June 4, 2013

Pre-Payment Reviews and Short Stays

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RAC Region C – Connolly has posted several pre-payment demonstration audit issues in the past weeks and one of those issues includes Pre-Payment Demonstration: MS-DRG-637-Diabetes with Major Complications and Comorbidities. This means that because of the Pre-payment Demonstration Project, the Medicare Recovery Auditors can review claims before they are paid. This pre-payment review will prevent the pay-and-chase model that Medicare had formerly practiced. This review will be applied to the seven states that were identified for inpatient short stay issues: Florida, California, Michigan, Texas, New York, Louisiana, and Illinois The states with the highest number of inpatient stays will also be reviewed and these include Pennsylvania, Ohio, North Carolina, and Missouri.

For this particular issue the RAC will review claims billed with MS-DRG-637-Diabetes with MCC, and length of stay is two days or less. Pre-payment reviews are complex review types and will require the provider to submit documentation before a payment or denial is made. The RAC will be looking for documentation for DRG validation requiring that diagnostic and procedural information and the discharge status of the beneficiary, as coded and reported by the hospital on its claim, matches both the attending physician description and the information contained in the beneficiary's medical record. Auditors will review claims for principal diagnosis, secondary diagnosis, and procedures affecting or potentially affecting the focused MS-DRGs.

RAC Pre-payment issues seek to reduce improper payments by $50 billion and cut the Medicare payment error rate in half. Prepayment reviews are expected to prevent improper payment of claims in states with either high volumes of short inpatient hospital stays or high rates of fraud.

In an April 3, 2013 letter, the American Medical Association (AMA) urged the Centers for Medicare & Medicaid Services (CMS) to rescind the pre-payment demonstration before it begins targeting hospital procedures for increased audit scrutiny.

“The AMA is concerned that using Recovery Auditor Contractors for pre-payment review could lead to significant errors and major burdens for physician practices,” said AMA President Peter W. Carmel, MD. “A recent CMS report shows that when providers appeal the decisions made by RACs, they prevail 46% of the time. We will work with CMS to find appropriate ways to identify clinically sound, non-burdensome and effective means of reducing improper payments.”[1]

Another concern is that physicians believe RACs are incapable of conducting reviews efficiently or accurately and cited a recent survey by the American Hospital Association (AHA) concluding that 39 percent of hospitals reported that their contractors had not met a 60-day deadline to make determinations on claims reviews.

Due to the requirement of documentation submissions, providers need to be vigilant about tracking RAC determination time lines since pre-payment reviews affect the overall cash-flow of a hospital or physician’s office. Prepare your inpatient coders to be aware of the MS-DRGs being targeted to ensure correct code and corresponding MS-DRG are assigned. If able to, add a second level of coding reviews to short-stay admissions since they present a coding issue with often limited documentation in the patient’s medical record. Also involve case managers to perform pre-bill reviews to verify the patient’s status and to avoid any billing errors.

RAC issues for the week of June 3rd – June 7th, 2013:

RAC Region D HDI            

Outpatient Hospital Claim Types

  • Inappropriate Use of Modifier 74 – JF - Facilities use modifier 74 to indicate that a surgical procedure was terminated after administration of anesthesia or initiation of the procedure. Facilities use modifier 73 to indicate that the surgical procedure was terminated prior to induction of anesthesia or initiation of the procedure. Procedures with modifier 74 are paid at 100% of the rate and procedures with modifier 73 are paid at 50% of the rate. Improper payments occur when modifier 74 is billed for procedures that were terminated prior to induction of anesthesia or initiation of the procedure.
  • Excessive Units of Multiple Drug Class Screenings – JF - Effective January 1, 2011, HCPCS codes G0431 and G0434 for multiple drug class screenings may only be reported once per patient encounter regardless of the number of drug classes tested.
  • Excessive Units of Multiple Drug Class Screenings – J5 and Legacy - Effective January 1, 2011, HCPCS codes G0431 and G0434 for multiple drug class screenings may only be reported once per patient encounter regardless of the number of drug classes tested.
  • Excessive Units of Multiple Drug Class Screenings – J1 - Effective January 1, 2011, HCPCS codes G0431 and G0434 for multiple drug class screenings may only be reported once per patient encounter regardless of the number of drug classes tested.

About the Author

Dr. Margaret Klasa is the medical director for ContextHealthcare. She is responsible for the company’s business knowledge discovery unit for medical context as it relates to the daily development of data products and software for medical claims editing and coding, with an emphasis on clinical and regulatory guidelines for Medicare, Medicaid and commercial payors.

Contact the Author

Margaret.Klasa@context4.com

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1 http://www.amednews.com/article/20120423/government/304239968/6/

Margaret Klasa, DC, APN, Bc

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