Our periodic search for the word “home” on the web sites of the four collection agencies acting as Recovery Audit Contractors (RAC) got a hit for the first time last week. As we have long advised, all Medicare providers should perform this exercise themselves each month. There is still too little profit available to attract much RAC interest in home care but you never know when one of them will decide to test the waters, as the two largest of the four did this month.

As a reminder, here is where you go. Once there, simply press Ctrl-F and perform your own word search. Below these instructions, we have copied new issue descriptions from the web sites of the RACs from Regions C and D.

REGION C:

REGION C:

REGION D:

Stamford, CONN. – August 1, 2011 – IVANS, Inc., a national health information exchange, announced Monday that 73 percent of hospitals agree that the Recovery Audit Contractor (RAC) Program helps to reduce Medicare fraud and errors.

However, more than 60 percent do not think the audit process is fair.

According to IVANS 2011 RAC Audit Survey, respondents cited that the extra time and money it takes to substantiate a RAC claim is impacting budgets and resources that are already stretched too thin, and that the frequency (every 45 days) with which they can be audited is burdensome to their administrative workflow. The study also revealed that hospitals believe the review process is too subjective and they need education on how to reduce future audits.

“IVANS survey demonstrates the need to ensure that these programs, which are valuable in their end results, are not too burdensome for providers,” said Clare DeNicola, IVANS president and CEO. “Using automation to streamline the workflow can help reduce the administrative challenges providers are facing with these audits.”

In this instance, CMS appears to agree. The government agency that manages the Medicare program and contracts with the four collection agencies to provide recovery audits recently implemented the “electronic submission of Medical Documentation” (esMD) program. It enables Medicare contractors, such as RACs, MACs, CERTs and PERMs, to accept electronic attachments from providers, a significant timesaver over printing and delivering many pounds of paper via fax or overnight courier.

IVANS is one of the CMS-approved Health Information Handlers (HIH). It offers a gateway, IVANS LIME™ AuditDocs, that conforms to Nationwide Health Information Network (NHIN) standards and leverages a web-based health information exchange (HIE) portal. A tracking feature confirms when documents have been received by an auditor and a document archiving function keeps each document set available throughout the RAC appeals process.

An IVANS news release underscored the importance of filing appeals and following them through the lengthy process, citing a 64% appeal win rate during the 2007-2009 RAC demonstration.

The IVANS survey also found:

Many home health care and hospice providers are understandably concerned with the tight deadlines required by Medicare auditors for submitting medical documentation to support an audited claim, especially considering limited available time and the financial impact of adding staff. Now that ZPIC activity is accelerating and some of the RACs have added home care language to one or two of their CMS-approved
audit issues, forward-thinking agencies will investigate CMS’s esMD program and evaluate software companies ready to help them use it.

The IVANS survey was conducted electronically from June 7-22, 2011, and the results represent responses from 128 hospital providers across the United States. A full summary is available. Write to Cecile.Locurto@ivans.com.

www.ivans.com

Medicare claims denials, which have increased in the last two years due to the government’s crackdown on fraud, once focused on two reasons for blocking payment: beneficiary eligibility and medical necessity. One deals with the patient’s appropriateness for the Medicare home health benefit; the other with the appropriateness of the care provided to an eligible patient.

When a home care provider appeals a payment denial, the battleground progresses from one level to the next until an Administrative Law Judge rules on the validity of whichever denial reason had been used. Was the patient eligible for the services provided, and were those services appropriate or excessive for the patient’s condition? (See our 2009 primer on the multi-tiered appeals process.)

Today, RHHIs are paying more attention to medical necessity than they used to, especially with regard to episodes with five to nine visits. In a growing number of claim denial cases, the intermediary’s auditor is less concerned with whether a patient met homebound status criteria but how much service was reasonable and necessary. More frequently than chance would dictate, denial letters dispose of just enough visits to kick a full-pay episode down to a LUPA. When there were seven visits, they deny three; when there were five visits, they deny one. Rarely if ever do agencies see a seven- or ten-visit episode reduced to five.

Two ways to explain the anomaly
There are two possible explanations for an increase in the number of denials that flirt with the edge of the LUPA line.

1.      RHHIs have been instructed by CMS to control Medicare spending by identifying episodes that can be easily reduced from the $2,000-$3,000 range to the $300-$400 range. They are to do it by denying a number of visits, not an entire episode, but so few visits that the provider will not deem the denial worth contesting.

2.      More and more providers appear to be improperly pushing episodes that should be LUPAs into the 5-plus visit range. Though they know these episodes are likely to be returned to LUPA status months, perhaps years, later, they are happy to live on the “float” from the RAP payment, which is either 50% or 60% of the full episode HHRG amount, knowing it will be justifiably returned to a LUPA by the RHHI.

If the first conjecture is the one causing the recently observed payment denial increase, it is a clever tactic on the part of government contractors increasingly pressured to control Medicare costs. It results in high dollar denials, typically 80% to 90% of the original claim amount, which the RHHI can present to the provider as “partially favorable.” This category used throughout the RHHI, QIC, and ALJ appeals process to indicate the episode payment was not denied in its entirety; only a few visits were removed.

More than clever, this tactic is a newfound cash cow for the RHHI as well as a way to demonstrate to CMS that it is aggressively pursuing inappropriate payments.

In the second scenario, of course, the RHHI is fully justified in denying the extra visits and returning the episode to the LUPA reimbursement level the provider knows full well the original claim should have requested. In court before the ALJ, if it even goes that far, providers tapping into this “free government loan” program rarely contest these denials. On the contrary, they expected them and they accept them.

Whether the first or second theory is causing the recent denial activity spurt, important questions must be asked. Are there instances where 5- to 9-visit episodes should not be reduced to four? Are there times when that fifth visit was obviously legitimate? Whose judgment should be trusted to make such a determination? A nurse? Or an RHHI financial auditor?

Home care financial consultants and appeals experts observing this phenomenon try to answer these questions every day. In a recent example, one unnamed agency reported its creativity at finding ways to avoid LUPA episodes had reached expert level, until their FI demanded they produce 80 charts for audit. After review, most had at least some individual visits disallowed, reducing about 20% of them to LUPAs, for a payback demand of approximately $40,000.

The nature of the beast
“Keep in mind who is making these determinations,” advises appeals consultant Michael McGowan. “RHHI contracts are awarded to insurance companies. No CFO or claims officer should ever be surprised when their intermediary behaves like an insurance company, it is simply their nature.”

“How exactly do insurance companies behave?” McGowan is quick to add. “Home care agencies that accept health insurance beneficiaries as patients know that obtaining HMO authorization is a visit-by-visit battle. If you would normally see a patient once a week for nine weeks, the company’s authorization desk clerk will argue that three total visits should be sufficient. If you would normally see the patient three times a week for two weeks the insurance company will argue the same. ‘We’ll give you three and see what happens.’”

Insurance companies refer to payments for patient care as ‘medical losses’ and do everything they can to keep their medical-loss ratio (MLR) as low as possible in order to keep Wall Street and large shareholders happy. According to health insurance industry whistle-blower and former insider Wendell Potter, the average MLR in America has dropped from 90% to just under 80% since 1994, the year the industry defeated President Clinton’s reform attempt.¹

National Government Services, for example, is not just the largest home health intermediary, it is a division of WellPoint. WellPoint is the darling of Wall Street because it has steadily lowered its MLR since 1994 as it has been buying up not-for-profit Blue Cross / Blue Shield companies and converting them to for-profit business units.

Aetna, on the other hand, once lost 20% of its stock price in a single day upon disclosing that its quarterly MLR had increased from 77.9% to 79.4%.

Potter describes the urgency of the situation:

If anyone hates to see the MLR going up more than investors do, it is the insurance company executives and their favored senior managers – who get much of their bonus compensation in the form of stock options. When an increase in the MLR prompts investors to unload shares, the stock price will go down – and along with it, the value of an executive’s stock options. The CEO and other top executives can make or lose millions in one day, depending on which way the MLR goes.

McGowan reasons that insurance company practices do not end at the door separating a corporation’s commercial side from its CMS contractor side. “Knowing that NGS is a unit within WellPoint and that its history is rooted in one of the not-for-profit Blues that WellPoint acquired and converted to for-profit status, one is lead to suspect when reading denial statements from the RHHI medical review department that HMO utilization standards are being applied to traditional Medicare PPS.”

Those standards are well-known to home care agency staff tasked with negotiating with HMO authorization clerks: severe limitations on services such as restrictions on the number of nursing visits, reduced or eliminated non-medical care by home health aides, and the assumption that physical therapy is of little benefit.

When an appeal reaches the ALJ, McGowan – who spends a substantial amount of time in CMS courts – notes, judicial behavior has parallel to that of the RHHI medical reviewers. “Partially favorable decisions that drop episodes to LUPA status are coming down more frequently than they used to,” he asserts. “In court today, the battle is visit by visit until there are only four visits left. No longer do we talk about the nurse’s plan of treatment across the entire episode of care. It is clear to me that judges are specifically looking for the point where the patient stabilized and could have been discharged to outpatient therapy.”

Comparing patient outcomes between normal and minimal service levels
Questions remain once the above practice changes have been explored. Whether RHHIs are improperly denying just the right number of visits or some agencies are improperly adding visits to LUPA episodes, further investigation is need to declare definitively that either practice harms patients.

• How do patient outcomes, including mortality rates, compare between HMO financially driven visit limitations and nurse-controlled plans of treatment?
• If outcomes are similar, HMO standards may be doing no harm and, therefore, nurse-driven care levels may be too high, indicating many episodes can remain at LUPA levels without negatively impacting outcomes.
• If patient outcomes are worse when visits are limited by HMO financial concerns, it will be safe to conclude that agencies are justified in insisting on higher care levels and fewer LUPAs.

Unfortunately, documenting relative outcome levels is nearly impossible. Home care OASIS data is readily available but insurance companies carefully guard their outcome data, calling it proprietary corporate secrets. Whichever one of the three possibilities above is eventually supported by further research, it must be remembered that treatment level decisions grow as much out of pre-existing goals and assumptions as out of concern for patients.

Within an HMO, where decisions are made by financial managers with an eye on the company’s stock price, the focus is on getting the patient out of home care and into the outpatient arena, where long-term care can be delivered by rehab clinics and the patient’s personal physician.

Medicare certified home health care agencies, on the other hand, concentrate on patient care and providing the full range of services necessary to return the patient to self-sufficiency, curing the entire suite of problems and conditions noted in the plan of treatment or at least moving the patient toward self-management of a chronic condition. They prefer not to send the patient to another care center but to complete treatment themselves.

Where a minimal number of visits may be sufficient to meet the HMO’s goal, a full 60 or 120 days of treatment and teaching may be necessary to make a home care nurse comfortable discharging the patient.

When home health fiscal intermediaries begin to impose HMO-type care limitations on nurses who are accustomed to Medicare paying for their services all the way through to desired outcomes, expect an inevitable clash of cultures. According to consultant McGowan, that clash has already begun.

Agencies that might be intentionally pushing LUPA episodes to five or six visits have already begun to see an accelerating denial rate and shrinking number of successful appeals. HMO bottom-line-oriented practice standards may not be appropriate for Medicare home health beneficiaries in most cases. If, however, CMS has instructed RHHIs to use them, providers have little option but to adjust.

___________________________________________

1Potter, W.  Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans. Bloomsbury Press, 2010.

Background
The Medicare Payment Advisory Commission (MedPAC / The Commission) is an independent Congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. The Commission’s statutory mandate is quite broad: In addition to advising Congress on payments to private health plans participating in Medicare and providers in Medicare’s traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare. The Commission’s 17 members bring diverse expertise in the financing and delivery of health care services. Commissioners are appointed to three-year terms (subject to renewal) by the Comptroller General and serve part time. Appointments are staggered; the terms of five or six Commissioners expire each year.

In recent years, MedPAC has focused attention on the level of professional skill with which home care nurses and therapists complete the Outcome and Assessment Information Set (OASIS) when assessing patient conditions. As clinical documentation skills have improved since 1999, and OASIS assessments have grown more accurate, episodic payments to home health agencies have increased an average of $200 per episode per year. In response, MedPAC has advised Congress to reduce the home health payment rate by 2.75% per year for three consecutive years until an approximate 8% cut has been achieved.

MedPAC has never addressed the underpayments made to home health agencies during the early years of OASIS use, before nurses and therapists developed the level of accuracy they enjoy today. However, industry watchers and data analysis experts, including Jeff Lewis, founder and former owner of Lewis, Inc., a home care software vendor, have studied OASIS data and estimated underpayments at between 10% and 15% during those years.

Medicare Advantage
The Balanced Budget Act of 1997 (BBA) established the Medicare+Choice (M+C) program with the purported goal of providing a wider range of health plan choices to Medicare beneficiaries. The BBA also modified the payment methodology under the program to correct excess payments, reduce geographic variations in payments, and align payments to reflect beneficiaries’’ health status. Six years later, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) increased payments and redesignated the Medicare+Choice program as Medicare Advantage (MA). Participating insurance companies are designated as MA organizations.

In rare cases, the MA program supplements home health agency revenue by paying for services to patients and increasing an agency’s patient census. Most of the time, however, MA has been a burden for three reasons, two are the fault of the MA organization, the other lays at the feet of CMS itself. Summarized here, these three problems have previously been explored in detail in Tim Rowan’s Home Care Technology Report. Links to these previous articles are provided.

1)   As is the custom when insurance companies pay for home health services, each visit must be pre-authorized. Often, providers have to fight to justify the need for every visit, and often hire a specially trained person just to conduct those battles with insurance company denial desk personnel. Patients enrolled in MA plans, therefore, almost always result in lower revenue and higher costs for providers. (See HCTR, 8/15/07)

2)   MA sales representatives have often been overly aggressive with elderly prospective clients. Many state insurance commissioners issued cease and desist orders in recent years after it was discovered that some agents were visiting elderly people in their homes, supposedly to explain the new prescription drug benefit to them. By the time they left, they had signatures not only on Medicare Part D enrollment forms but on Part C (Medicare Advantage) forms as well. Often, the beneficiaries later claimed, they had no idea they were signing up for both plans. (See HCTR, 5/28/08) If these beneficiaries were in the middle of a Medicare home health episode or even if they began one within the next few weeks, the provider agency had no way of knowing they should send their claim to the MA organization instead of to their RHHI. All too frequently, when they finally learned about the patient’s enrollment only because their RHHI denied their claim, they were later told by the insurance company, “We did not order those services. We will not pay for them.”

3)   Sometimes, weeks or months passed between the time a patient signed a MA enrollment form and the time their name appeared on the government’s Common Working File as a client of a particular MA plan. This happens because the insurance company is given 30 days to report new enrollments and CMS only updates the CWF once per month.  A 2008 study, reported in Home Care Technology Report (see HCTR 10/8/08), revealed that names appear in the CMS database after the date MA enrollment begins fully 35% of the time.

Choosing whom to protect
With this as a background, it would be understandable to assume that CMS would look to MA organizations at least as often as to Medicare health provider organizations when looking for ways to extend the life of the Medicare Trust Fund. Consider, however, this spring’s report from the Office of Inspector General, titled “Compendium of Unimplemented OIG Recommendations.”

Page 3:     CMS overestimated certain hospital cost items and should reduce payment rates by 7.5%. CMS agreed with the OIG recommendations.

Page 19:   CMS and its FIs incorrectly processed 74% of DPNA actions (denial of payment for new admissions), with 40% of the cases resulting in overpayments to Skilled Nursing Facilities. CMS should send DPNA instructions promptly, address communication breakdowns, require confirmation that instructions are received and understood and update its guidance for DPNA claims. CMS agreed with the OIG recommendations.

Page 37:   CMS should strengthen program safeguards to prevent improper payment for facet joint injection services, clarify billing instructions for bilateral services and act to resolve the undocumented, medically unnecessary and miscoded services the OIG found. CMS agreed with the OIG recommendations.

Page 41:   CMS should strengthen the Medicare DMEPOS supplier enrollment process to ensure suppliers meet Medicare supplier standards, including conduct more unannounced site visits to determine whether suppliers exist at the addresses on record. CMS agreed with the OIG recommendations.

After another dozen or so agreements, this paragraph appears under the title “Modify Payments to Medicare Advantage Organizations”:

“The 1997 data and estimates used as the basis to calculate monthly capitation payments to MA organizations were flawed, resulting in higher-than-necessary payments. Based on numerous reviews (which are summarized in our September 2000 report), studies by other agencies, and MA organization data, we concluded that from CY 1997 through CY 2000, MA organizations received more funds than necessary to deliver the Medicare package of covered services. Medicare payments funded excessive administrative costs, and MA organizations did not account for investment income earned on Medicare funds.

“Improper payments made in Medicare fee-for-service (FFS) expenditures also contributed to the flaws in the 1997 managed care base rates. Our review of Medicare’’s 1996 and 1997 financial statements identified substantial FFS improper payments. The standardized county rates for 1997 were calculated using 1996 base FFS expenditure data, and the overpayment errors were carried over into the 1997 managed care rates. We estimated the 1996 FFS error rate as 14 percent of FFS benefit payments.

“Recommendations: CMS should modify monthly capitation rates to a level fully supported by empirical data.”

“Estimated savings: $1.97 billion, based on the 3.077% overstatement of 1997 base rates applied to 2006 managed care payments.”

Response: “CMS did not concur with our recommendation to modify payments to MA organizations, noting that the BBA and the BBRA had increased these payments.”

Status: “Because the 1997 base rate was flawed, we have concerns that Federal payments to MA organizations continue to be excessive. We are updating our examination of MA organization payments and continue to recommend that CMS modify monthly capitation rates to a level fully supported by empirical data.”

Moral: If you want CMS to pay you more than is justified by the value of the services you render, it is better to be an insurance company than a healthcare provider organization.

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… !

1-Newborn Pediatric CPT Codes Billed for Patients Exceeding Age Limit

Certain service codes are specific to patients of a specific age and should not be applied/billed for patients which exceed the age limit defined by the CPT Code.

2-Once in a Lifetime Event

Certain procedures are only performed once in a persons lifetime. Query identifies claims paid for those procedures for more than one service date.

Reference: CMS Pub 100-08, Ch. 3, § 3.6.

3-Excessive Units-Untimed Codes

When reporting service units for untimed codes (excluding Modifiers -KX, and -59) where the procedure is not defined by a specific timeframe, the provider should enter a 1 in the units bill column per date of service.
Reference: CMS Pub 100-04, Transmittal 1019, dated 8.3.06, pages 7-11 CMS Pub 100-04, Ch. 5, § 20.2

4-Excessive Units-Blood Transfusions

Blood Transfusions should be billed with a maximum of (1) unit per patient per date of service.
Reference: Federal Register, Volume 67, No.212, (11/01/02) page 66868. Program Memorandum Intermediaries, Transmittal A-01-50, April 12, 2001, page 1 CMS Pub 100-04, Ch. 4, § 231.8

5-Excessive Units-Bronchoscopy

Bronchoscopy services should be billed with a maximum number of units (1) per patient per date of service.
Reference: Federal Register, Volume 67, No. 251, (12/31/02) page 80072. American Medical Association (AMA), Current Procedural Terminology (CPT) American Thoracic Society Coding 2005 Update

6-Excessive Units- IV Hydration

IV Hydration should be billed with a maximum number of units (1) per patient per date of service.
Reference: CMS Pub 100-4 Ch. 12, pages 31-32 CMS Pub100-20, Transmittal 419, page 7. MLN Matters, MM6349 R/T CR Release Date 12.19.08, page 4

7-Neulasta

Neulasta (HCPCS code J2505) Claims submitted with the total number of milligrams instead 1 unit per 6mg. Claims for J2505 should be submitted so that the units billed represent the number of multiples of 6mg administered, not the total number of mgs.
Reference: CMS Manual System, Publication 100-04 Medicare Processing Manual, Transmittal 949 (dated May 12, 2006) MLN Matters Number MM5912, Release Date, January 18, 2008 HCPCS Level II 2007, 2008, 2009

8-Urological bundling

A potential vulnerability may exist if certain urological procedure codes are billed in conjunction with other urological procedure codes for the same date of service and same beneficiary.
Reference: CMS Pub.100-3, Ch1, § 230.17 Noridian LCD Policy Article A25377

9-Wheelchair Bundling

Bundling guidelines for wheelchair bases and options/accessories indicate certain procedure codes are part of other procedure codes and, as a result, are not separately payable.
Reference: CMS Pub 100-03, Ch 1, § 280.1 & 280.3 Noridian LCD Policy A19846

10-Knee Orthotic Bundling

There are Knee orthotic addition codes that cannot be billed separately due to the fact that they are bundled with the base knee orthotic code or that the addition code is not medically necessary when billed in conjunction with a specific knee orthotic base code.

11-PEN supplies more than 1 time a day

The description or the billing guidelines state parenteral/enteral nutrition codes are allowed once a day.
Reference: CMS Pub. 100-3 (National Coverage Determinations Manual), Chapter 1, Section 180.2. LCD L11576 Parenteral Nutrition, LCD L11568 Enteral Nutrition, LCD Policy Article A37077 Parenteral Nutrition

Home care and hospice can breathe easy for a while, but only about this one issue.

Recovery Audit Contractors (RAC) are limited in the issues they can use to recoup funds from Medicare providers. It is important that all providers learn what those issues are and keep themselves updated as they change.

Initially, RACs may only look for overpayments and underpayments resulting from issues that arose during the 3-year demonstration project. Since home care and hospice were not addressed during the demonstration, those two healthcare segments are off the table when permanent contractors begin their search for improper payments.

RACs can add to the list of issues by applying for CMS approval. This is how home care and hospice will eventually be returned to the table and this is the reason compliance officers and revenue managers in these two segments must keep an eye on issue applications and approvals. This publication will do its best to help you.

Although a number of issues have been added to the base from the demonstration years, none of the RACs have announced CMS approval for home care or hospice issues. But they are getting close. A recent announcement by DCS Healthcare, the RAC for Region A, mentioned some Home Medical Equipment (HME) issues.

Here is a rundown of recent announcements:

Region A
Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont
RAC: DCS Healthcare, San Angelo, Texas; www.dcsrac.com
Approved Issues: Pharmacy supply and dispensing fees when billed by a HME supplier; wheelchair bundling; urological bundling.

Region B
Minnesota, Wisconsin, Michigan, Illinois, Indiana, Ohio, Kentucky
RAC: CGI Technologies and Solutions, Inc., Fairfax, Virginia, outreach offices in Cleveland and Atlanta, www.racb.cgi.com
Approved Issues: Blood transfusions; IV-Hydration; Bronchoscopy services provided by outpatient hospitals and physicians in Indiana, Michigan and Minnesota only.

Region C
Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, Puerto Rico, U.S. Virgin Islands.
RAC: Connolly Healthcare, Philadelphia, Pennsylvania, www.connollyhealthcare.com/RAC
Approved Issues: Wheelchair bundling, urological bundling, Clinical Social Worker services (inpatient), blood transfusions, untimed CPT codes, IV hydration therapy (outpatient hospital and physician), bronchoscopy services, “once-in-a-lifetime” procedures (outpatient hospital and physician), pediatric codes exceeding age parameters, HCPC Code J2505 for injection, pegfilgrastim. Not all of the above apply to every state covered by Connolly. Each has been approved for a different group of 3-4 states.

Region D
Alaska, Arizona, California, Hawaii, Iowa, Idaho, Kansas, Missouri, Montana, North Dakota, Nebraska, Nevada, Oregon, South Dakota, Utah, Washington, Wyoming, Guam, American Samoa, Northern Marianas
RAC: HealthDataInsights, Inc., https://racinfo.healthdatainsights.com
Approved Issues: (these apply to all states covered by HDI) Neulasta; Newborn pediatric CPT codes billed for patients exceeding the age limit; Once-in-a-lifetime procedures; Excessive units – Untimed codes; Excessive units – Blood transfusions; Excessive units – Bronchoscopy; Excessive units – IV hydration.

Steps to take

• Find the web site for the RAC that serves your state or territory
• Bookmark it.
• Revisit the site from time to time or
• Sign up to receive regular email updates.
• Implement a charting training program that will improve documentation quality and, in effect, inoculate your agency against overpayment accusations.
• Relax. You have plenty of time. These contractors earn a commission on overpayments they recoup. It will be a while before they turn from deep pockets to shallow pockets.
• Spend your time more productively. You have far more imminent attacks against your revenue to worry about right now. See this week’s article about CMS shortening your timeframe for appealing payment denials. These denials are on the increase and are coming from your RHHI. Do not ignore them while focusing on some future, narrowly focused contractor limited to looking at tightly controlled issues.
  

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.

by Aricka Flowers
HHNS staff writer

Aricka Flowers

As the Recovery Audit Contractor program’s January 1, 2010 implementation date nears, this new challenge to healthcare provider revenue looms as an imminent reality. Many providers look at the few remaining weeks between now and 2010 and are racked with fear and anxiety. Is the trepidation warranted? Not all of it, according to officials from the Centers for Medicare and Medicaid Services (CMS).

The first hint that RACs may not be an immediate sign of troubles to come stems from the whopping $37.8 million that was paid to providers during the program’s demonstration phase. Correcting underpayments is also part of the RACs’ assignment.

From 2005 through 2008, CMS’s RAC test run covered six states. During that time, three companies, PRG-Schultz, HealthDataInsights and Connolly Consulting, were granted contracts to identify and correct improper Medicare payments in California, Florida and New York. Later in the demonstration, Arizona, North Carolina and Massachusetts were added.

The three contractors were paid on a contingency basis; earning a percentage of the improper payments they identified and corrected. Though some feared a straight commission compensation plan might provide incentive for contractors to be overly aggressive, CMS officials point out that these RACs were instructed to detect and correct both under and overpayments in the Medicare Fee For Service program. RACs were also expected to provide CMS and Medicare contractors information that would assist in helping reduce the rate of error.

During the trial period, RACs identified more than $1 billion in improper Medicare payments; 96% were overpayments and 4% were underpayments made by CMS to the provider. This means that providers who were unaware they were owed money by CMS were finally paid – to the tune of close to $38 million.

If there is a positive side to the RAC program, this is it. Medicare’s complex payment process is one of the most common complaints amongst Medicare providers, who say it is fairly typical to wait an excruciatingly long time for payment for services from their fiscal intermediary. Home care providers just may find, as hospitals in six states found 4% of the time during the demonstration, that RACs will be bringing them money.

A second note of relief is access to the government’s existing appeals process. If a RAC finds that a provider has been overpaid by the agency, all is not lost. Providers will have a chance at clearing their name thanks to a safety net that was tested during the demonstration period – the right to appeal. During the program’s test run, 22.5% of RAC determinations were appealed and more than 40,000, almost eight percent, of those decisions were overturned; which means providers will actually have a fighting chance at disproving alleged overpayments.

The RAC demonstration also helped iron out kinks in the program, which resulted in multiple amendments to the plan. One example is the requirement that all RACs have a medical director on staff. Additionally, the demonstration birthed the decision to change the way RACs file claims, so as to ease the process for providers who want to appeal an overpayment determination. The change will allow providers to easily identify the claim they are contesting and why that decision was made.

Most importantly, the demonstration resulted in a call for oversight of RACs. As a result, an independent, third-party will be given the task of reviewing RAC claim determinations. Additionally, RACs will not be able to look very far back into a provider’s records. The look-back period was capped at three years thanks to the RAC test period. CMS is also investigating service-specific RAC findings in hopes of identifying problem patterns in specific areas or specialties, which could help providers get paid sooner in some cases.

The RAC demonstration also found that most instances of underpayments were found at in-patient facilities such as nursing homes and hospitals. Consequently, providers that maintain such facilities should not immediately fear the presence of a RAC because there is a chance the dreaded nuisance could result in a fiscal blessing in disguise. So, although the program may seem like just one more way to separate you from your payments, lessons learned during the demonstration process could turn the program into a positive development for both providers and CMS officials alike.