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jana-gill

Since I am an advocate and consultant for the provider community, it's important for me to recognize a common misconception that RAC contractors are focusing purely on automated audits of hospital services.

Being labeled "rural, independent or small" doesn't divorce providers from the likelihood of a RAC audit. Regardless of employment status, clinic size or demographic, if you are a participating provider, they have access to your data.

In fact, as the American Medical Association (AMA) makes changes to CPT® services, RACs have clued into potential billing issues tied to timing and code changes. Looking back to November 2009, Issue D000482009 HDI, Not a New Patient, was very timely due to the elimination of the consultation codes (CPT 99241-99245 & 99251-99255 for CMS providers. Nearly two years later, this continues to be a lucrative area of review. Although The Centers for Medicare & Medicaid Services (CMS) has defined the new patient rule clearly within the Medicare Claims Processing Manual (Chapter 12, Section 30.6.7), (1) specialty providers continue to code using the old consultation guidelines. New and established evaluation services are designated as such using the three-year rule, specialty designation and tax identification. Consultations did not have new or established designation, which allowed providers to use these codes based on new problems without considering the issue of timing. Furthermore, the RVU differential was significant as compared to the new patient category, thus incentivizing providers to use these codes if documentation met criteria standards.

The ability to translate your own claims data to identify Medicare beneficiaries with multiple new patient services within a three-year period will help reduce the opportunity for RACs to make this discovery instead.

More recently, on June 23 Region C published another evaluation- and management-related issue. "Evaluation and management services with allergy services" appears to be a straightforward description, yet it may translate into other "medical necessity" areas. Allergy services alone often include a host of tests and injections exclusive of E/M codes. Likewise, the use of Modifier 25 (separately identifiable E/M the same day as procedure or service) plays a significant role in the documentation of additional E/M service.

Looking back five years ago, CMS issued several alerts and CERT reports for CPT 99211. Although this is a "minimal" evaluation and management service not requiring the presence of the provider, medical necessity remains key. Within national CERT findings, 99211 was being used in several instances when only an injection procedure was performed and no other service was documented for a given day. Allergy injections run parallel to these findings. More often than not allergy injections are pre-scheduled and no other services beyond the injection are scheduled. The injection code includes the minimal amount of work needed to make the determination that the patient is fit to undergo the procedure.  On the other hand, if the patient has a significant, separately identifiable problem that meets the requirements of an E/M service, this may be billed using Modifier 25 for claims processing.

CMS has become increasingly sophisticated with regard to data mining and detecting modifier misuse. The bigger picture focuses on evaluation and management services tied to typically scheduled services. Injections of all types are an easy target for the RACs, as they frequently are scheduled in series and do not require the presence of a physician or mid-level practitioner.

As a precautionary audit within your own practice, review procedures and services that are pre-scheduled and develop a report to determine how often E/M services are billed in conjunction. If this is found to occur frequently, pull the documentation and compare the "visit intent" against the note content. This type of internal control should be run quarterly and shared with the medical staff to provide education and training to avert potential RAC scrutiny.

About the Author

Jana B. Gill, MA, CPC, is currently a product engineer and developer for regulatory and reimbursement software suites for Wolters Kluwer Company. Her expertise in coding and compliance has been integral to client and product development.  Jana has more than eighteen years of experience in healthcare, including coding, compliance, mergers and acquisitions, physician integrations and healthcare litigation. She is a national speaker for chapters of the MGMA, AAPC and Wolters Kluwer Company.

Contact the Author

jana.gill@gillcompliance.com

To comment on this article please go to editor@racmonitor.com

 


 

(1) "A patient who has not received any professional services - i.e., evaluation and management service or other face-to-face service (such as a surgical procedure) - from the physician or physician group practice (same physician specialty) within the previous three years. For example, if a professional component of a previous procedure is billed in a three-year time-period, i.e. a lab interpretation is billed and no E/M service or other face-to-face service with the patient is performed, then this patient remains a new patient for the initial visit. An interpretation of a diagnostic test, reading an X-ray or EKG, etc., in the absence of an E/M service or other face-to-face service with the patient does not affect the designation of a new patient."

CMS Heat is on – Hence the RAC Attack

klong100EDITOR'S NOTE: Each month we will publish a summary of fraud cases as reported by the Office of Inspector General and the Department of Justice. These findings are available to RACmonitor and MICMonitor readers, courtesy of DesionHealth. You can hear Karen Long's report weekly on "Monitor Monday."

New reports of charges, arrests or sentencing of health care providers for fraud or HIPAA violations are released almost daily. The Office of Inspector General at the U.S. Department of Health and Human Services has stepped up its compliance training for providers and expects the providers to do the same at their offices.

Also adding to the trend of increased enforcement is the government's focus on reducing improper payments to save federal dollars.

The following are the results of several of those investigations:

Hospital

  • Pittsburgh hospital employee pleads guilty to HIPAA charge. A former employee at UPMC Shadyside hospital in Pittsburgh pleaded guilty to knowingly disclosing patient health information to another person in violation of HIPAA, according to the U.S. Attorney in Western Pennsylvania. While working at the hospital, Paul Pepala shared patients' names and social security numbers, which were then used to file unauthorized tax returns seeking tax refunds in 2008. Pepala faces up to one year in prison and a fine of $50,000 at his Oct. 20 sentencing.
  • Maryland hospital to pay $1.8 million to settle False Claims Act allegations. Peninsula Regional Medical Center did not take the steps necessary to prevent medically unnecessary cardiac stent procedures by a doctor who was convicted of inserting the stents, ordering unnecessary tests and falsifying patient records, the U.S. Attorney's Office in Maryland states. The U.S. Attorney's office states that senior medical staff did not follow up on staff complaints about the unnecessary procedures. The hospital also entered into a corporate integrity agreement with the Department of Health and Human Services' Office of Inspector General "to ensure accurate billing."

Physician

  • Drug ring busted in Florida. Thirty-two people, including 13 doctors, were snagged in an investigation related to illegal distributions of pain killers and steroids in south Florida, according to the U.S. Attorney there. The charges include racketeering conspiracy, money laundering conspiracy and possession with intent to distribute controlled substances. The operation distributed more than 20 million Oxycodone pills and made more than $40 million from illegal sales, the attorney's office states.
  • Biller at physician office to spend more than three years in jail. A Maine woman responsible for billing at a physician's office has been sentenced to three years and one month in prison, according to news reports. An independent audit of the practice's records showed billing for more extensive exams than were performed, billing for procedures that weren't performed and altering medical records, resulting in more than $300,000 in overpayments, states the U.S. Attorney's Office in Maine. Dawn Zehrung, also known as Dawn Glover, has to pay more than $355,000 in restitution, the news reports state.
  • Pennsylvania doctor one of 53 defendants indicted in multi-million dollar fraud scheme. As part of the scheme described in a 498-count indictment, fake patients would pay a $150 fee to the staff at physician Norman Werther's office, then Werther would write prescriptions for the fake patients for Oxycodone-based drugs, according to the U.S. Attorney in the Eastern District of Pennsylvania. The prescriptions would be filled and then the drugs would be sold, the U.S. Attorney's office states. Three of Werther's office staffers were also indicted.
  • Two physicians charged with dispensing controlled substances that resulted in four deaths. Sam Jahani, 49, of Cleveland, Texas, and Eric Peper, 53, of Summerland Key, Fla., were indicted Aug. 3 on charges stemming from fraud that occurred in Colorado, the U.S. Attorney's Office in Colorado states. The doctors allegedly prescribed controlled substances including Oxycodone, Vicodin and Xanax "without determining a sufficient medical necessity" or without following "the usual course of professional practice," the U.S. Attorney states.
  • Four doctors part of 26 charged in fraud scheme. Four Detroit physicians were paid "kickbacks, bribes and other inducements" by pharmacists to write prescriptions and bill Medicare, Medicaid and private insurances regardless of whether the services were medically necessary, the Justice Department alleges. The doctors then would direct patients to fill the prescriptions at certain pharmacies owned by another man named in the 34-count indictment. The pharmacists would fill the prescriptions and bill Medicare, Medicaid and private insurances though the medications were not medically necessary or provided, the Justice Department states. The pharmacies billed Medicare $37.7 million as part of the scheme, which began in January 2006.

 
 
  • Maryland cardiologist convicted in insurance fraud scheme. John McLean, 59, of Salisbury "submitted insurance claims for inserting unnecessary cardiac stents, ordered unnecessary tests and made false entries in patient medical records," according to the U.S. Attorney's Office in Maryland.
  • Physicians accused of improperly spending grant money. As much as $13.6 million given to physicians to bolster rural healthcare in Louisiana following Hurricane Katrina was improperly awarded to physicians who weren't qualified for the money, HHS' Office of Inspector General states in a July report. The money was to be used for paying off student loans, offsetting malpractice payments and relocation costs for physicians who agreed to practice in greater New Orleans for at least three years after the storm. Of 100 physicians reviewed by OIG, only 33 were found to be in compliance with the requirements of the federal grant. The 67 not in compliance that were actually reviewed received $3.1 million in federal funds. The $13.6 million in alleged overpayments arrived at by the OIG were the result of an extrapolation of the sample findings to show 509 providers were improperly paid.

Home Health

  • Mother and son charged with home health fraud. A Miami mother and son who owned Angie's Home Health Care were sentenced prison for 71 months and 57 months, respectively, and ordered to pay more than $1.5 million in restitution, according to the U.S. Attorney's Office in South Florida. The agency provided services that were not medically necessary and billed Medicare. The son also instructed patients to provide false information, and nurses and recruiters were paid kickbacks to get beneficiaries to agree to be treated by the agency.
  • Miami home health nurse convicted of healthcare fraud. Armando Santos, 46, was sentenced to 10 years in prison after convictions on one count of conspiracy to commit health care fraud, four counts of health care fraud and two counts of false statements related to health care matters, according to the U.S. Attorney's Office in the Southern District of Florida. Santos submitted $230,315 in false claims to Medicare, including claims that he had provided twice-daily insulin injections to two patients who were not homebound or in need of those services, the U.S. Attorney states. The owners of Ideal Home Health where Santos worked have been charged in connection with the scheme.
  • Husband and wife indicted in connection with Miami home health fraud scheme. Elizabeth Acosta Sanz and Luis Alejandro Sanz were charged with conspiracy to commit health care fraud, health care fraud, conspiracy to pay kickbacks, payment of kickbacks, conspiracy to commit money laundering and money laundering, according to the U.S. Attorney's Office in the Southern District of Florida. The couple offered kickbacks to recruiters, instructed nurses to falsify patient medical records and submitted $11.3 million in false claims to Medicare, the U.S. Attorney's Office states.
  • U.S. intervenes in whistleblower case against a Kentucky home health agency. Two former employees of Nurses' Registry and Home Health Corporation in Lexington, Ky., allege that the agency "exaggerated the medical conditions and needs of its patients for home health care services" to inflate their payments, according to a Justice Department press release. The original lawsuit was filed in March 2008.
  • Patient recruiter pleads guilty July 21 in $25 million Medicare fraud scheme. Vicente Guerra-Nistal, 54, of Miami was a patient recruiter for ABC Home Health Care in Miami, which billed Medicare for physical therapy and home health services that weren't medically necessary or weren't performed, according to a Justice Department statement. Twenty other co-conspirators were charged as part of the scheme that billed Medicare about $194,000, the Justice Department states. Guerra-Nistal faces up to 10 years in prison plus fines and penalties.

Durable Medical Equipment

  • Three people including pastor convicted in $14.2 million durable medical equipment (DME) scheme. Christopher Iruke, 60, and Connie Ikpoh, 49, are a married couple who were pastors at a Los Angeles church and owners of fraudulent DME companies, according to the Justice Department. Along with Aura Marroquin, 30, they "billed Medicare for power wheelchairs, orthotics and other DME that were not medically necessary or never provided," the Justice Department states.
  • Louisiana DME company owner sentenced to prison. Thompson Chinwoh, 57, of Baton Rouge was sentenced July 18 to four years in prison for submitting claims for expensive durable medical equipment, such as back and knee braces, that were not medically necessary or prescribed for the patients, according to the U.S. Attorney's Office in the Middle District of Louisiana. A federal judge also ordered Chinwoh to pay $878,280 in restitution plus an additional $878,280.

 


 

Pharmacy

  • $3 million Medicare Part D scheme results in two arrests. Luba Balyasny, 46, and Alla Shrayber, 40, both of Brooklyn, N.Y., were arrested July 26 and charged with conspiracy to commit health care fraud for allegedly submitting false claims through two pharmacies, states the U.S. Attorney's Office in the Eastern District of New York. The pair allegedly submitted the claims for medications they did not buy or give to beneficiaries. They face 10 years in prison if convicted.
  • Pharmacist pleads guilty July 19 to false claims submission. Earnest McGee, 40, of Dorchester, Mass., paid customers to bring prescriptions to the Codman Square Pharmacy in Dorchester but didn't provide the medicines to the customers, according to the U.S. Attorney's Office in Massachusetts. McGee and another employee also bought prescriptions from Medicaid beneficiaries. McGee faces up to 10 years in prison and a $250,000 fine at his sentencing in October.

The cases above show that government enforcement of fraud and abuse laws and HIPAA regulations is increasing, and providers need to ensure their compliance programs will protect them.

About the Author

Karen Long is the compliance product manager for DecisionHealth and oversees products that relate to fraud and abuse and HIPAA compliance for physician offices and home health agencies, and accreditation compliance for hospitals. In her almost four years at DecisionHealth, Karen also has been the compliance editor and a reporter for Home Health Line, nation's leading independent authority on home healthcare business, regulation and reimbursement.

Contact the Author

KLong@decisionhealth.com

To comment on this article please go to editor@racmonitor.com

Here Come Medicare BundledPayments; Here Come the RACs

r-wiitalaHealthcare providers may now apply to participate in a new program known as the Bundled Payments for Care Improvement Initiative (shortened to Bundled Payments Initiative [BPI]).

The BPI (to be implemented by the new Center for Medicare and Medicaid Innovation) will align payments for services delivered across an episode of care, rather than paying for them separately.

Although it's too soon to know whether, and how, the BPI will affect the review activities of the Recovery Auditor Contractors, it's not too soon to begin evaluating certain areas that could be affected. These, and details of the BPI, are provided below.

How it Works

Obviously, the BPI will eliminate the current method of issuing separate payments to hospitals, physicians and other providers. As stated above, reimbursement will center on the episode of care-a package of services that patients receive for a specific medical condition during a hospital stay and/or recovery. Instead of a procedure generating multiple claims from multiple providers, the entire team will receive a bundled payment.

Providers can define their own episode of care and determine which services they would bundle together-as long as they use one of the following models:

  • Model 1: Acute care hospital stay only;
  • Model 2: Acute care hospital stay plus associated post-acute care stay;
  • Model 3: Only the post-acute care, beginning with the initiation of post-acute care services after discharge from an acute inpatient stay;
  • Model 4: All services furnished during an inpatient stay by the hospital, physicians and other practitioners.

Applicants also would propose the target price-an amount set by applying a discount to total costs for a similar episode of care as determined from historical data.  At the episode's conclusion, the total payments would be compared with the target price.  Organizations that wish to apply to participate must submit a nonbinding letter of intent.

The BPI and RAC Activities

Before applying, providers should answer several questions, including the following:

  • Do you really understand the state (or quality) of your facility's current documentation as well as its coding and billing practices?
  • Are there any known deficiencies that will be exposed during participation in the BPI? For example, if your facility struggles with documentation to support accurate MS-DRG assignment, will your organization be "held harmless" from exposure to improper payments if compliance violations are revealed?
  • Do you understand the current state (or quality) of documentation, coding and billing practices of the doctors and suppliers that will be part of your team? Will they also be held harmless from exposure to improper payments if compliance violations for their services are discovered?
  • Will your RAC coordinators and internal auditors be required to participate in this process? If so, what might be the impact on current compliance activities and workloads?
  • And, finally, will the BPI require less emphasis or more emphasis on coding? Will providers still be required to report exact codes to describe the care provided or are alternative reporting mechanisms on the horizon? What, if any, effect will that have on the future of RAC evaluations?

Clearly, the BPI represents a significant step toward cost containment and improving quality of care for the Medicare program, and no one can argue with those goals. Many more questions than the above will surface as the BPI unfolds, but it will be worthwhile to analyze how it may affect RAC activities in your organizations.

For More Information

A fact sheet about the initiative, which includes a table comparing the key features of the models, is available at http://innovations.cms.gov/documents/pdf/Fact-Sheet-Bundled-Payment-FINAL82311.pdf. The following web site also provides important details http://www.innovations.cms.gov/areas-of-focus/patient-care-models/bundled-payments-for-care-improvement.html.

About the Author

Randy Wiitala, BS, MT (ASCP) is a senior healthcare consultant with Medical Learning, Inc. (MedLearn), St. Paul, MN. MedLearn is a nationally recognized expert in healthcare compliance and reimbursement. Founded in 1991, MedLearn delivers actionable answers that will equip healthcare organizations with their coding, chargemaster, reimbursement management and RAC solutions.

Contact the Author

rwiitala@medlearn.com

To comment on this article please go to editor@racmonitor.com

Using Data Mining as a Component of Audit Defense

klong100alert-powered-by-decision-health

 

 

 

 

 

 

 

HealthDataInsights, the recovery auditor for Region D, recently posted 21 issues that were approved between July 27 and Aug. 11.

The RACs will examine whether services are medically necessary for the inpatient hospital issues.

The other three RACs have not posted issues this past week.

Part A Inpatient

Name of issue

Date posted or approved

Regions/states where it is active

Description of issue

Document sources

Acute inpatient hospitalization - Multiple sclerosis and cerebellar atazia w/CC (DRG 059)

7/27/11

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pubs 100-02, 100-08

Acute inpatient hospitalization - Ear, nose, mouth and throat malignancy without CC/MCC (DRG 148)

8/5/11

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pubs 100-02, 100-08

Acute inpatient hospitalization - Other disorders of the eye w/MCC (DRG 124)

8/5/11

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pubs 100-02, 100-08

Acute inpatient hospitalization - neurological eye disorders (DRG 123)

8/5/11

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pubs 100-02, 100-08

Acute inpatient hospitalization - otitis media and URI w/MCC (DRG 152)

8/5/11

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pubs 100-02, 100-08

Acute inpatient hospitalization - red blood cell disorders w/MCC (DRG 811)

8/5/11

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pubs 100-02, 100-08

Acute inpatient hospitalization - inflammation of the male reproductive system w/o MCC (DRG 728)

8/5/11

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pubs 100-02, 100-08

Acute inpatient hospitalization - otitis media and URI w/o MCC (DRG 153)

8/5/11

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pubs 100-02, 100-08

Acute inpatient hospitalization - acute major eye infections w/CC/MCC (DRG 121)

8/5/11

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pubs 100-02, 100-08


 

Name of issue Date posted or approved Regions/states where it is active Description of issue Document sources
Acute inpatient hospitalization – multiple sclerosis and cerebellar ataxia w/o CC/MCC (DRG 060) 8/5/11RAC RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – degenerative nervous system disorders w/o MCC (DRG 057) 8/5/11 RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – degenerative nervous system disorders w/MCC (DRG 056) 8/5/11 RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – acute ischemic stroke with use of thrombolytic agent w/CC (DRG 062) 8/5/11 RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – nonspecific CVA and precerebral occlusion without infarct w/MCC (DRG 067) 8/5/11RAC RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – intracranial hemorrhage or cerebral infarction w/CC (DRG 065) 8/5/11 RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – intracranial hemorrhage or cerebral infarction w/MCC (DRG 064) 8/5/11 RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – traumatic stupor and coma, coma greater than one hour w/CC (DRG 083) 8/11/11 RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – traumatic stupor and coma, coma less than one hour w/MCC (DRG 085) 8/11/11 RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – traumatic stupor and coma, coma greater than one hour w/MCC (DRG 082) 8/11/11 RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – nontraumatic stupor and coma w/MCC (DRG 080) 8/11/11 RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08
Acute inpatient hospitalization – nontraumatic stupor and coma w/o MCC (DRG 081) 8/11/11 RAC Region D Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. CMS Pubs 100-02, 100-08

 

About the Author

Karen Long is the compliance product manager for DecisionHealth and oversees products that relate to fraud and abuse and HIPAA compliance for physician offices and home health agencies, and accreditation compliance for hospitals. In her almost four years at DecisionHealth, Karen also has been the compliance editor and a reporter for Home Health Line, nation's leading independent authority on home healthcare business, regulation and reimbursement.

Contact the Author

KLong@decisionhealth.com

To comment on this article please go to editor@racmonitor.com

klong100

alert-powered-by-decision-health

 

 

 

 

 

 

 

Recovery auditors will be able to ask for up to 35 records every 45 days from providers that bill fewer than 27,200 claims, according to a RAC update from CMS.

The change, effective Aug. 22, is an increase for those providers that now are limited to 34 additional documentation requests or fewer because of the relatively small number of claims they bill.

Ralph-Wuebker100

With each new day the regulatory landscape for hospitals is becoming more stringent and complex as it relates to compliance with the rules and regulations promulgated by the Centers for Medicare & Medicaid Services (CMS). Most hospitals utilize multiple forms of compliance auditing, including the work performed by utilization review (UR) committees. The UR committee is charged with ensuring that each case is in compliance, being comprised of physicians, nurses, case management and administrative staff who are well versed in the ever-changing medical necessity compliance regulations.

One important tool used by these UR committees is the Program for Evaluating Payment Patterns Electronic Report (PEPPER). The PEPPER is intended to support a hospital's own auditing and monitoring activities, and it is utilized not only by the UR committee but also by case management, medical coding and billing, compliance, finance, and leadership teams.

Created in 2003, PEPPER in its current form includes an expanded list of areas at risk for improper Medicare payments. These targets reflect the latest denial data from Recovery Audit Contractor (RAC), Comprehensive Error Rate Testing (CERT) and Medicare Administrative Contractor (MAC) audits. The PEPPER is updated annually, and this year alone 18 new "targets" have been added, changing both the quantity and format of PEPPER data. All of these changes need to be understood fully in order to maximize their value.

The PEPPER currently is distributed to short-term acute-care hospitals on a quarterly basis, being distributed annually to long-term acute-care hospitals, critical access hospitals and inpatient psychiatric hospitals. Later this year, the reports will be available to inpatient rehabilitation hospitals for the first time. It is crucial that these institutions all learn to analyze and utilize the PEPPER report data to support their ongoing compliance efforts.

To learn how to analyze this data, one first must understand what the report is indicating. The PEPPER report provides a rolling three-year analysis of paid Medicare inpatient claims. The statistics are formatted in a ranking system based on state information, MAC/FI jurisdiction and national claim patterns. This quarterly data allows for an analysis of trends and is available within four to six months following claim submission. Starting this year the PEPPER data reflects 17 MAC/FI jurisdictions, but further consolidation is expected as the MAC program is finalized.

UR committees should not use PEPPER as their sole data analysis tool since it does not monitor outpatient services such as observation care or outpatient procedures (with the exception of one target that includes both inpatient and outpatient cardiac stents). It also does not include Medicare Advantage (HMO) claims or information from other payers. While the comparison data provided by the PEPPER is helpful, it currently does not compare hospitals by size, demographics or types of services. Thus, large inner-city hospitals are being compared to small community hospitals and everything in between.

The PEPPER compares Diagnosis-Related Groups (DRGs), sometimes referred to as MS-DRGs, developed for Medicare to classify hospital cases by similar clinical groups (that in turn use similar levels of hospital resources to treat cases in order to find outliers in comparison to other hospitals). If a hospital is significantly above or below the average within these groups, it is considered an outlier and can be at higher risk for audit. These designations can help identify potential areas of compliance weakness and should be prioritized and targeted by hospitals for ongoing internal compliance assessment.

Medicare and Medicaid Program Integrity Contractors - including RACs, MACs, Zone Program Integrity Contractors (ZPICs), Program Safeguard Contractors (PSCs) and many others - review these outliers for possible areas to audit.

Outliers are discovered by using a simple DRG validation ratio. MS-DRG coding is tested in the PEPPER by examining ratios of higher-severity MSDRGs compared to the universe of related MS-DRGs. The example below shows the ratio for simple pneumonia.

dr-wuebker-chart

 

 

 

 

The result will appear in the "percent" column of the hospital's PEPPER and will be color-coded if it is considered to be an outlier. Outliers appear in red if they are above the 80th percentile, appearing in green if they are below the 20th percentile. Once the outliers are calculated, high outliers must be evaluated by the hospital to ensure correct status and adequate documentation, both clinically and during utilization review. These outliers reflect admissions that may lack clear documentation of inpatient medical necessity regardless of length of stay. These numbers also may imply that further education is necessary for all parties in the UR committee, as well as attending physicians, if documentation is an issue.


 

As knowledge and acceptance of PEPPER grows, more hospitals are discovering the value of these reports and using them to their advantage in adhering to the standards identified in the Conditions of Participation. To obtain your PEPPER data files, go online to www.qualitynet.org. Training and other information is available at www.pepperresources.org.

About the Author

Ralph Wuebker, MD, currently serves as Vice President of Executive Health Resources' (EHR) ACE (Audit, Compliance and Education) Team. This group of physicians conducts audits and regular visits to EHR's client hospitals to provide ongoing education on a variety of topics including Medicare and Medicaid compliance and regulations, medical necessity, Recovery Audit Contractors, utilization review, denials management and length of stay.

Contact the Author

rwuebker@ehrdocs.com

To comment on this article please go to editor@racmonitor.com

Understanding and Managing the Posted RAC Issues

amanda-berglund100As you are aware, the Centers for Medicare & Medicaid Services (CMS) has given the four regional Recovery Audit Contractors (RACs) the power to audit Medicare claims for quickly growing lists of issues across multiple provider types to recover what they consider to be improper payments. This article focuses on how you can access these issues – and more importantly, why you need to.

It is not CMS, but the RACs that are tasked with identifying areas of vulnerability for providers billing through Medicare. To explain further, the “issues” referenced above are any areas where there is a potential vulnerability that allows for improper payments. Each RAC must support any claim that an issue should be approved and added to its issues list through sample (or probe) audits of claims. Each RAC also independently must demonstrate that an issue should be added to its own website – this is why the number and focuses of issues vary across the RACs. However, although each RAC has its own issues list, you can be sure that individual RACs are monitoring issues approved for other RACs closely with the intent of exploring those issues for their own audits.

Once an issue is approved, it must be added to the issues list on each RAC’s website. While these lists should serve to help providers determine their internal “RAC risk,” the lists have gotten so long and so difficult to navigate that some providers are unable to digest them – so instead they decide to wait for an audit before figuring out where they may have problems.

It should go without saying that waiting for an audit before understanding your RAC’s posted issues is very shortsighted, and allows errors and potential problems to persist unchecked.

If the risk of individual cases being denied isn’t enough to encourage providers to review their RAC lists and identify vulnerabilities, the risk of extrapolation – through which an error in a sampling of cases can be extrapolated over the entire case load across a span of three years – should be. Consider, for example, that a RAC determines the existence of a $50 error in 25 percent of a 100-case sample. This $50 error for the 100 cases means payback of $1,250 ($50 times 25 percent times 100). But what if you have 25,000 such cases and the statistical method indicates a certainty rate of 85 percent?

Your extrapolated recoupment, in that case, could be $265,625!(1)

Unfortunately, keeping abreast of all RAC issues for your region is not as easy as going to your RAC’s issues website and pulling out the newly posted issues. Existing issues can be changed at any time without notification. Depending on your contractor, you may find that your RAC’s website search capability is missing or not very helpful, that there is limited or no sorting capability, or that you have to click on each individual issue for more detail. It will be necessary for the most part to scroll through long lists on a regular basis to identify new or modified issues.

Because many providers have found that RAC websites can be difficult to navigate, some consulting firms (including ours) have created websites that allow providers to access, sort, filter, print and download issues. This can be especially helpful for providers that don’t want to scroll through hundreds of issues that only apply to other providers in order to find those issues that impact their organizations. It also can help providers group issues by the department or individual responsible for reviewing claims, determining risk and/or mounting appeals.

Regardless of how you access the information, use the issues list as a starting point to assess your own organization’s systems and processes, and to mitigate the loss of revenue and risk of overpayments for future claims. Providers should assign a committee or an individual responsible for keeping up with their RACs’ issues lists, and those entities should monitor beyond just those issues that affect your specific provider type. Because RACs can look across an entire episode of care, providers need to know how their partners in care (i.e. medical staff, post-acute facilities, outpatient hospitals, etc.) are vulnerable. For example, if an acute-care case is denied for an inpatient stay due to failure to meet medical necessity, the physician’s claim, the post-acute facility, etc. also may be vulnerable.

Knowing the issues helps you identify and quantify your own risk, and there are several software tools available that can link your own claims data with existing issues to demonstrate quickly which cases are most at risk. Use this list to prepare cases for review and appeals, and to make changes to avoid the errors in the future.

About the Author

Amanda Berglund, MS, MBA, is a partner in PACE Healthcare Consulting. Prior to joining PHCC, Amanda was Associate Administrator and Chief Business Development Officer at North Fulton Regional Hospital near Atlanta, GA.She is a former Manager of Business Development for Tenet Healthcare Corporation. Amanda received a BS from Columbia University and an MS from Georgia Institute of Technology. She also has an MBA in entrepreneurial leadership from Nova Southeastern University.

Contact the Author

amanda.berglund@pacehcc.com

To comment on this article please go to editor@racmonitor.com

RAC Audit Transfers to Post-Acute Care; Refunds to Hospitals May Be a Result


 

(1)This example is an overly simplified one used to express the point of extrapolation. When extrapolating over a number of claims, appropriate statistical methods must be used.

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The Medicaid Recovery Audit Contractors (RACs) could be gearing up to hit providers if one contractor’s quarterly report is any indication.

PRG Schultz International’s quarterly report for the quarter that ended June 30 noted it was awarded Mississippi’s Medicaid RAC contract and stated that it will “evaluate and bid for additional Medicaid RAC opportunities.” It also states that “while the magnitude and timing of additional health care claims recovery audit revenues are difficult to predict, we expect those revenues to increase in the third and fourth quarters of 2011 compared to the first half of the year.”

 

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Providers should look for demand letters for recovery audit contractor-identified overpayments from their Medicare Administrative Contractors (MACs) starting Jan. 1, 2012.

CMS will require MACs instead of RACs to send demand letters and follow the same process for other payment recoupments, states Change Request 7436 issued July 29. During the RAC demonstration and national program until now, the RACs had been required to send demand letters.

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Providers who recently received a comparative billing report (CBR) or have heard about the release of these reports may be asking how CBRs fit into the current audit landscape.  According to the Centers for Medicare & Medicaid Services (CMS), the CBR is a tool being used to educate providers about their individual billing practices.

CBRs show individual providers how their billing patterns for various codes and procedures compare to state averages and the national average for providers within the same field (i.e. physical therapists, chiropractors, etc.). These comparative studies are designed to help providers review their coding and billing practices and utilization patterns with an eye on taking proactive compliance measures. CMS has stated that “the CBR is not intended to be punitive or sent as an indication of fraud. Rather, it is intended to be a proactive statement that will help the provider identify potential errors in their billing practice.” Still, CBRs also may reveal issues that leave providers vulnerable to future audit activity (or put them on notice of overpayments).

CBRs Reveal Billing Outliers

In the past, CMS has issued similar billing reports, such as the Program for Evaluating Payment Patterns Electronic Report (PEPPER) targeting inpatient hospitals. PEPPER focuses on several inpatient risk areas, compiling data used by hospitals to compare their billing practices with those of other hospitals across the nation. Although not currently available to hospitals, CBRs are much like PEPPER in that they provide comparative data to assist providers in visualizing underpayments and overpayments as part of an effort to reveal billing outliers.

CMS awarded Safeguard Services LLC the contract for producing CBRs, awarding Livanta LLC the contract for distributing the reports. CMS has recommended that CBRs be sent out to select provider types that bill for certain services identified as vulnerabilities in the Medicare program.
The first CBRs were sent out in August 2010 to physical therapists, who were chosen due to an identified vulnerability in their billing practices: the use of the “KX” HCPCS modifier, which is a billing requirement used to show that a beneficiary has exceeded the therapy cap but requires additional medically necessary physical therapy services.

CBR Expansion Program

Since then CMS has expanded the number of provider types slated to receive CBRs. The provider types that thus far have been tabbed to receive the reports include chiropractors, ambulance services, hospice, podiatry, sleep studies and spinal orthotics, each having its own vulnerabilities identified by CMS.

A maximum of 5,000 providers in each provider class will be selected to receive CBRs. Medicare updates the data twice a year, so the reports cover one of two dates-of-service time frames: January through June or July through December. Due to CBRs being based on dates of service, the reports typically are not available for at least three months, allowing time for claims to be finalized.

CBRs are not available to anyone but the provider who receives them. The reports do not include patient or case-specific data, only summary billing information, this being a method of ensuring privacy. The providers receiving the reports are directed to use the summary billing information as a tool to help them comply with Medicare billing rules and correct any current billing errors that could lead to future audits.

Likely Audit Candidates

Providers receiving CBRs may wonder what these data reports mean in the context of future audits. CBR data analysis involves the same data-mining tools used by Medicare contractors to identify candidates for audit. Also, in our experience the vulnerabilities identified in the CBRs tend to be the same as those identified by CMS contractors who select providers for audit. Thus, providers who are identified as outliers in CBRs likely will be subject to audits.

Providers can determine whether they have been identified as outliers compared to their peers by reviewing the graphical illustrations included in the CBRs. Providers whose specialty has been identified but have not yet received a CBR may want to view a sample CBR (which can be found on Safeguard’s website) so they will understand the information in the report should it arrive.

CBRs: Next Steps

Upon receiving a CBR, it is vital that providers evaluate the information within and consider conducting an attorney-client privileged internal compliance audit to determine whether any differences in billing patterns are attributable to billing errors or can be explained in other manners  (i.e. a difference in patient population).

Providers also should develop compliance policies to address any identified risk areas. Recipients of a CBR and provider types that have been tabbed to receive the reports should consider contacting a health law attorney to discuss CBR analysis and development of an appropriate compliance plan that will reduce audit risks going forward.

About the Authors

Amy K. Fehn is a partner at Wachler & Associates, P.C.  Ms. Fehn is a former registered nurse who has been counseling healthcare providers for the past eleven years on regulatory and compliance matters and frequently defends providers in RAC and other Medicare audits.

Jennifer Colagiovanni is an attorney at Wachler & Associates, P.C.  Ms. Colagiovanni graduated with Distinction from the University of Michigan and Cum Laude from Wayne State University Law School.  Upon graduation, Ms. Colagiovanni was nominated to the Order of the Coif. Ms. Colagiovanni devotes a substantial portion of her practice to defending Medicare and other third party payer audits on behalf of providers and suppliers.  She is a member of the State Bar of Michigan Health Care Law Section.

Contact the Authors
afehn@wachler.com
jcolagiovanni@wachler.com