Updated on: June 22, 2012

RACs, Providers and PAYERS: A Complete Circle

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Original story posted on: October 22, 2010

 

 

pdear120dsWell, by now many of us have had some level of "practice" dealing with demand letters, internal reviews, appeals, and, for some of us, claim vindication.

 

Those of us not yet playing in this area have the very real opportunity to learn from our peers and adopt process refinement, identify and hire external experts, and just "get to it." "No excuses: get it done," may be the best mantra, but wait: is it only Medicare and Medicaid (MICs)? No, it is not.

I recently had the opportunity to attend the AHLA (American Health Lawyers Association) conference in Baltimore, where many terrific sessions focused on the impact of the new healthcare legislation (most agree it's VERY necessary, and not all that "new," really) and the expanded areas of fraud efforts. Many of us have read, written and/or spoken about these topics, and we all need to keep assimilating and implementing changes to improve our own internal abilities to detect and prevent errors that lead to claim denial and recoupment. However, most of us, I believe, are under the impression that the RACs, MICs, and soon enough the ZPICs are entities about which we should be worrying.

 

How many of us have thought through the implications of the Medicare Advantage Payers, which will impact us also? Remember that before the end of 2010, the RAC program will expand to Medicare Parts C & D, and the same CMS-approved and posted RAC issues will provide the basis for those reviews as well.

 

Audits - Medicare Part C "Advantage" Plans and the Provider!

 

The Medicare Advantage plans also deal with another audit process, which some of you may not be aware of: the Risk Adjustment Data Validation (RADV) audit process. In brief, the background for the RADV audit process started in 2008, when CMS announced its intention to begin "pilot RADV audits." The current payer risk adjustment model is known as the CMS Hierarchical Condition Category ("CMS - HCC") model, which was summarized in a recent presentation by D. Orbuch, chief compliance officer with United Healthcare, as seen below:

 

"• Member diagnoses (ICD-9 codes) map to Hierarchical Condition Categories ("HCCs")

 

-       HCCs = groups of diseases that are clinically related and have similar cost implications.

 

-   70 disease categories which include over 3,100 diagnoses

 

  • HCCs are used to determine a member specific risk adjustment factor ("RAF") and to calculate a prospective payment plan"

And the RADV audit process looks like this:

 

 

 

"• To ensure payment accuracy (as with fee-for-service), CMS audits the HCCs used to calculate plans payments.

  • Each risk adjusting diagnosis must be coded according to the ICD-9-CM Guidelines for Coding and Reporting.
  • CMS conducts medical record reviews. To validate, HCCs must relate back to diagnosis data contained in the audited enrollee's medical record.

 

Payments under the risk adjustment model are impacted by FFS errors."

 


 

• Studies have shown that the diagnoses identified in claims and diagnoses identified in medical records often are inconsistent.
• The audit of MA risk adjustment data using a medical record review should account for these inconsistencies/discrepancies between FFS claims and medical record data.
• CMS has recognized that it is necessary to “refine the error rate calculation” to account for any error rates inherent in Medicare FFS data that affect MA error rates.”

 


 



 

At this point you may be a bit lost as to why I am bringing this subject to your attention. The source document the Medicare Advantage plans must rely on to respond to the RADV audits is the same one being used to respond to pending RAC audits, and the same source we all are looking to for the purpose of defending and appealing our own RAC challenges: the medical record. It's not surprising, then, that the payers/plans see the same challenges, concerns and deficiencies: lack of diagnosis specificity, absent or unclear orders, and incomplete documentation impacting medical necessity for site-of-service delivery. They have another challenge, however: they must look to providers (most of us) to gather the information for them in a responsive, complete and timely fashion at the very time we are managing our own response RAC deadlines and diverting staff from other patient-related, day-to-day tasks.

 

CEOs, CFOs and hospital administrators must deal with how best to address the expanding needs for their "RAC-identified" teams and/or staff, plus how to manage the distraction of "retrospective" claim defense and the looming monetary recoupments for "past payments" (and related financial impacts). Additionally, they must prepare for the eventual switch from the current "pay and chase" (retrospective) climate to the "concurrent," real-time (dare we say "prospective"?) payment environment of the not-too-distant future as exampled by the RADV payer audit world. This likely will come after we all move into the ICD-10 conversion (more about that in future articles!)

 

I submit to you that the "D" word, DOCUMENTATION, is the factor that stands as our best current and future defense for claim and payment integrity. It is the focus for error-rate determination regardless of the type of service or site of service. Whatever it takes to get it right in the beginning is the one initiative that will pay off for each of us.

 

Each component of the Patient, Provider, Payer cycle works to deliver mission-critical patient and community services, and each entity relies upon the other. Nothing less than our best concerted efforts will help to achieve optimal outcomes for all three: patient, provider and payer.

 

About the Author

 

Patricia Dear, RN, has more than 30 years of experience in the healthcare industry, working within corporate healthcare entities, for-profit and non-profit hospital systems, legal defense and plaintiff counsel. She is a recognized national speaker on reimbursement and compliance. She is the president and CEO of eduTrax®.

 

Contact the Author


pat@edutrax.net

 

To read article entitled, "Attack the RAC with CAC," please click here


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