Getting Ready for RAC Part II: Prepare & Defend 2009 Arent Fox LLP. Background Resulting in RACs

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1 Getting Ready for RAC Part II Prepare & Defend Presented by Connie A. Raffa, J.D., LL.M Thomas E. Jeffry, Jr., J.D October 8, 2009 Webinar Donald H. Romano, J.D Rosemary Vander Wyde, RN, MA, COS-C Arent Fox LLP Washington, DC New York, NY Los Angeles, CA 2009 Arent Fox LLP Background Resulting in RACs January 2008 Office of Management & Budget (OMB) reported that Medicare is in top three Federal programs with improper payments $265.4 Billion or 96.1% Proper Payments vs. $10.8 Billion or 3.9% Improper Payments Reasons no medical necessity, incorrect coding, lack of documentation, secondary payor, other reasons, i.e., duplicate claims. 2 1

2 Recovery Audit Contractors Authorized by 1893(h)(1) of the Social Security Act; 42 USC 1395 ddd(h)(1). HHS contracts with Recovery Audit Contractors (RACs). Purpose: identify and recoup overpayments, and identify underpayments of post-payment fee-for-service, Part A & B claims 3 RAC Audit Implementation 1893(h)(3) Tax Relief and Health Care Act of 2006, 302, authorizes nationwide RAC contractors program implemented by January 1, RAC@cms.hhs.gov Four RAC Contractors awarded and Validator RAC. Websites:

3 The Four RACs 1. Region A Diversified Collection Services, Inc. of Livermore, CA, (subcontracting some audits to PRG- Shultz, Inc.), in CT, DC, DE, MA, MD, ME, NH, NJ, NY, PA, RI, VT. 2. Region B - CGI Technologies and Solutions, Inc. of Fairfax, VA, (subcontracting some audits to PRG-Shultz, Inc.), in IL, IN, KY, MI, OH, MN, WI. 3. Region C - Connolly Consulting Associates, Inc. of Wilton, CT, (subcontracting some audits to Viant Payment Systems, Inc.), in AL, AR, CO, FL, GA, LA, MS, NC, NM, OK, SC, TN, TX, VA, VW. 4. Region D - HealthDataInsights, Inc. of Las Vegas, NV, (subcontracting some audits to PRG-Shultz, Inc.), in AK, AZ, CA, HI, IA, ID, KS, MO, MT, NB, ND, NV, OR, SD, UT, WA, WY. 5 RAC Audit and Recovery Periods 1893(h)(4) RACs audit a percentage of claims based on volume criteria specific to provider/supplier type. RACs can audit claims paid by Part A & B during a fiscal year retroactive three years from the date the claim was paid, but Claims paid prior to October 1, 2007 cannot be audited. Date of Service can be before 10/1/07 if claim is paid on or after 10/1/07. RAC Data Warehouse with claims data created by CMS. RAC paid a contingency fee of % from amounts recovered. 6 3

4 Number of Records Audited The number of records that can be audited based on provider type are limited to: Home Health, Outpatient Hospital & other Part A billers, 1% of average monthly Medicare services, (max of 200) per 45-day period, per NPI. Hospice, Inpatient Hospital, Skilled Nursing Facility (SNF), or Inpatient Rehabilitation Facility (IRF), 10% of the average monthly paid Medicare claims, (max of 200) per 45-day period, per NPI. DME, Lab & other Part B billers, 1% of average monthly paid Medicare services (max of 200), per 45-day period, per NPI. 7 Number of Records Audited Physicians Solo practitioner, 10 medical records per 45-day period, per group NPI Partnership of 2-5, 20 medical records per 45-day period, per group NPI Group of 6-15, 30 medical records per 45-day period, per group NPI Group of 16+, 50 medical records per 45-day period, per group NPI 8 4

5 Automated Review Process Automated Review Process: RAC reviews claims data data mining. Overpayment determination made without contacting provider. No review of medical record because a) there is a clear policy that is the basis for the denial. Clear Policy means a statute, regulation, National Coverage Determinations (NCD), Local Coverage Determinations (LCD) or CMS Manual, that specifies the circumstances under which payment for a service will ALWAYS be denied; b) the denial is based on a medically unbelievable service; c) failure to respond to medical record request letter within 45-day deadline plus 10 calendar days mail time to submit. 9 Complex Review Process Review of the medical chart. Send hard copy, soon on CD or DVD. RNs or therapists must review medical record for coverage and medical necessity determinations. Certified Coders must review medical records for coding determinations. RACs have Medical Directors. Getting Ready for RAC Part II: Prepare & Defend 10 5

6 RAC Medicare Audit Criteria RAC must comply with the following criteria: National Coverage Determinations (NCDs), Local Coverage Determinations (LCDs), CMS Manuals coverage rules, CMS instructions and memoranda on interpretation of policy or regulation. 11 There s More RACs will not review medical records that are the basis of a voluntary disclosure accepted by Medicare. RACs can use statistical sampling and extrapolate findings to calculate overpayment. If the provider/supplier wins at any level of appeal, the RAC cannot keep the contingency fee it has been paid, and interest may be returned. MLN Matters MM6183, 9/29/

7 Potential Targets for RAC Home Health & Hospice Referenced from: OIG Reports GAO Reports OIG Work Plan 2010 Compliance Program Guidance for Home Health Agencies: Compliance Program Guidance for Hospices: Getting Ready for RAC Part II: Prepare & Defend 2009 Vander Wyde Health 13 Care Consultants LLC Home Health Appropriate coding supported by documentation & services provided Accuracy of OASIS data and is supported in the record. (no inconsistencies between RN & PT assessments) OASIS consistent with 485 Outlier payments, especially for insulin injections The same physician over numerous claims and ordering high volumes of service All services are reasonable and necessary but therapy services are especially vulnerable Getting Ready for RAC Part II: Prepare & Defend 2009 Vander Wyde Health 14 Care Consultants LLC 7

8 Home Health Duplicate billing, especially those patients getting less then 8 hrs. per day and 28 hrs. per week. Agencies that have had the same repeat citations over 3 consecutive surveys as well as agencies with a history of intermittently being out of condition. Agencies with a high number of complaints. Vulnerable states are: CA, FL, IA, IL, MI, TX especially the highly populated area. Government found that greater then 60% of repeat problem agencies are located in these states. RAC auditors should have access to Medicare s OSCAR system so problem providers are easily identified Vander Wyde Health Getting Ready for RAC Part II: Prepare & Defend 15 Care Consultants LLC Home Health OSCAR system is Medicare s online survey and certification reporting system. All state agencies are required to input data on survey and complaint results. This is the way that CMS monitors how the individual states are doing what they should. Repeat citations are: Failing to follow the care plan as to services along with frequency and duration; not having orders for services provided. The thinking is if agencies are not compliant with Medicare standards, there is a high probability that they are not following billing guidelines. Those agencies that have a high rate of denial on pre-payment audits are also more likely to receive a RAC audit Vander Wyde Health Getting Ready for RAC Part II: Prepare & Defend 16 Care Consultants LLC 8

9 Home Health Recommendations Make sure that staff is proficient in OASIS data collection and that means making home visits to ensure they are. Benchmark your OASIS data and quality outcomes to ensure that you are not an outlier as compared to other agencies Make sure that your coding is supported by the documentation and services provided If you are one of the agencies that could be vulnerable, make sure you remain in compliance especially with your POC since this will impact billing If you have a RAC audit and plan to have discussions following a denial, make sure your key people are involved, especially your therapy supervisors. According to last week s webinar, DCS does not have therapist on staff but brings them in as sub-contractors when needed. Based on experience gained through examining documentation in Medicare s record, sub-contractors are not that familiar with Medicare s coverage criteria. Getting Ready for RAC Part II: Prepare & Defend (C) 2009 Vander Wyde Health Care 17 Consultants LLC Home Health Recommendations Avoid technical denials: 1. Billing prior to receipt of signed orders (date received or date signed by MD is after the date billed, or there is no date on the 485 to substantiate that you had signed orders prior to billing). 2. Verbal order date in Locator #23 is after the start of the episode. 3. If you have several pages of orders, make sure you reference each page on all the pages because if the physician only signs one page you will only receive reimbursement for orders on that page. For example, number Plan of Care page 1 of 3, 2 of 3 and 3 of Vander Wyde Health Care Getting Ready for RAC Part II: Prepare & Defend 18 Consultants LLC 9

10 Hospice Long length of stays Services provided in nursing facilities. They found that 82% did not meet Medicare coverage criteria in the area of election notices, POC, services and certificate of terminal illness. 89% of these claims were not for profit and 74% were for profit. Documentation does not support terminal illness. Make sure you meet the guidelines in the NCD, especially for patients with diagnosis of Alzheimer's or failure to thrive. Found that some patients residing in nursing homes were billed for respite care. In- patient care is not supported by documentation. Medications that should have been included in the hospice benefit were billed under Part D. Physicians billing under both Part A & B. Vander Wyde Health Care Getting Ready for RAC Part II: Prepare & Defend 19 Consultants LLC Hospice Recommendations If you are providing a large volume of care in nursing facilities, make sure your documentation supports all the risk areas identified. If you have had repeat survey issues or similar complaints, resolve them and make these issues part of your QI program. Look at your long stay cases to make sure your documentation supports continuous decline. If it does not, the patient should be discharged from the program. Should you be so lucky as to get a RAC audit and wish to have discussions with the RAC following a denial, make sure your key people are there, especially your hospice physician. The Medical Director for PRG-Schultz, DCS s sub-contractor, was a hospice physician and, therefore, should be thoroughly familiar with operations Vander Wyde Health Care Getting Ready for RAC Part II: Prepare & Defend 20 Consultants LLC 10

11 Hospital Target Areas Sources include: The Medicare RAC Program: Evaluation of the 3-Year Demonstration, June 2008 Anecdotal Experience from Demonstration Project in California Issues identified by regional RAC Contractors 21 Hospital Target Areas Other Sources: Supplemental Compliance Program Guidance for Hospitals: HospSupplementalGuidance.pdf Original Compliance Program Guidance for Hospitals:

12 Hospital Target Areas CMS Evaluation Inpatient 1. Surgical Procedures in wrong setting (medically unnecessary) - $88 million recovered (5,421 claims) 2. Excisional debridement (incorrectly coded) - $66.8 million recovered (6,092 claims) 3. Cardiac defibrillator implant in wrong setting (Medically unnecessary) - $64.7 million recovered (2,216 claims) 4. Treatment for heart failure and shock in wrong setting (Medically unnecessary) - $33.1 million (6,144 claims) 5. Respiratory system diagnoses with ventilator support (incorrectly coded) - $31.6 million (2,102 claims) 23 Hospital Target Areas CMS Evaluation Outpatient Hospital 1. Neulasta (medically unnecessary) - $6.5 million recovered (3,253 claims) 2. Speech language pathology services (Medically unnecessary) - $3.2 million recovered (24,991 claims) 3. Infusion services (medically unnecessary) - $2.3 million recovered (19,271 claims) 24 12

13 Hospital Target Areas Anecdotal from Demonstration Project 1. Use of the incorrect coding guidelines 2. Inpatient rehabilitation, you were a big target 3. Outpatient to Inpatient; observation 4. Blood and blood products and infusions 5. Dialysis charts, start and stop times, weights before and after 6. Debridements whether they were surgical or not 7. Diabetic care 8. Same day surgery 9. Surgery recovery times 25 Hospital Target Areas Anecdotal from Demonstration Project 10. Improper use of modifier CPT codes that don t match Revenue Codes 12. J codes with incorrect multipliers 13. Coding for sepsis 26 13

14 Hospital Target Areas Anecdotal from Demonstration Project Inpatient-Respiratory w/ventilator MSDRG 166 MSDRG 167 MSDRG 168 Respiratory infections age greater than 17 MSDRG 177 MSDRG 176 MSDRG 179 Respiratory System diagnosis with Ventilator Support MSDRG 207 greater than 96 hrs of ventilator support MSDRG 208 less than 96 hrs Other Circulatory System OR Procedure MSDRG 264 MSDRG MSDRG'286,287 MSDRG 291/292/293 MSDRG's 308/309/310 MSDRG 313 Excisional Debridement MSDRG 217 MSDRG 463 MSDRG 464 Medical Back Problems - medical necessity MSDRG 551 MSDRG 552 Skin graft &/debridement MSDRG 573 MSDRG 574 MSDRG 575 Other MSDRG's MSDRG 870 MSDRG 871 MSDRG Hospital Target Areas RAC Contractors & CMS Approved 1. Newborn Pediatric CPT Codes Billed for Patients Exceeding Age Limit 2. Once in a lifetime procedures 3. Excessive Units Untimed Codes 4. Excessive Units for Blood Transfusions 5. Excessive Units Bronchoscopy 6. Excessive Units IV Hydration 7. Neulasta 28 14

15 SNF Issues from RAC Demonstration Project - $16 million Whether physical therapy, occupational therapy, and/or speech language pathology services provided were medically necessary. Demonstration Project $8.4 million 80,923 claims. Whether the Resource Utilization Groups (RUGs) chosen are accurate and supported by documentation in the resident s medical record. Whether Medicare Part B Services were properly billed. 29 Possible SNF Issues OIG 2010 Work Plan Medicare pays Part A covered SNF stays using Prospective Payment System (PPS) that applies a case-mix adjustment based on the resident s Resource Utilization Group (RUG) coding, which is an indication of the level of care and resource needs. OIG found 22% of 2002 claims - $542 million wrong RUGS. Medicare Part B payments for psychotherapy services provided to nursing home residents during non-covered Part A SNF stays. OIG found 31% of claims in one year - $185 million - did not meet coverage rules

16 Possible SNF Issues OIG 2010 Work Plan Review claims for Part B services to SNF residents whose stay not covered by Medicare Part A SNF benefit. These services are provided directly by Part B suppliers and providers. If stay is covered by Part A, SNF bills Medicare in accordance with consolidated billing requirements. Clinical Social Worker Services, described in 42 C.F.R (b)(2), to inpatients of Medicare participating hospitals or SNFs may not be billed separately to Medicare Part B. Look at Medicare Part A and Part B claims for overlapping dates of service. This is an example of an automated review. Medicare Part D Drugs for Residents who are also hospice patients. Are the drugs related to the terminal illness? 31 OIG Model Compliance Plans for SNFs OIG Supplemental Compliance Program Guidance for Nursing Facilities: Federal Register Notice: fr.pdf Original Compliance Program Guidance for Nursing Facilities (PDF) (65 FR 14289; March 16, 2000):

17 DME Issues Approved by CMS Pharmacy Supply and Dispensing Fees Pharmacy supply and dispensing fees when billed by a DME supplier are required to be accompanied with an oral anti-cancer, oral anti-emetic, immunosuppressive drug or inhalation drug. The absence of one of the aforementioned drugs billed on the same date of service or a denial of one of the aforementioned drugs represents an overpayment. Wheelchair Bundling Certain procedure codes cannot be billed together for the same date of service and the same beneficiary (e.g., providing a wheelchair and billing for the individual parts of the wheelchair) Urological Bundling Certain procedure codes cannot be billed together for the same date of service and the same beneficiary 33 DME Potential Issues? Sources (1) OIG Compliance Guidance for DME Suppliers (1999);(2) OIG 2010 Workplan, Failure to maintain medical necessity documentation This practice involves failing to ensure that the medical necessity documentation requirements for the item or service billed are properly met (e.g., failing to maintain the physician orders or CMNs or failing to ensure that CMNs contain adequate and correct information) Completing portions of CMNs reserved for completion only by the treating physician or other authorized person This practice involves not completing the CMN in compliance with Medicare rules (e.g., sections B and D should never be completed by the supplier) Inappropriate use of place of service codes This practice involves indicating on the claim form that the place of service is a location other than where the service was provided. For example, the patient resides in a SNF and a DME supplier submits a claim with the place of service as the patient s home 34 17

18 DME Potential Issues (cont d) Mobility Devices (e.g., scooters), hospital beds and accessories, oxygen concentrators, and enteral / parenteral nutrition physician order, delivered to benes, needed by benes Power Wheelchairs face-to-face examination from referring practititoner, medical necessity Enteral Nutrition Therapy Services in Nursing Homes medical necessity, adequacy of documentation, and coding accuracy of claims submitted under Part B Home Blood-Glucose- Testing Supplies physician order, proper modifier (LMRP require that suppliers add a modifier to identify when the patient is insulin-treated or non-insulin-treated and the amount of supplies allowable differs depending on the applicable modifier) 35 DME Potential Issues (cont d) Compliance Program Guidance for the Durable Medical Equipment Prosthetics, Orthotics, and Supply Industry:

19 Compliance Initiatives What to Do Now to Prepare for the RACs Conduct an internal risk assessment to identify potential risk areas that are likely targets per OIG, CERT reports Documentation Coding & billing CMS billing requirements Arrange for audit of identified issues under the direction of an attorney subject to the protection of attorney client privilege with support of clinical and billing consultants Drill down on audit findings with a claims review and prepare a root cause analysis of any problems Continue to monitor any identified risk areas Make sure records that may be requested are complete, organized and readily retrievable Stay tuned to new developments and implement system edits accordingly 37 What are Providers Options Following Demand Letter? Pay by check Allow recoupment from future payments Request or apply for extended repayment plan Appeal/Stay Recoupment Sample Demand Letters from Region A-DCS for Automated & Complex Audits found at files/demand%20letter%20complex. doc files/demand%20letter%20automate d.doc 38 19

20 Rebuttal Statement and Discussion Period 42 C.F.R Rebuttal 15 days from the date of the demand letter to submit a rebuttal statement. 2. Rebuttal statement should explain why recoupment should not be put into effect. 3. FI/Carrier/MAC must consider rebuttal evidence to decide if overpayment should be reduced or reversed. 4. The MAC will advise you of its decision in writing within 15 days of receipt of your rebuttal request. 5. Discussion Period Call RAC immediately for a discussion of why overpayment is wrong. Can request additional time for discussion period, but appeals deadlines are not stayed. 39 Stay of Recoupment Recoupment is the recovery by Medicare of any outstanding Medicare debt by reducing present or future Medicare payments and applying the amount withheld to the indebtedness. 42 C.F.R Recoupment is stayed during first two levels of appeal, redetermination and reconsideration, but interest continues to accrue

21 Time Deadline for Stay of Recoupment You Can Stay Recoupment of a RAC- Determined Overpayment A provider has 120 days from the date of the Demand Letter to file a request for redetermination to the MAC. Recoupment begins on the 41st day after the date of the Demand Letter, unless the MAC receives a request for redetermination within 30 days from the date of the Demand Letter (not 30 days from the date of receipt). If the redetermination decision is not favorable, a provider has 180 days to file a request for reconsideration with the QIC. 41 Time Deadline for Stay of Recoupment The MAC can begin recoupment on the 61st day after the unfavorable redetermination notice, unless the provider files a request for reconsideration within 60 days. If the reconsideration decision is not favorable, a provider can appeal further, but recoupment cannot be stayed during the appeal. See 09/2008 MLN Matters Article, available at /MM6183.pdf (Related Change Request 6183) 42 21

22 RAC Appeals 42 C.F.R. Part 405, Subpart I 5 Stages Stage 1 Redetermination by contractor that processed claim Stage 2 Reconsideration by Qualified Independent Reviewer ( QIC ) Stage 3 Administrative Law Judge ( ALJ ) Hearing Stage 4 Medicare Appeals Council ( MAC ) Review Stage 5 Federal District Court Appeal Timeframes AppealsprocessflowchartAB.pdf 43 Appeals -- Redetermination2 Request must be submitted in writing within 120 calendar days of receiving notice of initial determination (unless extended for good cause) Paper review, by contractor that processed original claim (but redetermination cannot be by same person or persons involved in original determination) No amount in controversy requirement 44 22

23 RAC Appeals Reconsideration Level Request must be filed within 180 calendar days of receiving notice of redetermination decision (unless extended for good cause) Providers dissatisfied with the redetermination may file a request to be conducted by a Qualified Independent Contractor ( QIC ) QIC reconsideration is an on-the-record review Providers must submit a full and early presentation of evidence in the reconsideration stage -- need good cause to submit new documentation or other new evidence past the reconsideration level of appeal 45 RAC Appeals ALJ Level Request must be filed within 60 days following receipt of the QIC s decision (unless extended for good cause) Must meet the amount in controversy (AIC) requirement ($100, adjusted by CPI-U) -- denials can be aggregated to meet AIC requirement, or for purposes of convenience ( big box cases The hearing may be conducted by videoteleconference ( VTC ), in-person, or by telephone -- strong preference for VTC 46 23

24 RAC Appeals MAC Level Request must be filed within 60 days following receipt of the ALJ s decision (unless extended for good cause) A request for MAC Review must identify and explain the parts of the ALJ action with which the party disagrees Unless the request is from an unrepresented beneficiary, the MAC will limit its review to the issues raised in the written request for review MAC does not grant all requests for review (MAC decision to decline review allows provider or supplier to appeal to district court-- CMS can ask MAC to review ALJ decision If the MAC fails to issue a decision or remand the case within the mandatory time frame, the provider may request the appeal be escalated to the federal district court 47 RAC Appeals Judicial Review Request must be filed within 60 days of receipt of the MAC s decision (unless extended for good cause) Judicial review in the federal district court The findings of fact by the Secretary of HHS are deemed conclusive if supported by substantial evidence No amount in controversy requirement Failure to have completed all administrative appeals levels will result in dismissal by district court for lack of jurisdiction 48 24

25 Appeals Strategies Consider whether reopening by RAC was timely (RACs can go back 3 years from date of initial payment determination) Take advantage of informal rebuttal process Gather all documentation early on -- Remember, evidence not presented at QIC level will not be accepted at the ALJ absent unusual circumstances Pay strict attention to the filing deadlines at each stage of the appeal and do not depend on getting an extension Do not forget to raise section 1879 limitation of liability and section 1870 waiver of recovery defenses where appropriate 49 Appeals Strategies At the ALJ level, submit well-organized and well-written position papers in order to clearly and effectively present your case. Draft a position paper outlining the factual and legal arguments in support of payment for a disputed claim For medical necessity denials, use medical summaries, illustrations, and other types of color-coded charts or graphs depicting the claims at issue that are userfriendly for the decision maker Rely on treating physician where possible to establish medical necessity 50 25

26 RAC Appeals Strategies Hire an expert to challenge RAC s finding that services were no medically necessary, it is crucial to engage the services of a medical expert. To challenge the sampling and/or extrapolation methodology, hire a statistical expert MMA Section 935 LIMITATION ON USE OF EXTRAPOLATION A Medicare contractor may not use extrapolation to determine overpayment amounts to be recovered by recoupment, offset, or otherwise, unless the Secretary determines that There is a sustained or high level of payment error; or Documented educational intervention has failed to correct the payment error Hire competent legal counsel to prosecute your appeal 51 Getting Ready for RAC Part II Prepare & Defend Question & Answer 52 26

27 NYC/