RAC Demonstration Program The RAC Demonstration: Evaluation Report July 2008 RAC Permanent Program Legislation What is the Purpose? How RACs Are Paid? Review Selection Physicians Medical Record Request Limit RAC Issues for Reviews Under the Medicare Modernization Act of 2003, CMS were authorized to conduct a Recovery Audit Contractor (RAC) pilot project in four states, including Florida. Ended March 2008. $1 billion of Medicare improper payments, $693.6 million in improper payments was returned to the Medicare Trust Funds. Tax Relief and Healthcare Act of 2006, Section 302 The purpose of the Recovery Audit Contracts (RAC) is to reduce Medicare improper payments through the efficient detection and collection of overpayments, the identification of underpayments and the implementation of actions that will prevent future improper payments. RACs are paid on a contingency basis (i.e., they retain a portion of the monies recovered) for all accurately identified overpayments. The RACs will use their own proprietary software and systems as well as their knowledge of Medicare rules and regulations to determine what areas to review. 10 = Solo Practitioner 20 = Partnership 2-5 individuals 30 = Group of 6-15 individuals 50 = Large group (16+ individuals) Issues will be approved by CMS prior to widespread review and approved issues will be posted to a RAC website before widespread review Time Frame for Claims o RACs will not be able to review claims paid prior to October 1, 2007. o RACs will be able to look back three years from the date the claim was paid. Types of Reviews Automated and Complex RAC_ReferenceDoc_11-17-10 1 of 6 11/18/2010
Automated Review Complex Review Time Frames Agree with RAC s Determination, No Appeal Disagree with RAC s Determination Collection Process Automated review based on claims data (i.e. correct units), medical records are not requested. Instead national claims data is scrubbed using proprietary data mining software. Identified using proprietary data mining software to scrub national claims data to identify cases with the greatest probability of errors (ie. DRG or medical necessity). Require requested medical records for off-site reviews. Providers must respond within 45 days to RAC request for records. Request for extension must be made within 45 days Pay by check on or before Day 30 (no interest) Allow recoupment from future payments (overpayment plus interest) on Day 41 Request or apply for extended payment plan (overpayment and interest) Pay by check on or before Day 30 (interest not assessed) and do not appeal Allow recoupment (overpayment plus interest) on Day 41 and file an appeal by Day 120 Stop the recoupment by filing an appeal by Day 30 Request or apply for extended payment plan (overpayment plus interest) and appeal by Day 120 Same as for Carrier, FI and MAC identified overpayments (except the demand letter comes from the RAC) Carriers, FIs and MACs issue Remittance Advice Remark Code N432: Adjustment Based on Recovery Audit Carrier/FI/MAC recoups by offset unless provider has submitted a check or a valid appeal CMS Interest Rate 10.75% (Transmittal 174, CR 7155, 10/18/10) Continue to accrue during the appeals process and until all monies are recouped. RAC_ReferenceDoc_11-17-10 2 of 6 11/18/2010
Estimated Appeal Cost Contingency Fee Limitation of Recoupment Appeal Timeframes: Rebilling: Inpatient Claims That Do Not Meet Medical Necessity Criteria Physician E/M Services Reach Thru Denials- Automatic Review of Physicians Claims Found to be in Error During Inpatient (Part A) Claim Review? The American Hospital Association has estimated the appeal cost average to be $2,000 to $7,000 for hospitals. If a RAC loses at any level of appeal, the RAC must return its contingency fee. CR 6183 describes these changes to the providers, physicians and suppliers overpayment recoupment process http://www.cms.gov/mlnmattersarticles/downloads/mm6183.pdf Original Medicare (Part A and B Fee-For-Service) Appeal http://www.cms.hhs.gov/orgmedffsappeals/downloads/appealsproces sflowchartab.pdf Updated for CY 2010 From CMS FAQ # 9462: Providers can re-bill for Inpatient Part B services, also known as ancillary services, but only for the services on the list in the Benefit Policy Manual. That list can be found in Ch. 6, Section 10: http://www.cms.hhs.gov/manuals/downloads/bp102c06.pdf Rebilling for any service will only be allowed if all claim processing rules and claim timeliness rules are met. There are no exceptions to the rules in the national program. The time limit for re-billing claims is 15-27 months from the date of service. These normal timely filing rules can be found in the Claims Processing Manual, Chapter 1, Section 70: http://www.cms.hhs.gov/manuals/downloads/clm104c01.pdf CMS confirms in their answer to FAQ # 7738 that RACs may review EM levels, however, they add: CMS will work closely with the American Medical Association and the physician community prior to any reviews being completed regarding the level of the visit and will provide notice to the physician community before the RACs are allowed to begin reviews of evaluation and management (E & M) services and the level of the visit. CMS is often asked about other claim types that may be affected by a full inpatient denial and if the RACs will deny other claim types associated with the inpatient stay, such as physician evaluation and management services. At this time the RAC will not automatically deny claims that are RAC_ReferenceDoc_11-17-10 3 of 6 11/18/2010
associated with a full inpatient denial. However, these claims may be reviewed individually and there may be a need to fully/partially adjust the claim based on the documentation submitted. http://www.cms.hhs.gov/rac/01_overview.asp#topofpage Connolly Consulting, Inc. (Region C) CMS Website & RAC Email CMS PowerPoint: The Who, What, When, Where, How and Why? RAC 2008 Evaluation Report January 2009 Update RAC Final Statement: Scope of Work (SOW) Comprehensive Error Rate Testing (CERT) Office of the Inspector General Work Plan: American Medical Association (AMA) Government Accountability Office (GAO) March 2010 Report to Congressional Requesters www.connollyhealthcare.com/rac 1-866-360-2507 RACinfo@connollyhealthcare.com See approved issues: http://www.connollyhealthcare.com/terms.aspx http://www.cms.hhs.gov/rac/ RAC Email: RAC@cms.hhs.gov http://www.cms.hhs.gov/rac/downloads/recovery%20audit%20 Contractor%20(RAC)%20Program%20Slide%20Presentation.pdf http://www.cms.hhs.gov/rac/downloads/rac%20evaluation%2 0Report.pdf http://www.cms.hhs.gov/rac/downloads/appealupdatethrough83 108ofRACEvalReport.pdf http://www.cms.hhs.gov/rac/downloads/final%20rac%20sow.pdf http://www.cms.hhs.gov/cert/ http://oig.hhs.gov/publications/workplan.asp Fact Sheet: http://www.ama-assn.org/ama1/pub/upload/mm/399/rac-fact-sheet.pdf GAO found that CMS did not establish an adequate process to address RAC-identified vulnerabilities that led to improper payments and corrective actions were limited. Issued report: Weaknesses Remain in Addressing Vulnerabilities to Improper Payments Although Improvements Made to Contractor Oversight : RAC_ReferenceDoc_11-17-10 4 of 6 11/18/2010
http://www.gao.gov/new.items/d10143.pdf CMS Education on RAC Demonstration High Risk Vulnerabilities: Articles to provide education regarding RAC demonstration-identified vulnerabilities in an effort to prevent these same problems from occurring in the future, and for providers to understand the lessons learned and implement appropriate corrective actions. # 1- No documentation or Insufficient Documentation Submitted. # 2- Medical Necessity Vulnerabilities for Inpatient Hospitals # 3- Diagnosis Related Group (DRG) Coding Vulnerabilities for Inpatient Hospitals CMS MLN Matters SE1024, revised 10/13/10: http://www.cms.gov/mlnmattersarticles/downloads/se1024.pdf Reminding providers that medical documentation must be submitted within 45 days of the date of ADR letter. CMS MLN Matters SE1027, revised 11/12/10: http://www.cms.gov/mlnmattersarticles/downloads/se1027.pdf 20 identified DRGs: 514/515, 127, 116, 143,182, 478, 88, 243, 296, 524, 144, 320,138, 012, 132, 188, 517. Added 11/12: DRGs 316, 395,141. o Medical record must contain sufficient documentation to demonstrate the beneficiary s signs and symptoms were severe enough to warrant the need for inpatient care. CMS MLN Matters SE1028, revised 10/29/10: http://www.cms.gov/mlnmattersarticles/downloads/se1028.pdf 4 identified DRGs: 475, 076/077/120, 415, 397/143 o Ensure that all fields on documentation tools are completed. o Comply with ICD-9-CM Official Guidelines for Coding and Reporting and Coding Clinic for ICD-9-CM guidance. http://www.cdc.gov/nchs/data/icd9/icdguide10.pdf # 4- RAC_ReferenceDoc_11-17-10 5 of 6 11/18/2010
CMS Medicare Quarterly Provider Compliance Newsletter: New Medicare Learning Network educational product which is intended to help physicians, providers, and suppliers and their billing staff understand certain billing errors. # 1- Volume 1, Issue 1 October 2010: Guidance to Address Billing Errors Also highlights the consequences related to these errors or non compliance with Medicare s regulations and policies. http://www.cms.gov/mlnproducts/downloads/medqtrlycomp_newslett er_icn904943.pdf o Failure to submit requested documentation timely o Other services with excessive units o Physician Pharmaceutical injectables o Other drug codes, incorrect number of units billed o Principal diagnosis on claim did not match the principal diagnosis in the medical record (respiratory system w/vent) o Medical record did not include sufficient documentation o Not medically necessary for inpatient setting: Other cardiac pacemaker implantation, DRG 116 Hearth failure and shock, DRG 127 RAC_ReferenceDoc_11-17-10 6 of 6 11/18/2010