Original story posted on: February 17, 2010

The Sky Has Fallen: IRFs and Physicians Now RAC Targets

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Updated on: June 22, 2012

ernieThe sky is no longer falling. It has fallen, period.

Analysis of the newly posted issues from Connolly Healthcare and HDI (Health Data Insights) reveals that for first time Rehabilitation Facilities (IRFs) and Physician Practices are now more heavily targeted than before, via reviews of Medically Unlikely Edits (MUEs).


We have heard repeatedly that many physicians do not think they will be targeted by the RAC for quite some time.  And given statements made by CMS over the past year, perhaps they can be forgiven for thinking that way. However, with both Connolly and HDI now approved to review all MUEs, probably more than half of the nation's physician practices are now under the magnifier of the RAC. And, at the risk of repeating ourselves, the other two RACs can't be far behind in getting similar approval.


MUEs now give the RAC an open door into the physician's records.


The MUEs


An MUE (Medically Unlikely Edit) is a unit of service for a Healthcare Common Procedure Coding System (HCPCS) or Current Procedural Terminology (CPT) code for services rendered by a single provider/supplier to a single beneficiary on the same date of service. The ideal MUE is the maximum unit of service that would be reported for a HCPCS/CPT code on the vast majority of appropriately reported claims. The MUE program includes a way to report medically reasonable and necessary units delivered/performed in excess of an established MUE.


The intent of the program was to reduce the error rates for Medicare claims, especially errors due to clerical entries and incorrect coding based on a number of considerations.  See this page for links to CMS FAQs about the MUE program.


One area we think of when we hear "MUE" is injections and infusions. Problems occur here for physicians because the MUEs are, in some cases, not easy to understand, and sometimes, the coders in the practices and hospitals alike either don't know about or misunderstand how many units they are allowed to bill. (Find lots of MUE Resources HERE.)


Errors from MUEs can easily add up to thousands, sometimes tens or even hundreds of thousands of dollars, especially when measured across years of incorrect usage.


Physicians in the states covered by Connolly and HDI are now being reviewed for these types of issues, all the way back to October 1, 2007, the same year that MUEs were introduced.


Even if only considering injections and infusions services, how many claims for those types of services have you filed since October of 2007? There's your risk.


IRFs At Risk


IRFs are paid under a different system than acute care inpatient hospitals. Acute care facilities are paid via the MS-DRG system, which we have described in previous articles. At the risk of oversimplifying, let's just say that the IRFs are paid with an even more complicated system, which uses Rehabilitation Impairment Categories (RICs) and Case Mix Groups (CMGs).


MS-DRGs and CMGs


Long story short, an MS-DRG is still used to file a claim, but the payment to the IRF is made using the CMGs and their associated figures. The claim forms have both the MS-DRG and the CMG on it.


What this means is that the claims can be tracked and analyzed using either or both those codes
, the MS-DRG and the CMG.


Under the MS-DRGs, there are only two codes - 945 and 946. Under the CMGs, however, there are over 90 codes. But since the codes 945 or 946 will accompany EVERY claim from an IRF, regardless of which CMG is coded, that means that all the CMGs are basically approved for review.


MS-DRG 945, Rehabilitation with CC/MCC


When Connolly posted this issue, it made us think and we went back to see, once again, what might Connolly know that the rest of us had missed. Connolly has shown that they are more "choosey" than the other RACs, especially compared to HDI. HDI seems to prefer to garner approval for entire groups of DRGs. Why would Connolly choose only one of the two DRGs?


When we went looking in the HDI list, we did find MS-DRG 945. It is included in their "issue" named, "Health Status Factors" and, as is their custom, includes multiple DRGS: MS-DRGs 939, 940, 941 and 945-951. Browse those in a DRG Guidebook and you'll find that those codes make up an entire MDC (Major Diagnostic Category - groups of principal diagnoses, generally corresponding to single organ systems or causes/origins for the diseases or pathologies). The significance of including 945/946 in that list escaped us, at that time, we admit. Connolly's posting now brings it to light, however.


The significance is, as noted above, all 92 CMGs are effectively now approved for review, at least by Connolly and HDI.


Medical Necessity Still Excluded


While all currently approved DRG Validation issues carry the caveat, "At this time, Medical Necessity excluded from review," we remind our readers that the records will already be in hand, and the RACs will have been preparing for the time when Medical Necessity is approved for review, and more importantly, approved for issuance of denials and consequent Demand Letters.


Extrapolation Potential


Also, providers should keep in mind that the large lists of approved issues add to our suspicions that the RACs will sooner or later use extrapolation techniques to boost their profits. To be prepared for such instances, there are some strategies that a provider should know, in order to mount the best possible defense. To that end, RAC University powered by eduTrax® has assembled a team of experts who will go over some recommended strategies.

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