Medicare home health care providers are familiar with having claims denied after services have been provided in good faith. Sometimes a legitimate error was made by a nurse or therapist. Sometimes a document went missing but turned up later. Sometimes the federal agency or contractor denying the payment makes an error.
Typically, a payment is refused by the agency’s Regional Home Health Intermediary (RHHI), also known colloquially as a Fiscal Intermediary or FI. Soon, though, a new government program will be sending auditors to healthcare providers looking for payments already made that should not have been made but were not caught by the FI prior to payment. They are expected to focus on hospitals and physicians first but will turn their attention to home care and other post-acute providers soon enough.
The new program, Recovery Audit Contractors, recently completed a demonstration project in six states and has been declared beneficial and approved to expand to all 50 states plus the District of Columbia and various U.S. territories. This program has the potential to become a disaster for Medicare-certified home care providers on the scale of the great IPS debacle of 1996-1999 when more than 2,000 agencies were forced to close their doors. To the extent that it weeds out professional fraud artists posing as healthcare providers, it will be a benefit. Its mandate, however, seems to be to find “overpayments” to all Medicare providers and not necessarily to focus on actual criminal operations.
In order to mitigate the coming danger, this newsletter, “RAC Assistance for Home Care” and its sister publication “RAC Assistance for Hospice” will work hard to provide information useful to providers that rely on Medicare payments for the survival of their business. Until RAC audits begin in earnest, early information will be about the structure of the program and what is generally believed can be expected.
When contractors turn their attention to home care and hospice providers, we will report on the way they conduct themselves and let our readers decide whether they are acting in the best interest of patients and taxpayers or merely maximizing the value of their government contract. Our hope is that readers will share their experiences with us so that we can, in turn, share them with all readers.
RAC basics
Conceived during the Bush administration as a way to protect the Medicare Trust Fund and taxpayers against wasteful overpayments, the RAC program invited private companies to bid for a limited number of contracts to provide an auditing and payment adjustment service. Winning bidders have largely assigned the day-to-day tasks to subcontractors which are turning out to be, in many cases, commercial collection agencies. They, in turn, hire auditors with, it is hoped, knowledge and experience with clinical coding and standard healthcare practice.
Competition for these contracts was fierce and actually delayed for a time by lawsuits filed by losing bidders. And why not? The contracts promise to be quite lucrative, the rule having been designed to provide a monetary incentive for the contractors to deny as many payments as possible. They will keep between 9% and 12.5% of the amounts they recoup, as a straight commission reward. Though their instructions are to look for underpayments as well as overpayments, the motivation established by a commission structure is clear.
RAC auditors will be empowered to examine claims paid on or after October 1, 2007. They will be looking for medically unbelievable reasons for care and treatments provided to Medicare beneficiaries. In the case of home health care, they will also be closely examining patient homebound status. Step one will be an automated process, using computer logic to make “medically unbelievable edits.” If a certain number of “MUE” are kicked out by the computer, charts may be demanded for scrutiny by a person.
Upon the discretion of the contractor, two things can happen next. Either a 100% chart audit may be performed and denials based on findings or the percentage of deniable episodes may be extrapolated to the agency’s entire census and the payment recoupments based on that calculated guess.
Editor’s note: Building on the MUE concept, we will offer a regularly recurring feature in this space. When stories of what we call Medically Unbelievable Denials reach us, we will report on the ones that may not seem fully justified. Naturally, this feature will be called “Clear as M.U.D.”
Cross all t’s, dot all i’s, write down all dates
If contractor practice during the demonstration phase is any indication, they will insist that the letter of the law be obeyed in every case. For example, there is a rule that says every physician signature on orders must be accompanied by a date. Many denials — accounting for millions of dollars in takebacks — resulted from a forgetful physician’s date omission. Though the care was surely delivered and the patient may well have improved, though the agency’s costs were long ago spent and paychecks cashed, entire payment episode amounts can be retroactively recouped for this reason alone.
One owner’s experience
Though we cannot use the individual’s name, nor the name of his home care agency, we have it on reliable authority that this early RAC experience is a true story. During the demonstration phase, a RAC audit found reasons to declare a substantial number of episodes as “overpayments.” Without warning, $60,000 was removed from the company bank account.
The owner discovered the withdrawal while checking his account online one morning. Surprised is not the word to describe his reaction. He wound up in the hospital with what fortunately turned out to be only an anxiety attack. His symptoms, as the clinicians among our readers well know, mimicked a heart attack and he literally feared for his life for several hours.
What to expect from this newsletter
As this news service evolves through the remainder of this year, and quite likely for years to come, we will provide detail along two story lines. First, our consulting clinicians will provide both general guidelines and specific examples of coding and charting practices that are more likely to protect against a payment takeback. We will also report on the kinds of charting that invite scrutiny and, ultimately, denials.
Second, we will write extensively about the appeals process. So far, those agencies that have gone through it are finding that they receive almost no satisfaction at the first and second appeal level but that at the Administrative Law Judge (ALJ) level nearly 90% of denials are overturned. See this week’s accompanying article, “Denial Appeals Basics.”
One expert reports that his clients are discouraged from continuing their appeal during early levels by the mountains of paper thrown at them. Professional examination of the documents, however, often reveals little of substance, sometimes little knowledge of healthcare practice and terminology on the part of the accuser. Those not frightened away by this common legal tactic in the early stages are rewarded with an extremely high percentage of overturn decisions by the ALJ.
Lastly, this newsletter will be a community effort. Reader input, in the form of comments to articles as well as full article submissions, will be welcome and will add to the richness of the information available here. If you have been paid a visit by a Recovery Audit Contractor, please tell us your story.
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