At this time, medical necessity is excluded from the review.

2008 Medicare Data Reported

Steps to Take to Prepare

The four steps described below will help you prepare for the upcoming RAC focus.

1.   Run look-back data from October 1, 2007 through September 30, 2009 for the above MS-DRGs. Perform a probe review (25 cases) beginning with your highest volume and highest revenue MS-DRGs. Most likely, these will be the sepsis DRGs and the major small and large bowel procedure DRGs. Although lower volumes, the extensive and non-extensive operating room (OR) procedures unrelated to principal diagnosis may result in high dollar recoupment because of the high RWs of these MS-DRGs. This is the same for the major chest and the respiratory system OR procedure MS-DRGs.

2.   Quantify your improper payment by underpayment dollars and overpayment dollars and adding together to report a paid claims error rate (PCER) (total improper payment dollars divided by the total net dollars paid to the hospital by Medicare), which you can pull from the remittance advice. Benchmark your PCER to the PCER reported on the last Comprehensive Error Rate Testing (CERT) report (November 2008).

If your PCER is significantly higher than the one reported by the Centers for Medicare & Medicaid Services (CMS), ask yourself why that is the case. If it is significantly under CMS, then ask the same question. Is the audit methodology consistent with CMS? Is there a reason for your hospital to have a higher or lower PCER?

Drill into the root cause-including people, process and technology-to understand gaps, inconsistencies, and missing education, policies/procedures, and technology that can be implemented to mitigate future risk.

3.   Prioritize MS-DRGs with the highest improper payment risk and determine next steps. Is a second probe sample required? (If so, double the amount of the first probe sample.) Determine cases that need re-payment. Track all account numbers that are re-paid to the Medicare fiscal intermediary (FI) or administrative contractor (MAC) to be able to easily identify these cases to the RAC if it requests that in a future demand letter. Determine if the coding error was isolated or systemic. If isolated, provide education, correct process issues, implement additional controls and safeguards. If systemic, consult your compliance officer and legal.

4.   Track and trend results and report to your hospital board to keep them abreast and involved in all issues and repayments identified as a result of pre-emptive RAC audits.