* HFMA staff and volunteers determined that this product has met specific criteria developed under. endorse or guaranty the use of this product.

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1 Latest Updates to the PEPPER: Utilizing New Report Data and Benchmarks to Support Your Compliance Efforts John Zelem, MD Senior Director, Audit, Compliance & Education Executive Health Resources * HFMA staff and volunteers determined that this product has met specific criteria developed under the HFMA Peer Review Process. HFMA does not endorse or guaranty the use of this product. Copyright ht 2011 Executive Health lthresources, Inc. All rights iht reserved. PEPPER 2011 The Program for Evaluating Payment Patterns Electronic Report (PEPPER) is intended to support the hospital s own auditing and monitoring activities Created in 2003, the current edition of PEPPER includes an expanded list of areas at risk for improper Medicare payment (18 targets added) These targets reflect the latest denial data from RAC, CERT, and MAC/FI audits Changes in both quantity and format of PEPPER data need to be fully understood in order to maximize their value 2

2 Medicare Audits 2011: A Target Rich Environment ZPIC Zero Day stay, extrapolation, specialized fraud fighters Traditional Targets (PEPPER 1 day stay, DRG validation) MAC Probe Audits (1+ day targets, esp. chest pain & high cost procedures) fi h CLAIMS procedures) REVIEWS OIG & DOJ Fraud, False Claims Kyphoplasty, chest pain, ICD RAC Targets Initial 18 announced, many more to follow 3 Who Should Use PEPPER? Utilization Review Committee Case management Medical coding and billing Compliance officers/committees Finance and Leadership 4

3 What Types of Hospitals Receive PEPPERs? Currently available: Short-term acute care (STPEPP, quarterly) Long-term acute care (LTPEPP, annual) Later this year (annual reports): Critical Access Hospitals (April) Inpatient Psychiatric Hospitals/Units (June) Inpatient Rehabilitation Hospitals/Units (Sept) 5 PEPPER 2011 Basics Provides a rolling 3 year analysis of paid Medicare inpatient claims Monitor your hospitals ranking based on STATE, MAC/FI JURISDICTION, and NATIONAL claim patterns Quarterly data allows analysis of trends Data is available within 4-6 months of claim filing Note: As of Q4 2010, PEPPER data reflects17 MAC/FI Jurisdictions. Further consolidation is expected as the MAC program is finalized 6

4 What the PEPPER is Not: Does not monitor outpatient services, such as observation care or outpatient procedures Except for 1 target that includes both inpatient and outpatient cardiac stents Does not include Medicare Advantage (HMO) claims or other payors Does not compare hospitals by size, demographics, or type of services 7 PEPPER Data and Info Obtain PEPPER data files from qualitynet.org: Training and other info: pepperresources.org 8

5 2011 Coding/DRG Validation ONGOING: Stroke / Intracranial Hemorrhage Respiratory Infection Simple Pneumonia Septicemia Medical DRGs with CC or MCC Coding/DRG Validation NEW: Surgical DRGs with CC or MCC Excisional Debridement Ventilator Support Unrelated OR Procedure 10

6 2011 Medical Necessity Extensive changes; increased scope and type of targets Reflects increased audits and denials, as well as hospital requested changes Subsets (* =new) 1-day stays (3 targets, minor changes) 2-day stays* (7 targets 6 medical, 1 procedure) Specific DRGs* (7 targets 6 medical, 1 procedure) 3-day qualifying stay Readmissions (any hospital and same* hospital) 11 Understanding Outliers Low Outlier High Outlier 90% 80% 70% 60% 50% 40% 35% 39% 46% 52% 56% 64% 70% 76% 79% 30% 20% 10% 0% 10th 20th 30th 40th 50th 60th 70th 80th 90th Percentile 12

7 DRG Validation Ratios MS-DRG coding is tested in the PEPPER by looking at ratios of higher severity MSDRGs to the universe of related MSDRGs. Example: Simple Pneumonia count of discharges for MSDRGs 193, 194 Higher Severity DRGs (simple pneumonia with CC or MCC) count of discharges for MSDRGs 190, 191, 192 (COPD with or without CC/MCC) + All Related DRGs plus count of discharges for MSDRGs 193, 194, 195 (simple pneumonia with or without CC/MCC) 13 Example: Simple Pneumonia Data Table Time Periods Target Area Discharge Count (Numerator) Denominator Count Percent (Numerator / Denominator) Target Area Average Denominator Length of Average Stay Length of (ALOS) Stay (ALOS) Target Average Medicare Payment Target Sum Medicare Payments Q1 FY % $5,734 $544,696 Q2 FY % $5,503 $748,388 Q3 FY % $5,652 $508,668 Q4 FY % $5,738 $401,694 RED = above 80 th percentile GREEN = below 20 th percentile (coding only) Reflects total payments, Shows degree of risk in financial terms 14

8 Example: Simple Pneumonia Trend Chart 55% Simple Pneumonia 50% 45% cent Targe et Area Per 40% 35% 30% 25% 20% Q1 FY Q2 FY Q3 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY Medical Necessity Ratios 1-Day Stays Medical necessity is tested in the PEPPER by looking at ratios of cases with a higher probability of medical necessity concerns to the universe of related cases. Example: 1-Day Stay: Medical DRG Count Of 1-day Stays (LOS 0-1) Higher Concern Cases for all medical DRGs excluding transfers, deaths, left AMA or observation > 24 hours Count of All Discharges for for all medical DRGs All Related Cases 16

9 Medical Necessity Ratios 2-Day Stays Medical necessity is tested in the PEPPER by looking at ratios of cases with a higher probability of medical necessity concerns to the universe of related cases. Example: 2-Day Stay: Heart Failure Count Of 2-day Stays (LOS 0-2) Higher Concern Cases For DRGs 291, 292, 293 excluding transfers, deaths, left AMA (does not exclude observation > 24 hrs) Count Of All Discharges for DRG 291, 292, 293 All Related Cases 17 Example: One-Day Stay Medical DRG Data Table Time Periods Target Area Discharge Percent Target Area Denominator Target Average Target Sum Count Denominator (Numerator / Average Length Average Length Medicare Medicare (Numerator) Count Denominator) of Stay (ALOS) of Stay (ALOS) Payment Payments Q1 FY , % $5,757 $2,020,558 Q2 FY , % $5,532 $1,908,391 Q3 FY , % $5,663 $1,970,827 Q4 FY , % $5,530 $2,073,912 RED = above 80 th percentile Reflects total payments; shows degree of risk in financial terms 18

10 Example: 2-Day Stay: Heart Failure Two-day Stays for Heart Failure and Shock 50% Target Ar rea Perce ent 45% 40% 35% 30% 25% 20% 15% 10% Q1 FY Q2 FY Q3 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY Hospital Jurisdiction : 80th Percentile State : 80th Percentile National: 80th Percentile 19 Internal Audits PEPPER Instructions (top of each worksheet) Need to audit? When reviewing this information, you may want to consider auditing a sample of records if you identify: Percents (4 th column in the table below) that are consistently red (high outlier) A trend of increasing Percents over time resulting in outlier status Your Percent is above the national 80th percentile (see graph on the following worksheet) 20

11 Digging Deeper: Short Stay Targets Short Stay Targets 1-day stays (3 targets, minor changes) 2-day stays (7 targets 6 medical, 1 procedure) How may outliers are present in these areas? 1 or more in the past 4 quarters? 2 or more in the past 3 years? Trend noticeably up or down? Evidence of short stay surgery/procedure risk? o 1-day stay ALL DRG outlier with 1 day stay MEDICAL DRG below the 80 th percentile o Review procedures included on Top 1 Day Stay Surgical ldrgli list tthat tare not tinpatient tonly 21 Example: 1-Day 65% Medical DRG 60% 55% 2 Stays for Esophagitis Gastroenteritis 50% 17% One-day Stays for Medical DRGs 15% a Percent Target Area 45% 40% 35% 30% 25% 13% 20% Q1 FY Q FY Q FY Q FY Q FY Q FY Q FY Q FY Q FY Q FY Q FY Q FY 2010 t Area Percent Targe 11% 9% 7% 5% Q1 FY 2008 One day stay trend shows outliers in these specific DRGs Q2 FY Q3 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY Q1 FY Q2 FY Q3 FY Q4 FY % 65% 60% 55% Percent Target Area P 50% 45% 40% 35% 30% Hospital Jurisdiction : 80th Percentile 2 Stays for Nutritional and Metabolic Disorders 25% Hospital Jurisdiction : 80th Percentile 20% Q1 FY Q FY Q FY Q FY Q FY Q FY Q FY Q FY Q FY Q FY Q FY Q FY 2010 Hospital Jurisdiction : 80th Percentile 22

12 Digging Deeper: DRG Specific Targets New in 2011 TIA vs. all stroke/ intracerebral hemorrhage COPD vs. all medical DRGs in MDC 04 (respiratory system) Syncope vs. all medical DRGs in MDC 5 (circulatory system) Circulatory System (Other) vs. all medical DRGs in MDC 05 (circulatory system) Digestive System (Other) vs. all medical DRGs in MDC 06 (digestive system) Medical Back vs. all medical DRGs in MDC 08 (musculoskeletal system/connective tissue) 23 How to Interpret DRG Specific Targets These targets reflect admissions that may lack clear documentation of inpatient medical necessity, regardless of LOS Use of similar DRGs in the denominator helps to control for population differences, such as the prevalence of respiratory disease As for all targets, high outliers must be evaluated by the hospital to ensure correct status and adequate documentation (both clinical and utilization review) These targets also involve DRG code assignment variation from hospital to hospital; review of outliers should be done in conjunction with coding staff 24

13 Example: Syncope 17% Syncope 15% Target Area Percent 13% 11% 9% 7% Change in case review? Change in coding? 5% Q1 FY 2008Q2 FY 2008Q3 FY 2008Q4 FY 2008Q1 FY 2009Q2 FY 2009Q3 FY 2009Q4 FY 2009Q1 FY 2010Q2 FY 2010Q3 FY 2010Q4 FY Procedure Targets New in 2011 PTCA with stent (ratio of inpatient to all cases) 2-day Stay Vascular Procedures o Renal, Peripheral, Other o Excludes cerebral and cardiac procedures Top 1-day stay surgical DRGs 26

14 PTCA with Stent New in 2011 Very high 80 th percentile threshold o Outlier = 100% national, high 90s for jurisdiction o Reflects large number of inpatient stents in all states/regions t o Does not differentiate elective vs. emergent o Does not differentiate 1-day vs. long stay o May be of limited use for these reasons 27 Example: Cardiac Stent PTCA with Stent 100% 90% Target Area Percent 80% 70% 60% 50% Shift to outpatient is greater than benchmark groups 40% Q1 FY 2008 Q2 FY 2008 Q3 FY 2008 Q4 FY 2008 Q1 FY 2009 Q2 FY 2009 Q3 FY 2009 Q4 FY 2009 Q1 FY 2010 Q2 FY 2010 Q3 FY 2010 Q4 FY

15 Additional Detail on Specific DRGs at End of PEPPER Hospital Top Surgical DRGs for One-Day Stay Discharges, Most Recent 4 Quarters In Descending Order by One-Day Stay Totals Per DRG Proportion of One-Day Stays to Hospital Average Length One-Day Total Dis- Total Dis- of Stay charges charges Stay DRG Description Count* for DRG** for DRG for DRG Perc cardiovasc proc w drug-eluting stent w/o 247 MCC % Extracranial procedures w/o CC/MCC % Perc cardiovasc proc w non-drug-eluting stent 249 w/o MCC % 2.6 Permanent cardiac pacemaker implant w/o 244 CC/MCC % Other vascular procedures w/o CC/MCC % 3.2 Cardiac defibrillator implant w/o cardiac cath w/o 227 MCC % Other vascular procedures w MCC % Additional Targets 3-day qualifying stay prior to SNF Transfers to SNF or swing bed with LOS = 3 Possible social admission to gain SNF benefit Readmission to any hospital Readmission within 30 days to any hospital Excludes acute care hospital transfers Excludes rehabilitation (diagnosis code V57.) (Maryland only, excludes psychiatric transfers) Readmission i to same hospital (new) If same hospital readmission rates are lower than total readmissions, patients are seeking care elsewhere. 30

16 Recommended Utilization Review Plan & Components PLAN The hospital must have in effect a utilization review (UR) plan that provides for review of services furnished by the institution and by members of the medical staff to patients entitled to benefits under the Medicare and Medicaid programs REVIEW The committee must review professional services provided in order to determine medical necessity and to promote the most efficient use of available health facilities and services INTERPRET The UR Plan is the documented process by which the organization will adhere to the standards identified in the Conditions of Participation as well as the defined operational standard for the Utilization Review Committee 31 Utilization Management Committee Responsibilities Code of Federal Regulations] [Title 42, Volume 3] Sec Condition of participation: Utilization review Review of services furnished by the institution and by members of the medical staff for Medicare and Medicaid patients with respect to the medical necessity of (i) Admissions to the institution; (ii) The duration of stays; and (iii) Professional services furnished, including drugs and biologicals i l Review of admissions may be performed before, at, or after hospital admission. (3) Except as specified in paragraph (e) of this section [outliers], reviews may be conducted on a sample basis. 32

17 Utilization Management Committee Responsibilities Reviews conducted on a sample basis are useful for monitoring trends and patterns. Most such studies reveal process issues and documentation inadequacies that can lead to audit vulnerability. Each medical record must contain documentation sufficient to support payment; hence each medical record is expected to be reviewed for both coding accuracy and for medical necessity (coder review is usually 100%, however utilization review often has gaps or inconsistencies.) Error prone services, including but not limited to short stays (1-2 day LOS), are vulnerable to medical necessity audit and careful concurrent review (or post-discharge review if concurrent was not possible) to ensure correct payment. 33 UR Committee Metrics Overall Metrics: LOS by CMI Outliers/types and causes PA Reports-good and poor performers and a call to action when appropriate Utilization of high cost/at risk services: labs, PET, etc Readmission rates per high level DRG-should refine this to "unrelated Avoidable days by service, physician observation cases with LOS greater than 48 hours: trends, opportunities and action plan 34

18 UR Committee Medicare Metrics PEPPER (Coding/DRG Validation; Medical Necessity) Outpatient procedures followed by an overnight stay (traditional Medicare) Ratio of outpatient to inpatient (PTCA ratio was recently added to the PEPPER) RAC/MAC denials and appeal results Readmission trends (overall, target DRG) Use of observation services (traditional Medicare) Ratio of observation to inpatient t for similar il diagnoses Use of observation > 24 and > 48 hours Use of Condition Code UR Committee Medicare Metrics ABN, HINN, any kinds of notices Discharge dispositions Conduct internal case review/audit PEPPER outliers RAC targets (esp. high cost and high volume) Use of observation (esp. complex diagnoses) One-day Medicare inpatient cases Clarity of physician orders wording, date, time, legible signature Medicare patients discharged to SNF after 3 in-pt days 36

19 Recommended Utilization Review Plan & Components Establish and define organizational utilization metrics based on national or best-practice standards Set internal benchmarks for demonstration of efficacy of utilization management practices. Trend information for subsequent development of recommendations or actions per committee related to established goals. Identification of Key Analytics, Data Collection Method and Evaluation Explanation of data collection, trending, with a appropriate process improvement. o 1- Day Stays (DRG, Physician, Location, Re-admission) o 3 -Day Stays with subsequent SNF admission, o Re-admission rates per DRG 37 Compliance Dashboard Overall observation rate Commercial medical observation rate Key Payors Medicare Medical observation rate Inpatient high-risk case count per month Surgery: inpatient vs. observation vs. outpatient IQ failure rate IRR (inter-rater reliability) 38

20 Cardiac Dashboard Cardiac inpatient vs. outpatient Metrics: Payor Traditional Medicare ER vs. Elective Same-day DC vs. Overnight Stay Device vs. Catheter Procedure By Physician i (blinded) d) 39 St. Elsewhere Dashboard Medical Jan-11 Feb-11 Mar-11 Observation Rate 28% 25% 27% Medicare Medical Observation Rate 9% 8% 8% High Risk DRG Short Stays CARDIAC Scheduled Cardiac Devices inpt/outpt 67/33 61/39 64/36 Scheduled Cardiac Cath Procedures inpt/outpt 55/45 53/47 52/48 Audit Activity RAC Requested Charts Charts RAC denied charts

21 Audit Methodology for Medical Necessity Case Sampling Obtain data on a population of cases Focus on traditional Medicare cases for compliance purposes. Initial data may be claims information from the hospital, MEDPAR summary case volumes or PEPPER data 41 Audit Methodology for Medical Necessity Case Sampling Identify cases that could be audit targets Specific Medical Short-Stay St Targets: Anemia, TIA, COPD, Chest Pain, Atherosclerosis, Syncope, Heart Failure, Cardiac Arrythmia, Esophagitis/Gastroenteritis, Nutritional/Metabolic, Renal Failure, Kidney/UTI, Backs Specific Surgical Short-Stay Targets: PTCA/Stent, Pacemakers, Cardiac Catheters, Cardiac Defibrillators, Vascular, Major Joint Replacement, TURP, Spine Fusions General Targets: Medical 1-day stays, Surgical 1-day stays, 30-day readmissions, 3-day SNF cases 42

22 Audit Methodology for Medical Necessity Case Sampling Sample claims in outlier areas High volume or high percent of cases in audit target areas Exclude cases previously reviewed by EHR 43 Summary and Next Steps PEPPER review Benchmark comparison against similar il facilities with Med PAR data Data analysis utilizing claims data (835, 837, etc.) overlapped with UM data Diagnosis specific audits of high risk areas and outliers 44

23 Useful Compliance Publications Access the EHR Compliance Library, log onto select Resource Center, Compliance Library EHR Client Bulletins and archived audio conferences Latest CMS Recovery Audit Contractor (RAC) Demonstration Evaluation Reports Recent Report on Medicare Compliance articles RAC Program Legislation Revised Statements of Work for RAC Program 45 QUESTIONS? John Zelem, MD Senior Director, Audit, Compliance & Education

24 About Executive Health Resources * HFMA staff and volunteers determined that this product has met specific criteria developed under the HFMA Peer Review Process. HFMA does not endorse or guaranty the use of this product. EHR received the elite Peer Reviewed designation from the Healthcare Financial Management Association (HFMA) for its suite of Medicare and Medicaid Compliance Services, including Medical Necessity Certification, Continued Stay Review and Denial Review and Appeal. The American Hospital Association has exclusively endorsed Executive Health Resources Medicare Compliance Management, Length of Stay Management, Retrospective Clinical Denials and Concurrent Clinical Denials Programs. AHA Solutions, Inc., a subsidiary of the American Hospital Association, is compensated for the use of the AHA marks and for its assistance in marketing endorsed products and services. By agreement, pricing of endorsed products and services may not be increased by the providers to reflect fees paid to the AHA. EHR has been recognized as one of the Best Places to Work in the Philadelphia region by Philadelphia Business Journal three years in a row. 47 Copyright 2011 Executive Health Resources, Inc. All rights reserved. No part of this presentation may be reproduced or distributed. Permission to reproduce or transmit in any form or by any means electronic or mechanical, including presenting, photocopying, recording and broadcasting, or by any information storage and retrieval system must be obtained in writing from Executive Health Resources. Requests for permission should be directed to INFO@EHRDOCS.COM. * HFMA staff and volunteers determined dthat this product has met AHA Solutions, Inc., a subsidiary of the American Hospital Association, is specific criteria developed under the HFMA Peer Review Process. compensated for the use of the AHA marks and for its assistance in marketing HFMA does not endorse or guaranty the use of this product. endorsed products and services. By agreement, pricing of endorsed products and services may not be increased by the providers to reflect fees paid to the AHA. 48