RAC Jurisdictions D B. March 1, March 1, August 1, 2009
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1 Medicare Recovery Audit Contractors (RACs): An Overview 1 1
2 What is a RAC? RAC Program Mission The RACs will detect and correct past improper payments so that CMS and the Carriers/FIs/MACs can implement actions that will prevent future improper payments Providers can avoid submitting claims that don t comply with Medicare rules CMS can lower its error rate Taxpayers and future Medicare beneficiaries are protected 2 2
3 RAC Legislation Tax Relief and Healthcare Act of 2006, Section 302: requires a permanent and nationwide RAC program by no later than 2010 gave CMS the authority to pay RACs on a contingency fee basis 3
4 RAC Jurisdictions D B A March 1, 2009 March 1, 2009 August 1, 2009 C 3 4
5 RAC Review Process RACs review claims on a post payment basis RACs use the same Medicare policies as FIs, Carriers and MACs NCDs, LCDs & CMS manuals Two types of review: Automated (no medical record needed) Complex (medical record required) RACs will NOT be able to review claims paid prior to October 1, 2007 RACs will be able to look back three years from the date the claim was paid RACs are required to employ a staff consisting of nurses, therapists, certified coders & a physician CMD 5 5
6 RAC Program s Three Keys to Success 1. Minimize Provider Burden 2. Ensure Accuracy 3. Maximize Transparency 6 6
7 Minimize Provider Burden Limit the RAC look-back period to three years Maximum look back date is October 7, 2007 RACs will accept imaged medical records on CD/DVD Limit the number of medical record requests (based on previous year Medicare volume) 7 7
8 Ensure Accuracy Each RAC employs: A physician medical director Certified coders CMS New Issue Review Board provides greater oversight RAC Validation Contractor provides annual accuracy scores for each RAC If a RAC loses at any level of appeal, the RAC must return the contingency fee 8 8
9 Maximize Transparency New issues are posted to the web Major Findings are posted to the web RAC claim status web interface (2010) Detailed Review Results Letter following all Complex Reviews 9 9
10 What Can Providers Do to Get Prepared? Know where previous improper payments have been found (OIG, CERT, Demo RAC Reports) Know if you are submitting claims with improper payments Prepare to respond to RAC medical record requests Keep/submit proper documentation Appeal when necessary Learn from your past experiences 10 10
11 Contact Information CMS Website
12 CMS Region C RAC Christine Castelli, Principal Client Relations/Quality Assurance
13 Connolly Background Established in 1979 with a singular focus on recovery auditing Pioneered the use of data mining technology to identify and recover overpayments and underpayments Serves Medicare and Medicaid, and some of the industry s largest commercial payers Reviewed over $150 billion in paid medical claims in
14 Connolly RAC Program Mission Detect and correct Medicare past improper payments Analyze root causes of those improper payments and provide actionable process improvement recommendations to CMS that prevent or mitigate future improper payments Operate with high sensitivity to provider relations 14
15 Connolly Review Process Use same Medicare policies as MACs, FIs, Carriers, and DME MAC NCDs, LCDs, CMS Manuals (e.g. claims processing, program integrity, benefit policies, etc.) Use same types of staff as the MACs, FIs, Carriers, DME MAC Nurses, therapists, certified coders and physician CMD 15
16 Connolly s Subcontractor: Viant Viant is based out of Naperville, Illinois Viant has 18 years of servicing the nation s largest healthcare payers Viant participated in the RAC Demonstration as a subcontractor in California Viant will be subcontracting in Region C, providing Part A Complex Reviews Connolly is 100% accountable for the Region C RAC contract 16
17 Get Prepared & Organized Complete, submit, and keep current your Request for Contact Information form 17
18 Prepared & Organized, cont. Identify and maintain a RAC Liaison to manage correspondence Respond to RAC medical record requests fully and within the required 45 day turn around Utilize the benefit of the discussion period Communicate, communicate, and communicate 18
19 Medical Record Submission We will accept paper medical records, but we suggest submitting medical records via CD/DVD Adhere to the provider medical record submission requirements See Handout Instructions Make sure all medical record images are sent in a tamper-proof package Strongly suggest that all medical records be sent on CD/DVD via trackable carriers FedEx, UPS, DHL, registered USPS mail, etc. 19
20 Connolly Key RAC Personnel Dr. James Lee, D.O. Medical Director and Registered Pharmacist Thomas Gallo, Principal Operations Christine Castelli, Principal Client Relations / Quality Assurance 20
21 Connolly Resources Connolly RAC toll free phone number Connolly RAC fax number Connolly website & address Connolly RAC office address The Navy Yard Corporate Center One Crescent Drive, Suite 300-A Philadelphia, PA Christine Castelli
22 Questions? 22
23 Medicare Recovery Audit Contractor ( RAC ) Program American Health Care Association May-June 2009 RAC Webinars Mark E. Reagan Partner mreagan@health-law.com HOOPER, LUNDY & BOOKMAN, INC. 575 Market Street, Suite 2300 San Francisco, CA Tel: Fax:
24 Recovery Audit Contractors Background- Demonstration Program Lessons Learned Permanent Program Implementation Timing Rules and procedures Areas of Potential Focus Managing the Appeal Process - Timelines Strategies to Limit Recoupment Timelines within Timelines
25 Background RAC Legislation Medicare Modernization Act Section 306: Mandates CMS to conduct RAC demonstration Contingency fee-based retrospective claim review Tax Relief Act and Healthcare of 2006, Section 302: Mandated a permanent and nationwide RAC program by no later than 2010
26 Background RAC Program Mission to detect and correct past improper payments, to implement actions that will prevent future improper payments. Providers can avoid submitting claims that don t comply with Medicare rules CMS can lower its error rate Taxpayers & future Medicare beneficiaries are protected
27 Background Source of RAC s Audits Where do RAC audits come from: Data mining OIG Work Plan CERT Reports GAO Reports RAC Evaluation Report (as updated)
28 The Demonstration Phase Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) Section 306: Mandated 3-year CMS demonstration using Recovery Audit Contractors (RACs) to detect and correct improper payments in the Medicare fee for service program. Demonstration program intended to determine if use of RACs was a cost-effective means of adding resources to ensure correct payments to providers and suppliers and to protect the Medicare Trust Fund. The demonstration operated in New York, Massachusetts, Florida, South Carolina and California and ended on March 27, 2008.
29 RAC Collections by Error Type/Demonstration (Net of Appeals) Most improper payments occur when providers submit claims that don t comply with Medicare coding rules or medical necessity guidelines 17% Other $160.2M 9% No/Insufficient Documentation $74.3M 42% Incorrect Coding $331.8M 32% Medically Unnecessary $391.3M SOURCE: Self-reported by RACs
30 RAC Appeal Data/Demonstration (update Jan 2009) Number of Claims with Overpayment Determinations Number of Claims Where Provider Appealed (any level) Percentage of Claims Where Provider Appealed (any level) Number of Claims with Appeal Decisions in Provider's Favor Percentage of Claims with Appeal Decisions in Provider's Favor Percentage of Overpayment Determinatio ns Overturned on Appeal All RACs 9/07* 358,765 51, % 25,559 50% 7.1% All RACs 3/08** 525,133 73, % 24,376 33% 4.6% All RACs 8/08*** 525, , % 40,115 34% 7.6% *source CMS report 2/08 ** source CMS report 6/08 *** source CMS report 1/09
31 Permanent RAC Program Tax Relief and Health Care Act of 2006 Section 302: The RAC Program made permanent and requires the Secretary to expand the program to all 50 states by no later than CMS plans to have 4 RACs in place. Each RAC will be responsible for identifying overpayment and underpayments in approximately ¼ of the country. The new RAC jurisdictions match the DME MAC jurisdictions. First rollout in Summer of 2009 (from previous March 1, 2009 dates)
32 Revised Phase-In PRG subcontractor PRG subcontractor PRG subcontractor Viant subcontractor
33 Implementation Status Unselected RACs appealed selection whereupon an automatic stay stopped work for all four RAC regional awards until a determination is made by GAO, as required under provisions of the Competition and Contracting Act of 1984 (CICA). On February 6 th, CMS effectively resolved the disputes by settlement where two unsuccessful RACs would subcontract with selected RACs. Viant. As a subcontractor to Connolly Consulting, the RAC for Region C, Viant will conduct complex reviews of hospital inpatient claims and physician-administered J-codes in North Carolina, South Carolina, Virginia and West Virginia. PRG-Schultz. PRG Schultz will act as a subcontractor to Diversified Collection Services (Region A), CGI (Region B) and HealthDataInsights (Region D). In this capacity, PRG Schultz will audit Part A/B MAC claims in, Maine, New Hampshire, Vermont, Minnesota, Wisconsin, Idaho, Oregon, and Washington; home health claims in Regions A, B and D; and durable medical equipment claims in Region B.
34 Lessons Learned: CMS Changes to RAC Program Look back period (from claim pmt date date of medical record request) Demonstration RACs Permanent RACs 4 years 3 years Maximum look back date None 10/1/2007 Allowed to review claims in current fiscal year? RAC medical director Not Required Mandatory Coding experts Optional Mandatory Discussion with CMD regarding claim denials if requested Credentials of reviewers provided upon request No Not Required Not Required Yes Mandatory Mandatory
35 Lessons Learned: CMS Changes to RAC Program Demonstration RACs Permanent RACs Vulnerability reporting Limited Mandatory RAC must payback the contingency fee if the claim overturned at first level of appeals all levels of Appeal Web-based application that allows providers to customize address & contact None Mandatory by Jan. 1, 2010 External validation process Not Required Mandatory
36 RAC PROGRAM Record Request Limitations Limits on the Number of Medical Records a RAC can Request per Month (Actually every 45 days) Based on 10% of average monthly claims (2008) Maximum of 200 claims every 45 days
37 Permanent RAC Implementation Section 302 in TRHCA requires the Secretary to implement the RAC program throughout the country by no later than January 1, 2010 RAC MAC coordination - CMS transmittal 145 Jan 9, 2009 CMS strategy to ensure that the RAC permanent program will not interfere with transition from FI s to new Medicare claims processing contractors, called Medicare Administrative Contractors (MACs). This strategy will allow the new MACs to focus on claims processing activities before working with the RACs. Generally, the RAC blackout period will be: a. 3 months before a MAC begins processing claims for a given State b. 3 months after a MAC begins processing claims for a given State. CMS and the permanent RACs will undertake aggressive provider outreach. CMS to make available RAC-identified service specific vulnerability data via web posting, so providers can avoid making those errors in the future. Providers should regularly review on-line Providers should all review trends in their own past denials
38 Top RAC Recovered SNF Claims CA only Physical therapy and occupational therapy (medically unnecessary) Speech-language pathology services (medically unnecessary) Other Part B claims (i.e., blood glucose) Part A claims will likely be in play Impact of consolidated billing
39 Investigation/Analysis According to CMS, the RACs analyze claims data using their own proprietary software to identify clearly improper payments and likely improper payments Clearly improper Automated Review: the RAC contacts the provider and requests a refund of any overpayment amounts Example: Duplicate Payment Likely improper Complete Review: the RAC requests medical records form the provider, reviews the claim and medical record and then makes a determination as to whether the claim contained an overpayment Example: Medical Necessity
40 Problematic Areas for Potential Denials of Claims Payments are made for services that do not meet Medicare s medical necessity criteria Payments are made for services that are incorrectly coded Providers fail to submit documentation TIMELY, or fail to submit enough documentation to support the claim reviewed Duplicate payments
41 RAC Application of Standards RACs apply statutes, regulations, CMS national coverage, payment and billing policies as well as National Coverage Determinations, Local Coverage Determinations that have been approved by Medicare RACs are not to develop or apply their own coverage, payment or billing policies
42 RAC Program Prepare for RACs Establish internal RAC team Interdisciplinary Team: Legal, Finance, Clinical, Compliance, IT Identify RAC point of contact for internal and external RAC communications Develop central tracking mechanisms/database for all RAC - Incoming and Outgoing Coordinate the tracking mechanism with communications structure record reviews, and appeal of recoupment deadlines Conduct self audits to identify potential problems Participate in RAC trainings and outreach Monitor news sources, CMS, associations, and your own reports to stay abreast of trends If desired, development of unique forms for Redeterminations and other appeal levels once issues identified
43 Strategies Record Requests Denials Reviewing Denials for compliance Implementing the Appeal Process appeal rights and recoupment Additional Defenses and Issues to Raise or Consider
44 RAC initiates Review Request for medical records Typically the process will begin with a notice of a possible overpayment and a request for medical records The RAC will request certain records to support the claim and provide a deadline for the provider to submit the records Typically, 45 calendar days from date of letter
45 Responding to Record Requests: Stamp date and Time Received 45 calendar days from date of letter Can request an extension Notify RAC if significant discrepancy between date of letter and date of receipt Identify any internal issues in expeditiously getting the mail for processing
46 Responding to Record Requests: Was the request sent to the right place? Notify RAC of the contact person with contact information Did the RAC exceed the Record Request Limit? Every 45 days (starting with the first request received) 10% of average monthly inpatient claims (max of 200) 1% of average monthly outpatient claims (max of 200)
47 Responding to Record Requests: Copying of Record and Others Ensure entire record is copied Include copies of NCD, LCD, coding guidelines, CMS guidance? Review of all records before they are released Permits early identification of issues Establishes priority for appeals Intensive work
48 Responding to Record Requests: Has the claim already been subject to audit by another contractor Did the RAC follow the New Issue Review Process? Initial requests may be part of the process Letter should clearly state basis for the request Look to the CMS and RAC websites and confirm that issue is identified Is this even a RAC Request? Confusion with so many different Medicare contractors (i.e., MACs, PSCs, MICs, etc.)
49 Responding to Record Requests: Document Management? Stamp number (Bates Stamp) on bottom of each page produced Scan everything produced to RAC Include cover letter itemizing contents of box of documents or CD Send certified mail or, if regular mail, complete affidavit of service by mail
50 Responding to Record Requests: Data Management Audit ID Number Type of Audit Reason for Audit (Issue Specific) Date of Record Request Date Received Next Deadline Information about the production Patient information Status of case Reimbursement information RAC response Status at each level of appeal
51 RAC Claim Denials Determination Letter If the RAC concludes that there has been an overpayment, based on its review of the medical records, it will send a notice of determination which explains, among other things: How the overpayment was determined Recoupment and Right to Rebuttal/Discussion Period Appeal rights The letter will also notify the provider of the date of recoupment Handled by the MAC Pressure points of appeal and recoupment timelines The time to stop recoupment is far shorter than time to appeal
52 Stamp the date received Appeal period begins when you receive the redetermination ( demand letter ), which is presumed to be five days after the date of the letter absent evidence to the contrary 120 days to appeal (i.e., request a determination) Appeal within 30 days to stop recoupment on day 41
53 Review the Denial Automated reviews Lack of documentation (records not submitted timely) Coding issues Medical necessity denials
54 Recoupment Rebuttal/Discussion Period Vehicle to indicate why recoupment should not occur/discussion period May rebut any proposed recoupment action by submitting a statement within 15 days of the notice of an impending recoupment action Designed to detect errors in calculation/not substantive analysis Discussion period allows for discussion of medical necessity denial with RAC up through recoupment Occurs prior to and separate from the appeal process
55 RAC Appeals Provider has right to appeal adverse determination as with any Medicare contractor Request for redetermination Request for reconsideration to QIC Request for administrative law judge hearing Request for review by Medicare Appeals Council Federal court review
56 Appeal Rights/Process Notice of Initial Determination Notice must contain: Basis for full or partial denial Info on right to a redetermination All applicable claim adjustment reasons and remark codes Source of the RA and who may be contacted for more information
57 Appeal Rights/Process Appeal Process Step 1: Request for Redetermination Provider s Request for Redetermination due 120 days from receipt of the notice of initial determination from RAC) Medicare Redetermination Request Form (CMS 20027) or your own form submitted to the MAC (not the RAC) Notice of initial determination is presumed to be received five days from the date of the notice unless evidence to the contrary MAC has 60 days for written redetermination Redetermination Notice must contain explanation how CMS policies, coverage rules, etc. apply
58 Recoupment Limitation During Appeal Demand letter required for all overpayments subject to recoupment limitations New requirements for demand letters for overpayments subject to recoupment limitations (Medicare Financial Management Manual ( MFMM ) 200.2)
59 Recoupment Limitation After Demand Letter First Level Recoupment stopped if valid and timely request for redetermination received within 30 days from date of demand letter. If valid and timely request for redetermination received more than 30 days from date of demand letter, recoupment will be stopped from that point, but any previously recouped funds may not be refunded. Strategic Question Ability to submit complete redetermination request to stop recoupment
60 Recoupment Limitation After Demand Letter Timeframe Medicare Contractor Provider Day 1 Date of Demand Letter Mailed Receives Notice by First Class Mail Day 1-15 Deadline for Rebuttal Request. No recoupment occurs. Submit rebuttal statement Day 1-40 No recoupment occurs Provider can appeal and potentially limit recoupment from occurring Day 41 Recoupment begins Provider can appeal and potentially stop recoupment
61 Appeal Rights/Process Appeal Process Step 2: Request for Reconsideration to QIC Reconsideration Request Form (CMS Form 20033) or your own form due to FI within 180 days from receipt of the redetermination No minimum amount in controversy requirement All evidence must be submitted at this level unless good cause shown QIC has 60 days for written Reconsideration
62 Recoupment Limitation - Second Level Appeal Upon receipt of Medicare redetermination notice or revised overpayment notice/demand letter, recoupment will be stopped if valid and timely appeal received within 60 days of notice for second level appeal by a Qualified Independent Contractor ( QIC ) If decision unfavorable to provider or partially favorable, recoupment can begin on 61 st day after Medicare redetermination notice or revised overpayment notice/demand letter Contractors have until 76 th day to start recoupment. After recoupment begins, recoupment can be stopped by a valid and timely appeal.
63 Recoupment After Second Appeal (QIC) Recoupment will occur regardless of any further appeals Recoupment can occur at day 30 after the date of the QIC decision or from the revised written final determination due to effectuation
64 Appeal Rights/Process Appeal Process Step 3: Request for Administrative Law Judge Hearing Request for ALJ hearing due 60 days from date of receipt of the QIC s reconsideration notice Use Form CMS A.B or your own form Case file forwarded by QIC to the Office of Medicare Hearing & Appeals Hearing is de novo ALJ decision due within 90 days Minimum Amount in Controversy is $120 Hearing by video conference, telephone conference or in person Maximum chance of success
65 Appeal Rights/Process Appeal Process Step 4: Request for Review with Medicare Appeals Council Any party to the hearing can request review (DAB- 101) MAC can review ALJ decision on its own motion Request for MAC review due 60 days from the date of receipt of the ALJ hearing decision or dismissal MAC s review is de novo No minimum amount in controversy Record review but may request oral argument Appeals Council will remand to ALJ if additional facts are necessary
66 Appeal Rights/Process Appeal Process Step 5: Federal Court Review Request for judicial review due 60 days from the date of receipt of the MAC decision or declination for review by the MAC Minimum amount in controversy is $1,220
67 Strategic Issues 30 days to stop recoupment 120 days to request redetermination % interest accrues from date of determination Cash flow can extend repayment for 210 days from the date of determination
68 One strategy appeal all claims within 30 days at first level and within 60 days at second level Advantages Cash flow (for a maximum of 210 days from date of determination) Potential Sentinel Effect? Disadvantages Accrue interest at % Frantic timetable to assemble appeals
69 A Second Strategy appeal some claims within recoupment limits Based on amount in question? Based on review of the merits? A Third Strategy appeal claims within appeal but not recoupment limits
70 Additional Defenses and Issues Without Fault (Section 1870) Even if overpayment identified provider may still be paid if without fault (i.e., no fraud or pattern) 3 year rule (unique counting rule) Waiver of Liability (Section 1879) Even if service determined to be not reasonable and necessary, payment could be made if provider or supplier did not know, and could not reasonably have been expected to know that payment would not be made
71 Additional Defenses and Issues Timing of Reopening Good Cause 42 C.F.R Medicare Appeals Council Decisions involving hospitals and skilled nursing facilities Decisions by Appeals Council and the ALJ lack jurisdiction to decide contested reopenings under the Medicare appeals process
72 Additional Defenses and Issues Timing of Reopening/ Good Cause MAC Decision Palomar Medical Center v. Johnson, S.D. Cal. No. 3:09-cv BEN-NLS (S.D. Cal. Complaint filed 3/24/09) Challenges RAC reopening of two year old hospital claim ALJ determined RAC had not shown good cause for reopening MAC reversed ALJ finding ALJ lacked jurisdiction to determine whether reopening was lawful Court challenge to jurisdictional argument and due process CMS Transmittal 1671 (February 16, 2009) RAC data analysis is good cause and ALJ has no jurisdiction
73 Additional Defenses and Issues Credentials of reviewer Can request a copy of credentials Medical Director Coding Experts
74 Additional Defenses and Issues Review criteria used Must be Medicare policy, National Coverage Determinations, Local Coverage Determinations What was in effect at time Is Medicare policy applied correctly Can any of the coverage determinations be used as a defense? Incorrect application of statutes Medical records standards Physician testimony/declaration Standard of care evidence Peer-reviewed science
75 Additional Defenses and Issues Sampling Extrapolation PIM (CMS Pub100-08) Chapter Challenge statistical analysis
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