CMS recently issued a transmittal with instructions to Zone Program Integrity Contractors (ZPIC) – new Medicare contractors who are replacing the Program Safeguard Contractors (PSCs) – regarding suppressions and exclusions in the RAC Data Warehouse.  The RAC Data Warehouse is a web-based application that enables the RACs to determine if another entity already has a specific provider or claim under review.  The goal is to prevent conflicts between RAC activity and the the activities of other Medicare contractors.  The recent transmittal specifically requires ZPICs to enter suppressions in the RAC Data Warehouse to mark providers or subsets of a provider’s claims as off-limits to the RACs and unavailable for RAC scrutiny.   Given the increased scrutiny all providers are experiencing, hopefully the RAC Data Warehouse will function as intended and spare a provider from having the same claim(s) reviewed by RACs, MACs, ZPICs, QIOs etc etc.

As if further evidence was needed that fighting Medicare fraud is on the front burner in Washington, Senator Chuck Grassley (R-Iowa) recently introduced a bill called Fighting Medicare Payment Fraud Act of 2009. This bill would allow HHS up to extend the amount of time before paying claims from the current 30 days (prompt payment rule)  to up to one year if there is a suspicion of potential fraud or abuse.  This would allow CMS more time to review claims before payment is made.  The bill would authorize this extension for certain suspect categories of providers or specific providers.  The bill would also require the Office of Inspector General (OIG) to provide annual recommendations of categories of providers or suppliers where additional scrutiny is needed before payments are made under the prompt payment rule.  Click here to read the Senator’s thinking behind this new bill.

The four RACs are continuing to post new approved issues on their websites and expanding their reach.  Hospice remains, thankfully, off their radar screen.  Long may that last… !

Here are some considerations for assessing your risk level:

1. Who will do the assessment?
   1. Do you have adequate internal resources with appropriate tools to review a sample of your hospice’s clinical records to ensure forms are valid, signed and timely and that documentation supports the eligibility of each patient for each day on service and for every level of care provided?
   2. Do you need to retain outside clinical consultants to provide expert and objective clinical record reviews to help identify risk exposure and opportunities for improvement?
2. Do you need to retain counsel to protect findings under attorney-client privilege?
   1. This is usually a good idea if you retain outside consultants and have concerns about what might be discovered during an assessment.
3. How far back in time should you review?
   1. It is usually best to start with where you are currently – with active patients and preferably for time frames for which claims have not yet been submitted. If problematic issues are discovered you can then determine (perhaps with the advice of counsel) how much farther back in time you might need to go.
4. What do you do with the results of the audit?
   1. If your findings indicate the possibility that your hospice has been overpaid for claims it has submitted (for example, if documentation does not support patient eligibility) there is the possibility you might be in a voluntary disclosure situation. If that is the case, retain counsel and get legal advice before you do anything else.
   2. If the findings are of concern but do not clearly indicate an overpayment situation, use the findings to identify opportunities for improvement. For example, what needs to be done to ensure members of the IDG have the tools, resources and training they need to accurately and thoroughly document patient eligibility?

Once an assessment of risk is conducted, you will have a better idea of how much you should be worrying about the RACs. More importantly, you will be able to develop a concrete action plan to strengthen staff assessment and documentation skills and ongoing auditing and monitoring activities to ensure your level of risk is minimized.

The other RAC news of any interest this week is that the Frequently Asked Questions (FAQ) on the CMS RAC web page was updated.  This is a helpful resource and can be seen here.

This article has been posted on two sites: homehealthnews.org and racassistance.com. Leave your comments and stories of your experiences at either site and Heather Wilson and Tim Rowan will consolidate them and keep track of important news that should be shared industry-wide.

Maybe, but probably not.  Let’s look at some of the things we know and some of the concerns:

RACs are not a myth.

Four regions have been designated and  RAC contracts for each region have been awarded.  The Tax Relief and Health Care Act of 2006 made the RAC program permanent and expanded it to all 50 states by January 10, 2010. The RACs are mandated to review paid claims for all Medicare Part A and B providers – this includes hospices.

RACs are paid on a contingency basis

Unlike other Medicare contractors, RACs are paid a percentage (9.0% to 12.5%) of money recovered for Medicare. Given this unique payment structure, there is legitimate concern the  RACs might be more aggressive in their scrutiny than what we have seen before – they may be somewhat similar to bounty hunters.

In their eagerness to recoup money RACs might “overreach” even more than RHHIs

Prognostication never has and never will be an exact science.  We have seen with ADRs how the RHHI’s have “overreached” in some of their denial determinations.  The tools and guidelines available for assessing eligibility for hospice care are inherently limited.  Hospices have a responsibility, through comprehensive and accurate documentation to make a strong case for each patient’s eligibility.  But even with good documentation, we have heard that claims have been denied because “the patient’s needs were met by the facility,” or “there was no acute event to precipitate the patient’s admission to hospice.”  With the RACs being incentivized to recoup money, will they be likely to find even more spurious reasons for denial of claims?  RACs are required to follow Medicare policies, LCD guidelines etc.  They are not allowed to make their own policy – but neither are the RHHIs.

What training in hospice will RAC reviewers have?

We have seen how clinical record reviewers for RHHI’s are often poorly trained regarding hospice regulations, LCD guidelines etc.  Given that the RACs are so hospital focused, how can we be certain their reviewers will understand hospice, the challenges of prognostication and the nuances of the Medicare hospice benefit?

RHHI/MAC denials + RAC denials = Cash flow disaster

Many hospices across the country are burdened with heavy ADR/TMR activity and navigating the maze of the Medicare appeals process.  The scrutiny of both pre-pay and post-pay claims by the RHHI’s/MACs is not going to subside when the RACs are fully functional.  Although RACs and MACs are not allowed to review the same claims, there are likely enough claims out there to keep both of them busy and hospices burdened.  Paying money back to Medicare for care that has already been provided or not getting paid for care provided will significantly impact a hospice’s cash flow.  Having reimbursement tied up in the lengthy Medicare appeals maze could threaten a hospice’s financial viability.

RHHI/MAC denials + RAC denials = Medical records department nightmares

RACs are allowed to review 10% of a hospice’s average monthly claims every 45 days.  There is no limit placed on the number of claims RHHI’s can review.  Making certain that medical records that are requested for review are copied and sent in accordance with stringent deadlines will require careful tracking and monitoring and will be labor intensive.

The Medicare appeals process is lengthy, expensive and complicated

Navigating the Medicare appeals process can be challenging, labor intensive and expensive.  Given that most appeals are denied at the first two levels and not overturned until the ALJ level of appeal, it is a long road from first appeal to the ALJ level.  The good news here is that hospices can halt the recoupment process for the first two levels of appeal. However, if they are not successful (and probably will not be), the overpayment will be recovered when the second level of appeal is denied.  Keeping track of each stage of the appeals process for claims from both RACs and RHHIs/MACs will require consistent monitoring and attention.

These are probably enough worries for the weary for one day.  RAC Assistance for Hospice will be addressing these worries in more depth in the weeks and months ahead with the hope of offering strategies for dealing with some of the challenges outlined above.

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For Region A, Diversified Collection Services is the only RAC that has not posted any approved issues on its website and therefore has not begun any automated reviews.  Their website provides a copy of a sample demand letter which is helpful to review.  DCS’s website also provides detailed instructions regarding how to submit records as well as providing contact information.  The FAQs on the DCS website are directed to hospitals but may be useful to review.  All hospices in Region A should bookmark the DCS website and review it often.

For Region B, CGI was the third RAC to post issues approved by CMS for automated review.  CGI has posted three issues for outpatient hospitals and physicians that it has been approved to review in Indiana, Michigan and Minnesota.  This has no relevance for hospices.  CGI’s website is very easy to navigate and providers in Region B should bookmark the website and review it often.  The FAQs are quite comprehensive and helpful.  In addition, CGI has scheduled an outreach session specific to hospices and home  health through the Midwest Center for Home, Hospice and Palliative Education on September 9th from 9:00 to 10:30 AM.  Hospices located in Region B should try to attend this outreach call. Click here to register on line or here to download a registration form.  It might even be helpful for hospices outside of Region B to listen in to get an idea (hopefully) of how the RACs and CMS plan to address hospice issues.

Region C – Connolly Healthcare is the leader in posting  approved issues on its website. Currently, Connolly has posted six issues for outpatient hospitals and physicans in Florida and South Caroina,  1 issue for outpatient hospitals and physicians only in South Carolina, and, most recently, an issue for Clinical Social Workers who provide services during inpatient hosptial stays in Florida only.  The Connolly website is difficult to read due to the unnecessarily small font size but should be bookmarked by hospices in Region C and reviewed often.  It includes sample demand letters for both automated and complex reviews.

Region D – HealthDataInsights (HDI) has posted seven approved issues for all states in Region D and has begun automated reviews of hospital claims.  HDI has posted sample fax forms to use to initiate a “discussion” of RAC claim denials.  The HDI website has limited FAQs, a useful RAC User Guide and the promise of more “coming soon.”  Hospices in Region D should bookmark the website and visit it regularly.

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.

An equally important RAC management activity will be to monitor what they are doing across the country.  Given how these for-profit companies are compensated (the more money they recoup from providers, the more money they make), the potential for RAC abuse or overreaching is worrisome.   To help everyone’s monitoring efforts, RAC Assistance for Hospice has developed a RAC Forum where registered users can share their experiences and learn from each other about RAC activities in their own and other regions.

The RAC Forum will be the place where readers can tell colleagues what types of reasons are provided for recoupments, success or lack of success at various levels of the appeals process, etc.  Please help RAC Assistance for Hospice help you by registering for and contributing to this forum.  The more information we can gather, the more we will be able to monitor the activities of each RAC and ensure that they are not abusing the enormous power that has been entrusted to them.

The articles and resources in the Manage category of RAC Assistance for Hospice are intended to help hospices develop a comprehensive management response to RAC activity.

1. Learn everything possible about what RACs do, who they are and what to expect from them; and
2. Make absolutely certain that all of the hospice’s clinical staff knows how to assess patients for eligibility (for hospice care and for higher levels of care such as general inpatient and continuous care) and how to appropriately and thoroughly document that eligibility.

The articles in this newsletter’s Educate category of RAC Assistance for Hospice address these two areas: education about the RACs and about documentation.