Medicare Audits – RACs, ZPICs, MICs, OIG and Now. . . Patients?

I.   Medicare Audits and Senior Medicare Patrol Background

CMS Delays RAC Prepayment Review Demonstration Project . . . For Now.

(January 11, 2011):

I.     Background:

Last month, we discussed a new demonstration project by the Centers for Medicare and Medicaid Services (CMS) to test Recovery Audit Contractors’ (RACs’) ability to conduct prepayment review of Medicare Part A and B claims. RACs have successfully identified a wide variety of Medicare overpayments and have become one of CMS’ most important post-payment audit tools. In light of their continued success, last November, CMS announced that RACs would also now conduct  prepayment audits. An initial RAC Prepayment Demonstration Project was intended to cover many of the same types of prepayment review as those currently conducted by Zone Program Integrity Contractors (ZPICs) around the country.  The RAC Prepayment Demonstration Project was initially slated to be conducted in Florida, California, Mississippi, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri.

II.     Recent Developments:

After CMS announced the RAC Prepayment Demonstration Project, it reportedly received an outpouring of concerns regarding the scope of these prepayment audits.  In consideration of these concerns, yesterday CMS announced that it was indefinitely delaying implementation of the Project, and would give 30 days notice before the RAC Prepayment Demonstration Project was reactivated.

III.     Commentary:

Importantly, CMS’ decision to delay the RAC Prepayment Demonstration Project does not mean that they will not ultimately pursue RAC prepayment reviews in the future. Moreover, it is essential that health care providers keep in mind that other CMS contractors are already placing a wide variety of Part A and Part B providers on prepayment review.  As before, providers should regularly review their activities to ensure that all regulatory and statutory requirements are being met.  Broken down into areas of concern, providers should examine a number of basic elements.  We refer these elements as the “Seven Basic Charateristics of a Payable Claim.”

(1) Were the services administered medically necessary?

(2) Were the services actually provided (at a level of quality consistent with Medicare’s expectations)?

(3)  Are the services “tainted” by any statutory or regulatory violation (such as Stark, Federal Anti-Kickback or a False Claims Act violation)?

(4) Do the services meet Medicare’s coverage requirements?

(5) Have the services been properly and fully documented?

(6) Were the services correctly coded?

(7) Were the services correctly billed to Medicare?

If you are unable to answer “Yes” to each of the above questions, you have a serious problem.   It is important to keep in mind that there is no administrative appeals process or other effective legal remedy to get off prepayment review.  In fact, there is no “silver bullet,” despite what you have heard or been told.  The only way to be taken off of prepayment review is to show the responsible Medicare contractor that your claims fully meet each of Medicare’s myriad statutory and regulatory requirements for coverage and payment.  To that end, there are a number of preemptive steps a provider can take to reduce the chances of being selected for prepayment review in the first place.

To start, we recommend that you (or your qualified legal counsel) conduct a “gap analysis” of your claims.  In doing so, you will readily identify any possible deficiencies in your medical necessity assessments, coverage, documentation, coding and / or billing activities.  Moreover, you should consider assessing your utilization rate against the local and national average. For instance, for basic Evaluation and Management (E/M) services, are you or your providers billing higher level codes more often than your peers?  Medicare contractors use this data to identify possible outliers who may be engaging in improper coding and / or billing.  Data mining can also be used by contractors to identify potential problem providers who may need to be audited and / or placed on prepayment review.  Keep in mind, should you identify any overpayments when you conduct a gap analysis, you must report the overpayment and return it to the government within 60 days.  Any deficiencies noted in your review can be promptly addressed and added to the risk areas covered in your Compliance Plan.  After taking these steps, you will likely be well situated to respond to any prepayment audits initiated by a Medicare contractor, regardless of whether the contractor is a RAC or another Medicare contractor.

Get Ready – RAC Prepayment Reviews of Medicare Claims Are on the Horizon

(December 19, 2011):

I.          Introduction: 

As you know, RACs play an important role in the identification of Part A and Part B overpayments. Since the inception of the RAC Demonstration Project in 2005, RACs have successfully identified a number of improper claims, denying payment for reasons ranging from mere technical errors to broad concerns about medical necessity.  Unlike other contractors engaged in post-payment audits (such as Zone Program Integrity Contractors and Program Safeguard Contractors), RACs are not compensated on a fixed contract or cost-plus basis.  Instead, their compensation is based on the amount of overpayments they identify (which remain overpayments after any administrative appeals have been pursued). This arrangement has roundly been criticized by providers. Regardless of whether or not you agree with the RAC concept, the program is here to stay.  After reviewing the results of the RAC Demonstration Project, the government expanded the program and made it permanent.

II.         Expansion of the RAC’s Responsibilities:

On November 15^th, 2011, CMS announced that it was initiating a new demonstration project designed to help ensure that Medicare claims billed to the government are medically necessary and otherwise proper before they are paid. RACs will now be performing prepayment audits of provider claims. These reviews will likely be conducted in much the same manner as those currently initiated by other Medicare contractors. With the addition of RAC prepayment reviews, CMS hopes to further reduce the number of improper claims paid by the government each year.

III.        States to be Covered in the RAC Prepayment Demonstration Project:

The “RAC Prepayment Review Demonstration Project” is initially slated to target physicians, hospitals and other Medicare providers in Florida, California, Mississippi, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri.  Implementation of the new pilot project is set to begin in January 2012.

IV.        Impact of Being Placed on Prepayment Review:

Importantly, there is no administrative appeals process covering prepayment audits. As a result, it is not uncommon for providers placed on prepayment review to remain in this status for four to six months or until the provider is able to show the contractor that the services billed are both medically necessary and fully meet Medicare’s coverage and documentation requirements.  Unfortunately, being placed on prepayment review can prove disastrous for providers with a large Medicare patient load.  It can effectively delay payment for several months, even if the contractor ultimately finds that the claims qualify for coverage and payment.

V.         Avoiding Prepayment Review:

Unfortunately, there is no “silver bullet” you can use to completely eliminate the risk of being placed on prepayment review. Nevertheless, there are a number of preemptive steps you can take to reduce the likelihood of such an occurrence.  To start, you should conduct a “gap analysis” of your claims.  In doing so, you will be able to learn whether or not the services you are billing meet Medicare’s medical necessity, coverage and documentation requirements.  Additionally, you will likely learn whether your utilization of services is less than, comparable to, or exceeds that of your peers.  Any deficiencies noted can be promptly addressed and added to the risk areas covered in your Compliance Plan.  At this point, you will likely be well situated to respond to any prepayment audits initiated by a RAC or another Medicare contractor.

Liles Parker attorneys and staff have extensive experience conducting gap analyses and providing compliance guidance to health care providers.  Additionally, our attorneys are skilled in assisting providers who have been placed on prepayment review. For more information, please call us today for a free consultation at 1-800 (475) 1906.

CERT Audits are Serious – Don’t Take them Lightly

(November 23, 2011):

I.             What is a CERT Audit?

The “Comprehensive Error Rate Testing” (CERT) program was implemented as a mechanism for the Centers for Medicare and Medicaid Services (CMS) to assess whether their Medicare Administrative Contractors (MACs) are properly paying claims.  In other words, is a particular MAC failing to identify and deny improper claims?  Alternatively, is the MAC denying claims which do, in fact, qualify for coverage and payment? Essentially, the CERT program serves as an integral management tool for CMS as well as an important feedback mechanism for the MACs. When problem areas are identified, they can be actively addressed by a wide variety of Medicare contractors with audit responsibilities.  Notably, several of the MACs around the country have been aggressively reasserting their roles in the corrective action process.

Essentially, MACs write the checks on behalf of CMS.  As a result, they play an extraordinarily important role in the Medicare reimbursement process. Therefore, when a CERT auditor finds that a MAC has been incorrectly reimbursing providers for claims which may not qualify for coverage, it is very important that the MAC immediately address this system-level deficiency.

II.            Recent Actions Taken by MACs in Response to CERT Audit Findings.

In response to certain CERT audit findings, one MAC recently sent notification to providers of Evaluation and Management (E/M) services explaining that new “stringent corrective actions” will be taken to address some of the more common claims errors identified by the CERT auditors when conducting their reviews of MAC payment practices.  As recent correspondence to a provider reflects, MACs are taking the results of CERT audits quite seriously, and are expanding their program integrity efforts.  As one MAC recently wrote, the contractor stands ready to:

• Suspend a provider if that provider has “too many” payment errors (it does not state how many is “too many”);
• “[R]efer every physician” to that region’s ZPIC if those providers continue to bill for services which may constitute payment errors;
• “[R]efer every physician” to the ZPIC if there is a pattern of past payment errors; and,
• “[C]onduct prepayment reviews” of future claims, up to 100% of a provider’s claims.

To be clear, none of these potential corrective actions represent new authorities.  Nevertheless, the fact that MACs are now reasserting these points is reflective of CMS’ ongoing concerns regarding the prevalence of improper claims.  Indirectly, CMS is making it crystal clear that as the initial recipient and screener of Medicare claims submitted by providers for payment, MACs play an essential role in screening out improper claims and bad providers.  As Medicare’s primary gatekeepers, MACs are responsible for identifying both improper claims and providers who may be engaged in abusive and / or fraudulent practices.

III.           What Should You Do if You Are Notified of a CERT Audit?

Should you receive a CERT audit request for documents from a CERT Documentation Contractor (CDC), it is important to keep in mind that your practice or clinic is not being accused of fraud or wrongdoing.  Fundamentally, a CERT audit is primarily designed to identify deficiencies and mistakes made by Medicare contractors.  Nevertheless, it is imperative that you take a CERT audit request quite seriously.  At the end of the day, it will be you, not the MAC, who is responsible for any overpayments identified as a result of the audit. Moreover, bad results on a CERT audit may lead to further auditing in the future.

IV.          What Actions Should a Compliance Officer Take to Being Audited?

As an organization, if you are subjected to a CERT audit, the “horse is already out of the barn,” so to speak.  Your goal is to review and monitor your organization’s coding, billing and utilization practices on an ongoing basis so that improper claims are never submitted to your MAC in the first place.   In most cases, you can check your MAC’s website to determine if their CERT auditor has already identified certain areas of concern. For instance, one MAC recently reported that out of 508 errors identified in a CERT audit of certain Medicare claims, the contractor found that:

• 311 errors were due to “insufficient documentation.”  Notably, a majority of the errors in this category were because the medical record “did not contain a valid physician’s signature” or because a diagnostic test performed “did not contain a valid physician’s order” or an identification of the provider who rendered the service.
• 132 errors were due to “lack of medical necessity” based on the medical documentation submitted.
• 37 errors were due to “incorrect coding” (primarily related to laboratory testing).
• 10 errors were due to “invasive procedures that were assessed to be without medically necessity.”
• 9 errors were due to an “incorrect procedure code” used when billing the service.
• 6 errors were the result of “billing for services that were not rendered.”
• 2 errors were due to “other errors.”
• 1 error was due to an “incorrect discharge code being used.”

Compliance Officers can take these “general” risk areas, add them to the “practice-specific” risk areas already noted, and take special note of these concerns when conducting internal reviews. The only way to avoid the scrutiny of Medicare’s various administrative contractors (MACs, ZPICs, RACs and CERT auditors) is to avoid payment errors altogether.  While no provider is perfect, the development, implementation and adherence to an effective Compliance Plan can significantly reduce the number of improper claims submitted by a provider to a MAC for reimbursement.

V.            What Actions Should a Compliance Officer Take After Receiving a CERT Audit Letter?

As Compliance Officer, upon receipt of a CERT audit request, you should carefully review the request and take steps to assemble a complete set of medical records and other supporting documentation related to the specific claims at issue.  It is important not only to make sure that your documentation is complete when sending in records to a CERT contractor, but to make sure that compliance is a daily part of your practice. Ensuring that your documentation is appropriate and accurately documents both medical necessity and the level of services performed can greatly assist you in avoiding trouble down the road.

Now, more than ever, it is important that you have an effective Compliance Plan in place.  Your Compliance Plan should explicitly set out your organization’s policies about how to correctly assess the need for, and document the services provided to a Medicare beneficiary. Otherwise, as demonstrated by the tough stance being taken by the MAC discussed above, CERT audits and other Medicare post-payment audits could raise serious problems for your practice.

Liles Parker attorneys represent health care providers in CERT, MAC, ZPIC and RAC audits and investigations.  Our attorneys have extensive compliance experience and can conduct “gap” analyses designed to place your practice or clinic on solid regulatory footing.  To speak with one of our attorneys, call 1 (800) 475-1906 for a free consultation today. 

Medicare Post Payment Audits and the “Average” Provider

How Do Medicare Post Payment Audits Develop?

Many providers believe that their practice is a normal one – average billings, average patient load, costs of care which are consistent with industry standards – and that they need not be concerned with undergoing a Medicare post payment audit for being a “statistical outlier.” As you may know, Medicare and Medicaid contractors rely heavily on “data mining” to identify potential audit targets. With “data mining,” RACs, ZPICs and other entities conducting Medicare post payment audits can look at historical billing data, as well as billing date from regional and local peers of a particular provider, and determine if that particular provider’s billings appear suspect.

What Types of Data Are Used in Medicare Post Payment Audits?

While a provider might think its billing is in line with or below that of its peers, it is very important to remember that the Medicare post payment auditors are experts in “slicing and dicing” the data in so many ways that virtually every provider could show up as an outlier. For instance, perhaps the cost per patient, cost per procedure or cost per service plotted high, or maybe the total number of services per patient was high. For length-of-stay (LOS) providers, perhaps the total number of days of service on average was high or the billings per day ended up being high.

Moreover, even if a provider thinks they run a “tight ship,” a lot of Medicare claim reimbursement is dictated by the medical necessity of the services provided to each patient. For instance, a provider may have a string of highly complex, highly demanding patients, who need more in-depth care. These same providers may have gained a local reputation for handling high complexity cases, thereby further driving up the data “against” them. In any event, Medicare post payment auditors are looking out for high-billing providers and have many ways of interpreting the relevant data to justify their audit decisions.

Liles Parker handles Medicare post payment audit appeals, in addition to other health law matters. For more information or to speak to one of our attorneys, please call 1 (800) 475-1906 today for a free consultation.

ZPICs, PSCs, and RACs are Conducting Audits of SNFs — Skilled Therapy and Skilled Nursing Services Must be Fully Documented and Must Comply with Medicare’s Coverage Requirements

(July 10, 2011):  I.   Introduction:  In response to a report released by the Office of the Inspector General (HHS-OIG) of the Department of Health and Human Services, the Centers for Medicare and Medicaid Services (CMS) recently signaled that it will direct Medicare contractors to more closely scrutinize the billing patterns of skilled nursing facilities (SNFs). In fact, since HHS-OIG released its report, we have noted a dramatic increase in the number of SNF audits being performed by Zone Program Integrity Contractors (ZPICs), Program Safeguard Contractors (PSCs), and Recovery Audit Contractors (RACs). These audits can potentially result in extrapolated overpayments of millions dollars. 

In light of these enhanced audit and enforcement efforts, it is essential that SNFs take steps to better ensure that their actions fully comply with applicable documentation, coverage and payment requirements.  Areas of particular concern identified by ZPICs have included:

II.  Areas of ZPIC Concern:

Certifications and Recertifications. Federal regulations require that a physician certify a patient’s need for SNF services “at the time of admission or as soon thereafter as is reasonable and practicable.” The first recertification must take place by the patient’s 14^th day of SNF care, and each subsequent recertification must take place every 30 days. Providers should ensure that they conduct and document certifications and recertifications in a timely fashion. A number of contractors have refused to accept copies of physician’s orders — including orders for additional or ongoing therapy care — as a substitute for a certification or recertification.

Hospital Documentation. Medicare rules state that all patients receiving SNF care must have received inpatient hospital care for at least 3 consecutive days and be admitted to the SNF within 30 days following discharge from the hospital. Patients must receive SNF care for a condition for which they received treatment in the hospital. At a minimum, providers should obtain the following documentation related to each patient’s qualifying hospital stay: 

Patient history and physical.

All laboratory reports and tests.

All physician orders and progress notes.

All inpatient therapy progress notes.

Patient discharge summary. 

Providers should obtain this information from the discharging hospital as soon as possible after a new patient is admitted to the SNF. Incomplete or insufficient records (especially those that establish a baseline level of patient function) will give contractors ample bases on which to deny your claim.  

Therapy Documentation. All therapy care must be provided under a plan of care established by a physician, nurse practitioner, or licensed therapist. The documentation must also reflect the patient’s diagnosis, anticipated therapy goals, and the type, amount, frequency, and duration of therapy. The documentation should also include the patient’s prior functional ability, rehabilitation potential, and evidence of an expectation for material progress. At a minimum, the therapy documentation for each claim should consist of: 

A treatment plan for each RUG code billed and for all dates of service on the claim.

A log of all therapy minutes that were provided during the dates of service on the claim.

Progress notes to support the look-back period for each RUG code billed as well as the entire payment period for the dates of service. 

Providers should ensure that information from the therapy logs (especially the number of minutes of therapy) accurately reflects the amount of therapy provided and is consistent with the information coded on the MDS. Inconsistent coding will likely result in a denial of the claim, despite the fact that these therapy services were properly provided. 

Nursing Documentation. Under applicable regulations, patients must require skilled care on a daily basis in order to be eligible for post-hospital SNF services. Generally speaking, skilled nursing care is that which is so complex that it can only be safely and effectively performed by professional or technical personnel. Generally, examples of skilled nursing cited by SNF have often included:

Management and evaluation of the care plan;

Observation and assessment of the patient’s changing condition; or

Patient education services.

 SNFs have sought to demonstrate a skilled level of nursing care by documenting the nurse’s ongoing observation and assessment of a patient’s condition. However, in order for observation and assessment to qualify as skilled care, the patient’s condition must such that imminent deterioration is possible. In those cases, observation and assessment of the patient only constitutes skilled care until the patient’s condition is stabilized. Providers should therefore document any and all facts and circumstances which indicate a possible imminent decline in the patient’s condition. Otherwise, a ZPIC deny the claim on the basis that the care given does not constitute skilled nursing care.

III.  Recommendations and Conclusion:  Over the past year, the number of SNFs audited by ZPICs, PSCs and RACs has significantly increased, due in large part to the government’s continuing concern that the services being provided do not qualify for coverage and payment. 

While an audit of your SNF may be inevitable, you can reduce the likelihood of an overpayment through the use of an effective Compliance Plan which includes the use of periodic self-audits designed to identify possible deficiencies which may exist.  Once identified, SNFs must immediately take remedial steps to correct any deficiencies which are identified and modify its practices (and the risk areas within its Compliance Plan) to better ensure that these problems do not reoccur. 

Prior to conducting a review, we recommend that you contact your legal counsel to discuss possible review options.  Working with legal counsel, SNFs should consider working with outside third-party reviewers who are familiar with both ZPIC / PSC / RAC concerns and SNF coverage and payment requirements. While it is certainly important for providers to actively participate in the self-audit, a third party engaged to direct the review may be more objective in their assessments of the documentation than the therapy or skilled nursing providers themselves. Attorneys who are familiar with the risk areas unique to SNFs can also readily identify problems with documentation, recommend strategies for improvement, and work with SNFs to adjust their Compliance Plans accordingly.  Ultimately, the assistance of knowledgeable counsel could help providers avoid (or reduce) future liability it audited by a Medicare contractor.  As a final point, regardless of whether a self-audit is conducted by a third party or by the SNF itself, it is essential to keep in mind that:

 “If it doesn’t belong to you, give it back” – All providers, including SNF must comply with this simple rule.  Should you identify a Medicare or Medicaid overpayment, it must be returned to the government within 60 days. 

 “Documentation of services rendered must be accurate” – Therapy and skilled nursing services must be accurately documented in each patient’s medical records.  It isn’t sufficient to merely state that therapy or skilled nursing services were provided.  As detailed above, SNFs must document aspects of the therapy or services provided which qualify as “skilled” care.  Finally, documentation must accurately describe the work actually conducted and ensure that the duration of services documented is correct.     

Liles Parker attorneys have extensive experience representing SNF and other health care providers in connection with ZPIC audits and / or reviews by other Medicare contractors.  Should you have questions, please give us a call for a complimentary initial discussion of your project or case.  We can be reached at:  1 (800) 475-1906.

The ZPIC Audit and Appeals Process

(March 25, 2011) – Zone Program Integrity Contractors (ZPICs) have established themselves as the preeminent audit tool of the Centers for Medicare and Medicaid Services (CMS), surpassing both Recovery Audit Contractors (RACs) and Medicare Administrative Contractor (MAC) Benefit Integrity units.

RAC and ZPIC appeals follow the same general procedures, but it is important to learn these procedures regardless of whether you engage counsel. Timeframes, both for recoupment and filing appeals, are very strict, and you should ensure that you meet these deadlines.

For more information, please review the Liles Parker “ZPIC Audit and Appeals Process” Chart. Click here: ZPIC Audit and Appeal Process Chart

CMS Authorizes Medicare Contractors to Accept Administrative Appeals by Facsimile and Secured Internet Transmission but Many Contractors have Yet to Implement this Change

(November 21, 2010):  Earlier this year, the Centers for Medicare and Medicaid Services (CMS) issued Change Request (CR) 6958, titled “Guidelines to Allow Contractors to Develop and Utilize Procedures for Accepting and Processing Appeals Via Facsimile and/or Via a Secure Internet Portal/Application.”  Health care providers and their counsel welcomed the guidance, anticipating that this change would make it easier when filing requests for redetermination and reconsideration. 

To its credit, CMS authorized Part A and Part B Medicare Administrative Contractors (MACs), Durable Medical Equipment MACs, Fiscal Intermediaries, Carriers and Regional Home Health Intermediaries (RHHIs) to accept administrative appeals by facsimile and / or secured internet transmission.  However, CMS made this change optional — at the discretion of the contractor.  CMS did not require (at least for now) that contractors implement this change.  Nor did CMS provide additional funding for contractors desiring to allow providers to file administrative appeals in this fashion.  

Many health care providers around the country have experienced difficulty quickly and appropriately responding to pre-payment review actions and extrapolated post-payment audits conducted by Zone Program Integrity Contractors (ZPICs). As Recovery Audit Contractors (RACs) work their way down the provider chain, these pressures will undoubtedly increase.  The option to file an administrative appeal by facsimile or secured internet transmission would significantly assist health care providers, by both reducing filing costs (e.g. FedEx / USPS expenses) and by providing providers with options for handling appeals that must be immediately filed in order to meet applicable deadlines.

To date, few contractors have chosen to allow health care providers to file administrative appeals by facsimile or secured internet transmission. For example, TrailBlazer serves as the Part A and Part B MAC for providers in Texas.  Over the last year, providers in South Texas have been increasingly subjected to site visits, Medicare number revocation actions, pre-payment reviews and post-payment audits. Earlier this month, TrailBlazer released updated guidance covering the administrative appeals process for use by providers in its MAC region. Unfortunately, TrailBlazer confirmed its position in this regard, expressly stating “At this time, redeterminations may not be faxed to TrailBlazer.”  Hopefully, the filing of appeals by facsimile and secured e-mail will be permitted by TrailBlazer in the near future.

 As set out in CR 6958, CMS requires that contractors choosing to accept administrative appeals by facsimile and secured e-mail abide by a number of requirements covering the handling of appeals filed in this fashion.

Liles Parker attorneys represent a wide variety of health care providers in Medicare administrative overpayment cases around the country.  Should you have questions regarding a Medicare audit of your Physician Practice, Clinic, Home Health Agency, Hospice, Community Mental Health Center or DME Company, give us a call for a complimentary consultation.  Mr. Liles can be reached at 1 (800) 475-1906.

Health Data Insights Begins Medical Necessity Reviews

(August 30, 2010): Introduction:

Health Data Insights (HDI), the Centers for Medicare & Medicaid Services (CMS) Recovery Audit Contractor (RAC) responsible for auditing health care providers in Region D, has announced it will immediately begin reviews on previously approved projects which involve the medical necessity of selected inpatient DRG payments.  A complete list of the medical necessity “issues” currently being examined by HDI can be found on its Website. 

 

Scope of Responsibility:

RACs, such as HDI, contract with the CMS to perform post-payment reviews of Medicare claims to find overpayments (and theoretically, underpayments in return for a percentage (from 9 percent to 12.5 percent) of the amounts recovered. Put simply, they “eat what they kill.” HDI was awarded responsibility for handling Region D audits.  Region D consists of 17 States and 3 U.S. territories (Alaska, Arizona, California, Hawaii, Iowa, Idaho, Kansas, Missouri, Montana, North Dakota, Nebraska, Nevada, Oregon, South Dakota, Utah, Washington, Wyoming, Guam, American Samoa and Northern Marianas).  HDI’s contingency fee contract award dollar amount is 9.49% according to CMS.  The 29 DRGs where HDI will be examining “medical necessity” requirements, include certain procedures related to:

• Nervous System Disorders
• Respiratory
• Cardiac Procedures
• Cardiovascular Diseases
• Cardiovascular, Other
• Gastrointestinal Disorders
• Musculoskeletal Disorders
• Endocine, Nutritional & Metabolism Disorders
• Kidney & Urinary Tract Disorders, and
• Blood & Immunological Disorders

Provider Concerns:

A continuing concern of health care providers is that the RAC determinations of medical necessity will be performed by personnel with little, if any, specific knowledge of the specific claims at issue. Given the RAC business model, providers remain worried that audits will not reflect a fair and reasonable application of applicable coverage requirements. This is especially worrisome in light of the fact that approximately 41 percent of overpayments in the demonstration project were due to medical necessity determinations.

Audit and Appeal Considerations:

As set out CMS’ June 2010 reported entitled “The Medicare Recovery Audit Contractor (RAC) Program — Update to the Evaluation of the 3-Year Demonstration,” as of 03/09/10, the cumulative number of claims with overpayment determinations identified by RACs has grown to 598,238.  Notably, only 76,073 of these overpayments were appealed by health care providers.  Of the claims appealed, over half were decided in favor of the health care provider.  Interestingly, HDI had one of the highest number of claims denials overturned on appeal, in favor of the appealing provider. Four basic steps to be taken when preparing for a RAC audit include:

(1)               Monitor issues of interest to the government and its contractors.  Are the services you provide currently under scrutiny by RACs and other Medicare contractors?  You should keep abreast of current enforcement initiatives and mistakes made by other providers.  Learn from their mistakes. 

(2)               Know where your current weaknesses are and fix them.  This typically requires that you conduct an internal audit of your coding, billing and operational practices.  Take care when engaging an outside “consultant.”  We have seen numerous cases where the consultant conducts an internal assessment and identifies multiple problems with the provider’s prior and current practices. Unfortunately, few consultants consider the fact that their adverse report to the provider will likely not be privileged.  As a result, if the provider is ever investigated, the report could easily serve as a roadmap for the government. Prior to conducting an internal audit – call your attorney!   

(3)               Know your rights. If your practice is audited, know your rights both during the audit and once the audit results are issued by the contractor.  There is a fine line between exercising your rights as a provider and being perceived by a contractor as refusing to cooperate in their review.  You should immediately call your attorney to clarify which actions must be taken if your practice is subjected to a site visit by a Medicare contractor.  The best practice would be for you to call your attorney today and discuss how you should respond in the event of a site visit.  CMS takes allegations of non-cooperation very seriously.  Should the contractor argue that you refused to cooperate in their efforts, you could find the action taken by the contractor is to seek a revocation of your Medicare number.  This is an especially sensitive issue.

(4)               Have a firm understanding of how the Medicare appeals process works.  Depending on the amount in controversy, you may choose to handle Medicare claims denials internally.  As the use of data-mining increases, Medicare contractor reliance on provider profiling will continue to increase.  While mere errors or mistakes should be returned to the government (or not appealed is properly denied by the contractor), should you find that claims were improperly denied, we recommend that you appeal such denials. RACs and other Medicare contractors will likely focus on providers with high error rates. 

While every case is different, health care providers should consider the following when faced with a RAC audit:

The scope of RAC audits is expanding.  In the past, hospitals and other “low-hanging fruit” were the focus of HDI and other RACs around the country.  As a result, some physicians, small practice groups, clinics and other smaller providers have grown complacent in their compliance efforts.  This is a mistake, as more issues are identified and approved, the RACs will be expanded the scope of their reviews.  Now is the time to get your practice in order.

ZPICs and PSCs continue to represent a greater danger to small physician practices and health care provider groups. Zone Program Integrity Contractors (ZPICs) and Program SafeGuard Contractors (PSCs) are not subject to the time, audit and service scope limitations imposed on RACs.  The implementation of effective compliance efforts will help reduce the likelihood of liability should the practice be audited by a ZPIC, PSC or RAC.

Beware of “canned” consultant solutions.  As a search on Google will readily attest, consulting firms around the country are touting the latest RAC audit “tool” or audit response “template.”   We recommend that you exercise caution when retaining any organization that “guarantees” results or seeks to dissuade you from engaging legal counsel support.  

Retain experienced health care counsel. Under the current appeal structure, there is a significant likelihood that your case will eventually be heard by an Administrative Law Judge (ALJ).  Importantly, ALJs are lawyers — not typically clinicians.  In defending your case, it is strongly recommended that you retain legal counsel, regardless of whether you ultimately decide to work with a consultant or employ a clinician as an expert witness.  Legal counsel will be best situated to understand and argue the various legal arguments which may prove essential in winning your case.

While RACs have not represented much of a threat to individual physicians and small practice groups in the past, the future is likely to be quite different.  Physicians must already contend with audits by ZPICs, PSCs, Medicaid Integrity Contractors (MICs), Medicaid Fraud Control Unit (MFCU) investigators and Comprehensive Error Rate Testing (CERT) contractors.  The expansion of the RAC program will further increase the need for statutory and regulatory compliance.  Physicians and small practice groups and organizations should avoid the misconception that their limited size and / or relative billings will keep them “off the radar,” thereby limiting their chances of being audited.

ZPICs and PSCs are continuing to rely statistical sampling in an effort to extrapolate damages:

In our practice, we have seen a marked increase in the number of solo physicians and small providers groups who have been subjected to pre-payment and post-payment audits of their Medicare billings. 

In the case of post-payment reviews, the vast majority of Medicare audits we have worked on have included the statistical extrapolation of damages by ZPICs and PSCs.  We expect RACs to follw suit as the number of their audits increase.  In defending a post-payment audit, it is essential that you examine the statistical methodology utilized and identify any flaws in the contractor’s approach.  We have successfully convinced both Qualified Independent Contractors (QICs) and ALJs to invalidate statistical extrapolations based on mistakes in the process committed by the ZPIC or PSC.  Arguments can be legal and / or methodology-based.  In many cases, it is necessary to engage the assistance of a qualified statistical expert.  Should you succeed – be ready to defend this decision before the Medicare Appeals Counsel (MAC).  Over the past year, practically every invalidation of the statistical extrapolation of damages was appealed to the MAC by the Administrative QIC (AdQIC). 

Summary:

Health care providers must be proactive in their efforts to better comply with applicable Medicare coding and billing practices.  Should your practice be placed on pre-payment audit or have its post-payment Medicare claims reviewed, we recommend that you immediately contact your health care attorney for assistance.

Should you have questions regarding RAC, ZPIC or PSC audit processes, you may contact us for a complimentary consultation.  We can be reached at 1 (800) 475-1906.

 

Region B RAC CGI Announces that it will Begin Review of Eighteen Projects that Involve Medical Necessity

(August 25, 2010): CGI Technologies and Solutions, Inc., (CGI), has announced it will immediately begin reviews on 18 newly approved projects that involve the medical necessity of selected inpatient DRG payments.  A complete list of the “issues” currently being examined by CGI can be found on its website. http://racb.cgi.com/Issues.aspx

Recovery Audit Contractors (RACs), such as CGI, contract with the Centers for Medicare & Medicaid Services (CMS) to perform post-payment reviews of Medicare claims to find overpayments and underpayments in return for a percentage (from 9 percent to 12.5 percent) of the amounts recovered. Put simply, they eat only what they kill.  CGI was awarded responsibility for handling Region B audits.  CGI’s contingency fee contract award dollar amount is 12.50% according to CMS.  Issues where CGI will be examining “medical necessity” requirements, include certain procedures related to:

• Chest Pain
• Other Circulatory System Diagnoses
• Other Vascular Procedures
• Syncope & Collapse
• Red Blood Cell Disorders
• Atherosclerosis
• Heart Failure & Shock
• Esophagitis, Gastroenteritis & Misc Digestive Disorders
• Musculoskeletal Disorders
• Chronic Obstructive Pulmonary Disease
• Respiratory
• Nutritional and Metabolic Disorders
• Kidney & Urinary Tract Infections
• GI Disorders
• Percutaneous Cardiovascular Procedures
• Renal Failure
• Nervous System Disorders and
• Cardiac Arrhythmia & Conduction Disorders.

 As CGI’s website discusses, when asked “What utilization criteria will CGI be using to review for medical necessity?” in its FAQ section, CGI states, “CGI will utilize the rules for National Coverage Determinations (NCD), Local Coverage Determinations (LCD), HCPCS, ICD-9 (ICD-10 when implemented and appropriate) and CCI that were in effect on the date of service.” 

 A continuing concern of providers is that the RAC determinations of medical necessity will be  performed by personnel with little, if any, specific knowledge of the specific claims at issue.  Given the RAC business model, providers remain worried that audits will not reflect a fair and reasonable application of applicable coverage requirements. This is especially worrisome in light of the fact that approximately 41 percent of overpayments in the demonstration project were due to medical necessity determinations.

 Should you have questions regarding the RAC process, you may contact us for a complimentary consultation.  We can be reached at 1 (800) 475-1906.

 

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