://www.aha.org/RAC racinfo@aha.org Ractracsupport@providercs.com