Audit

Published on: May 27, 2011

Recent RAC Updates

Over $365 Million in Improper Payments Identified By RACs Since October 2009

CMS recently reported that RACs have identified $312.2 million in overpayments from October 2009 through March 2011. During the same period, $52.6 million in underpayments were identified. While these figures are well below the over $1 billion in improper payments identified during the demonstration program, they are expected to increase. RACs are currently reviewing large numbers of DRGs in coding and medical necessity reviews and it is anticipated that these will result in identification of more improperly billed claims. The first quarter of 2011 accounted for $184.6 million in identified improper payments and these trends can be expected to continue for the foreseeable future.

CMS also released the top approved issue for each RAC region. The top issue for RAC Region A is Ventilator Support of 96+ hours; the top issue for RAC Region B is Extensive Operating Room Procedure Unrelated to Principal Diagnosis; the top issue for RAC Region C is Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Provided During an Inpatient Stay; and the top issue for RAC Region D is Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Provided During an Inpatient Stay.

Published on: May 25, 2011

All Four RAC Regions Have Recently Added Additional Issues Approved for Review in RAC Audits

by Wachler & Associates, P.C.

DCS Healthcare: The Region A RAC added three new medical necessity claims to its approved issues list. These claims are:

Peripheral/cranial nerve and other nervous system procedures with MCC (MS-DRG 040);
ECMO or tracheostomy with MV 96+ hrs or PDX except face, mouth and neck with major O.R. (MS-DRG 003);

Published on: May 17, 2011

RAC Recovered $237.8 Million in Six-Month Period

by Wachler & Associates, P.C.

Recovery Audit Contractors (RAC) recovered $237.8 million in the six-month period that ended in March. This amount is already three times more than the amount of money recovered in the previous year. According to recent estimates, CMS alleges that the total sum of Medicare improper payments exceeds $47 billion annually. If you have been audited by a RAC, ZPIC, MAC, carrier or other Medicare contractor and need assistance with the defense of the audit, please contact a Wachler & Associates attorney at 248-544-0888.

Published on: March 2, 2011

Recent RAC Activity

by Wachler & Associates, P.C.

CGI, the Recovery Audit Contractor (RAC) for Region B, recently removed four DRG validation issues from its list. This means that providers in Region B will no longer be subject to RAC audits on these particular procedures.

Connolly has added several new RAC issues to its CMS approved list. One issue, Duplicate Claims, has been added for outpatient hospital claims. Twelve issues have been added to DRG validation claims, and twenty-four issues have been added for medical necessity claims. Providers in Region C need to be aware and prepared for these new issues being audited.

Some examples of the new medical necessity issues include: Skin graft and/or debridement DRG 577; Endocrine, nutritional and metabolic disorders DRG 639; Acute inpatient admission, MS-DRG 491. For a full list of the new issues in Region C, please visit Connolly’s website.

Published on: February 25, 2011

CMS Announces New Limits on RAC Record Requests

by Wachler & Associates, P.C.

Effective February 14, 2011, CMS has limited the number of records RACs may request when reviewing Medicare claims from Physicians and other practitioners. These requests for medical records, which are used in connection with complex claims reviews, will be limited based on the size of the group/office being audited.

If you have any questions regarding RAC, Medicare or other third party payor audits, please contact a Wachler & Associates attorney at 248-544-0888 or www.Wachler.com.

Published on: February 11, 2011

New Issues Posted by RACs

by Wachler & Associates, P.C.

Connolly Healthcare, the region C RAC, recently posted 77 new issues eligible for review. Twenty-three of these new issues involve Medical Necessity reviews, several of which include reviews of acute inpatient admissions to validate the medical necessity of short stay admissions. These new approved issues implicate a variety of MS-DRGs, which will involve reviews for the medical necessity of the services and whether the MS-DRGs, which will involve reviews for the medical necessity of the services and whether the MS-DRG at issue was billed correctly.

DCS Healthcare, the RAC for region A, posted 7 new issues for review. The new approved issues involve MS-DRG validation. The issue description provided by DCS Healthcare indicates that the reviews require that diagnostic and procedural information and the discharge status of the beneficiary, as coded on the claim, matches the attending physician’s description and the patient’s medical record.

If you are facing a RAC audit or would like more information about a RAC related issues, please contact a Wachler & Associates attorney at (248) 544-0888 or visit www.Wachler.com.

Published on: November 8, 2010

CMS Publishes Proposed Rule Regarding Medicaid RAC Activities

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) published a proposed rule on November 5 regarding RAC activities for Medicaid programs. Section 6411 of the Patient Protection and Affordable Care Act (PPACA) requires states to contract with one or more Medicaid RACs by December 31, 2010. By that date, states are also required to submit to CMS a State Plan Amendment (SPA) which documents the initiation of the Medicaid RAC program. The proposed rule stated April 1, 2011 as a goal for Medicaid RAC implementation.

The proposed rule addresses four main points including contingency fees, reporting, appeals and coordination of audit efforts. Comments are requested on the current methodologies for determining the maximum contingency fees allowed under the Medicaid RAC program. According to the proposed rule, no state will pay a contingency fee higher than the maximum allowed under the Medicare RAC program, unless it provides ample justification for an exception based on the existing state law. States must also provide incentives for the identification of underpayments to the Medicaid payments.

In addition, under the proposed rule states will report to the federal government only the net amount of collected overpayments after contingency fees that were paid to the contractor have been subtracted from the total. Each state will be required to refund the federal share of the net overpayment amount to the federal government. States will also have to issue reports describing the effectiveness of their Medicaid RAC programs.

Published on: October 25, 2010

Most Recent RAC Activity

by Wachler & Associates, P.C.

The RACs for Regions A, B and C recently added new approved issues for review. The RAC for Region A, DCS Healthcare, added two issues, DRG validation claims and outpatient claims, to its list for providers in Region A states. CGI, the RAC for Region B, added two new issues for professional services claims and the RAC for Region C, Connolly Healthcare, added a new issue for outpatient hospital claims and physician (carrier) claims.

For more information on Recovery Audit Contractors, or for assistance with a Medicare audit, please contact a Wachler & Associates attorney at 248-544-0888.

Published on: October 20, 2010

CMS Releases Letter to State Medicaid Directors Regarding Medicaid RACs

by Wachler & Associates, P.C.

On October 4, 2010 the Centers for Medicare and Medicaid Services (CMS) published a letter that was sent to state Medicaid directors as part of a series of letters that will provide guidance for the implementation of provisions of the Patient Protection and Affordable Care Act (PPACA), including the expansion of the Recovery Audit Contractor (RAC) program to Medicaid. States are required to contract with Medicaid RACs consistent with state law and the RACs will be paid through contingency fees. States will submit a State Plan Amendment (SPA) to CMS through which the State will either attest that it will establish a Medicaid RAC program by December 31, 2010 or indicate that it is seeking an exemption from the requirements. CMS will permit states to maintain flexibility in the design of the state’s Medicaid RAC program and the number of entities the state will enter into contracts with, so long as the states act within the parameters of the statutory requirements.

States that seeks to request variances or exceptions from the Medicaid RAC program must submit to CMS a written request from the state’s Medicaid Director to the CMS/Medicaid Integrity Group. CMS has expressed that it will grant complete Medicaid RAC program exceptions rarely and only under the most compelling of circumstances.

Another important component of the Medicaid RAC program is the contingency fee payment to the contractors. PPACA requires that Medicaid RACs be paid only from amounts “recovered” on a contingent basis for collecting overpayments and in amounts specified by the State for identifying underpayments. Although CMS will not dictate the contingency fee rates, the maximum rate will be established. CMS will publish a notice in the Federal Register, no later than December 31, 2010, to announce the highest Medicare RAC contingency fee rate and this rate will apply to Medicaid RAC contracts with a performance period beginning on or after July 1, 2014. The contingency fee rates should be reasonable and take into account several factors, including: the level of the effort performed by the RAC, the size of the state’s Medicaid population, the nature of the state’s Medicaid health care delivery system and the number of Medicaid RACs engaged. The fees paid to Medicaid RACs must include amounts associated with (1) identifying and recovering overpayments and (2) identifying underpayments. States must maintain an accounting of amounts recovered and paid, and ensure that the total Medicaid RAC fees paid are not more than the total amount of overpayments collected.

Published on: October 8, 2010

American Hospital Association Releases RACTrac Survey

by Wachler & Associates, P.C.

In September the American Hospital Association (AHA) released its RACTrac for the second quarter of 2010. RACTrac is a nationwide survey conducted by the AHA which documents the ongoing Recovery Audit Contractor (RAC) activity. The purpose of the survey is to fill the void of information provided by the Centers for Medicare & Medicaid Services (CMS) on the RAC program’s impact on hospitals.

RACTrac reported that 1,389 hospitals participated in the survey from all of the RAC regions. During the first quarter of 2010, more than two thirds of these hospitals experienced RAC activity. The survey results indicated that the RACs primarily engaged in complex reviews. For instance, during the first quarter of 2010, 88 percent (over $15.5 million) of the reported RAC activity by hospitals participating in the survey was involved in complex reviews, while 20 percent was involved in automated reviews. Complex reviews require human review of the medical records and a determination of whether or not an improper payment was made. If an improper payment is identified, the hospital will receive a letter stating that the associated claim has been “denied.” Automated reviews, however, involve a claim determination without human review of the medical records. Instead, the RACs utilize software to detect certain types of errors. The RAC will send a demand letter to the hospital, providing notice that an overpayment has been detected.

Participating hospitals also reported appealing 16 percent of the RAC denials available for appeal. Of the claims that had completed the appeals process at the time of the survey, 13 percent were overturned in favor of the provider. However, 1,571 of the claims are still in the appeals process and the overturned rate may increase once the appeals process is complete.