Home Health News

by Heather Wilson

I had the opportunity to speak with a hospice executive director this week who stopped by the Weatherbee offices for a visit during her vacation/workshop on Cape Cod. She talked about how challenging it is to keep up with issues like the RACs given the amount of information she needs to absorb and process each day.  We also received a number of emails this week in response to the last e-newsletter asking us why we are focusing so much attention on the RACs and why they are important.  I thought perhaps a broad RAC overview in organized sound bites might be helpful.

RAC Demonstration Project 2005 – 2008

• The RAC demonstration project was so successful CMS decided to make the program permanent and roll it out to all Medicare providers by January 2010.
• The RAC demonstration began with only three states and then added three more.
• Over the three years, the demonstration RACs recovered close to one billion dollars in overpayments – mostly from hospitals.
• RACs are supposed to identify overpayments and underpayments but 96% of the improper payments identified during the demonstration were overpayments.
• The demonstration project excluded hospice and home health claims.

RAC Regions

• CMS issued a Statement of Work, divided the country into four RAC regions and awarded contracts for each region.
• The RAC regions match the DME MAC regions, not the new MAC jurisdictions for hospices.
• RACs are not replacing RHHIs/FIs/MACs.

RAC Fee Structure

• RACs are paid on a contingency basis – the more money they recover, the more money they make.
• The contingency fees range from 9% to 12.50% depending upon the amount each RAC negotiated with CMS.
• RACs must return their contingency fee if the hospice is successful at any level of the appeal process.

RAC Audits

• RACs only review claims that have already been paid.
• Before a RAC can begin audits, provider outreach must be offered.
• RACs must seek approval from CMS for any audit areas they wish to review.  The approved areas are posted on the RAC websites.
• RACs conduct two types of review: automated and complex.
• Automated reviews use the RAC’s proprietary software to review claims and kick out obvious errors/overpayments.  There is no review of clinical records.
• For complex reviews, the RAC sends a request for records, reviews the record and makes a determination regarding whether an overpayment has been made.

Record Review Limitations

• CMS placed a limit on the number of records a RAC can review.
• For hospices, RACs can review 10% of the average number of monthly claims the hospice submits with a cap of 200 records for each 45 day period.
• If a RAC does not review any of a hospice’s records in a 45 day period, it is not allowed to “bunch” records and review double the amount in the next 45 day period.
• RACs have a three year look back period and are not allowed to review any claims prior to October 1, 2007.
• RACs will check the RAC Data Warehouse to make certain they are not reviewing any claims that have been suppressed or excluded.
• Suppression is temporary, exclusion is permanent.
• An excluded claim may be one that was once denied and then overturned on appeal.
• A suppressed claim may be one that is currently under review by the OIG or law enforcement.

Automated Review Results

• Automated reviews are only conducted when there is certainty the claim contains an overpayment.
• Hospices will not know that their claims are being reviewed but will know which issues have been approved for automated review because they will be posted on their RAC’s website.
• If the RAC makes an overpayment determination, the RAC sends a demand letter for payment – there is no request for records.
• The demand letter must include the reason  for the overpayment determination.

Complex Review Results

• Complex reviews occur when there is a high degree of probability that an overpayment has occurred.
• Issues under review must first be approved by CMS and posted on the  RAC’s website.
• The hospice has 45 calendar days (with a grace period of 10 days) from the date of the request for records letter to submit the records to the RAC.  In some circumstances an extension may be granted.
• If the hospice does not submit the records during this time period, it is an automatic denial and a demand for repayment will follow.
• Within 60 days of receiving the records, the RAC issues a review results letter.
• If an overpayment has been determined, the RAC issues a demand letter  and communicates the determination to the hospice’s fiscal intermediary/MAC.

Recoupment Process

• Interest on the overpayment begins to accrue 30 days after the date of the demand letter.
• Hospices can refund the overpayment by check or by offset.
• Some hospices may be eligible for an extended payment plan.
• Recoupment by offset against current or future payments begins 41 days after the date of the demand letter if no payment or arrangement has been made or appeal filed.
• Hospices may initiate a discussion period (not to be confused with an appeal) within 15 days of the demand letter to refute the findings.  It remains to be seen whether or not this is worth the effort  – it was not during the demonstration.

Stopping the Recoupment Process

• Recoupment can be delayed (for both automated and complex reviews) if the hospice files an appeal within 30 days of the demand letter.
• Interest accrues during the appeals process.
• Hospices will follow the same Medicare appeals process as they have for ADRs.
• If the hospice’s appeal is denied at the first two levels of appeal, recoupment with interest occurs.
• If the denial is overturned at the ALJ level, the money is returned to the hospice.

That is probably enough for today. We will be going into much more depth regarding all of these sound bites, as well as the Medicare appeals process in the weeks/months ahead.