Updated on: December 6, 2012

RACs Expanding Audits Outside of Hospitals

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Original story posted on: November 29, 2012

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New issues that recovery auditors (RACs) have posted indicate that the contractors are expanding their scope and diving into various provider settings.

The contractors first targeted expensive hospital claims because RACs receive a percentage of the improper payments – overpayments and underpayments – that they correct. But recent issues target provider settings such as home health agencies, for example.

The standard home health payment for a 60-day episode is about $2,100, but agencies have been in the Office of Inspector General (OIG) crosshairs for potentially fraudulent activity.

And in the RACs’ most recent statement of work in 2011, CMS pushed the contractors to identify and pursue issues for provider types other than hospitals.

In issues posted last week, CGI Federal, the RAC for Region B, noted that it will conduct complex reviews of home health claims for two areas of potential overpayments. In one issue, the RAC will look for claims for dependent services in which the patient no longer requires a skilled service. In another issue, the RAC will look at whether services are reasonable and necessary for late episodes, which are the third or later consecutive home health episodes and pay increased reimbursement.

RAC news

Along with the home health issues, CGI Federal posted physician issues as well. Region A RAC Performant Recovery posted one durable medical equipment (DME) issue.

Durable medical equipment (DME) supplier

Name of issue

Date approved

Regions/states where it is active

Description of issue

Document sources

Complex lower limb prostheses

11/28/12

RAC Region A

Lower limb prostheses that do not meet the indications of coverage and/or medical necessity related to NHIC Corp.’s local coverage determination L11464.

NHIC LCD L11464; NHIC Medicare services article A25310; CMS Pub. 100-02 chapter 15; OIG report OEI-02-10-00170; CMS Pub. 100-08 chapter 3; DME coding system, DME pricing data analysis coding – lower limb prostheses

Home health agency

Name of issue

Date approved

Regions/states where it is active

Description of issue

Document sources

No skilled service

10/25/12

RAC Region B

To qualify for the home health benefit, a patient must need a skilled service. When a skilled service is needed, dependent services may also be covered. Dependent services are not covered for a patient who no longer needs a skilled service. Claims with no skilled service billed will be reviewed to determine whether the qualifying criteria of having an ongoing skilled service has been met.

Social Security Act 1814 (2)(C); CMS Pub. 100-02 chapter 7

Skilled nurse length of stay

10/25/12

RAC Region B

Late episodes (third and later) receive increased payments, therefore payment incentives exist for extended home health care. Medicare covers skilled nursing services when they are reasonable and necessary. Extended nursing care for observation and assessment may not be covered. Claims for nursing services into the third episode and after will be reviewed to determine whether all Medicare coverage criteria is met.

42CFR 409.42, 409.44; CMS Pub. 100-02 chapter 7; Medicare Payment Advisory Commission report to Congress March 2011

Physician

Name of issue

Date approved

Regions/states where it is active

Description of issue

Document sources

Incorrect billing of diagnosis codes for colonoscopy and sigmoidoscopy

10/25/12

RAC Region B

Automated review to ensure correct reporting of diagnosis codes for colonoscopy and sigmoidoscopy services.

WPS LCD L30304

Professional Trastuzumab off-label uses

10/25/12

RAC Region B

Automated edit to identify claims for Trastuzumab (Herceptin) being used for off-label indications.

CMS Pub. 100-02 chapter 15; CMS Pub. 100-04 chapter 17; CMS Addendum A and Addendum B updates; WPS LCD L28576

About the Author

Karen Long is the editor of Physician Solutions 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

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