"Recovery Audit Contractors"

Published on: August 23, 2010

The OIG Publishes Reports Targeting IRFs

The Office of Inspector General (OIG) published two reports targeting inpatient rehabilitation facilities (IRF). Most notable, however, is the CMS response to the OIG reports. The first report reviewed IRF transmission of patient assessment instruments for calendar years (CY) 2006 and 2007. This report showed that IRFs failed to timely submit patient assessment data and this could reduce the case-mix group payment. Based upon the OIG findings, CMS concluded that fiscal intermediaries (FI) overpaid IRFs approximately $20.2 million in CY 2006 and 2007. Additionally, FIs may have overpaid $19 million because of a lack of clarity in the regulations regarding data for claims originally submitted within the 27-day timeframe, but then later resubmitted to correct errors outside the 27-day timeframe.

The second report addressed the issue of whether proper status codes were used on IRF claims. When a patient is discharged to his or her home, Medicare pays the full prospective rate. In contrast, if a patient is transferred from the IRF (to another IRF, a short-term, acute care prospective payment hospital, a long-term hospital or a nursing home that qualifies for Medicare or Medicaid payments), Medicare pays a reduced amount. The OIG review found that out of 220 claims sampled, 213 claims were improperly coded as discharges. This resulted in an overpayment of approximately $1.2 million. For the four year period ending in September 2007, CMS determined the overpayments for this issue totaled approximately $34 million. Of particular importance to IRFs is the fact that CMS has indicated that it will share the OIG audit information with the Recovery Audit Contractors (RACs) and encourage them to utilize the findings in their reviews.

For more information on Medicare audits, or for assistance with an audit, please visit www.racattorneys.com or contact a Wachler & Associates attorney at 248-544-0888.

Published on: August 13, 2010

RACs Will Begin Medical Necessity Reviews

by Wachler & Associates, P.C.

The American Hospital Association (AHA) reported on August 10 that the Centers for Medicare and Medicaid Services (CMS) have approved “medical necessity review” audits for the Recovery Audit Contractor (RAC) program. According to the AHA, the approved audits include 18 types of inpatient hospital claims and one type of durable medical equipment claim. Although the report did not include the specific new audit issues, providers should expect to see these issues posted on RAC websites and may begin receiving additional documentation requests (ADRs) within the next two weeks.

For more information on recovery audit contractors, please visit www.racattorneys.com or contact a Wachler & Associates attorney at 248-544-0888.

Published on: August 10, 2010

District Court Ruling – Medicare Contractors Can Reopen Claims Regardless of “Good Cause”

by Wachler & Associates, P.C.

On July 28 the U.S. District Court of the Southern District of California granted the Department of Health and Human Services’ (HHS) motion for summary judgment in the case, Palomar Medical Center v. Sebelius. The case, filed on May 26, 2010, challenged a magistrate judge’s recommendation that HHS is correct in its position that a decision to reopen a Medicare audit claim is not subject to appeal, regardless of whether “good cause” was given for the audit.

Palomar Medical Center originally alleged that the Centers for Medicare and Medicaid Services (CMS) unlawfully reopened a claim without showing “good case” for the reopening as required by Medicare regulations. In addition, Palomar argued that CMS was incorrect in its position, that Administrative Law Judges (ALJs) may not review whether Medicare contractors, such as recovery audit contractors (RACs), have followed federal regulations when reopening claims.

This case has important consequences for Medicare providers because there appears to be no recourse when a Medicare contractor does not abide by CMS’ reopening rules.