Updated on: June 22, 2012

Warning: MACs More Severe Than RACs

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Original story posted on: June 10, 2009
lfotheringill120ds

By Linda Fotheringill, Esq.

 

The RACs certainly have our attention.

 

The MACs (i.e., Fiscal Intermediaries (FI) and Carriers and Medicare Administrative Contractors), however, deserve as much if not more of our attention. Consider this:

 

The June 2008 CMS program evaluation of the RAC demonstration reported $992.7 million in overpayments collected from providers. But additionally, in a similar time period, the Medicare claims processing contractors (i.e. the MACs) in New York, Florida and California corrected more than $13 million in improper payments and prevented an additional $1.8 billion in alleged improper payments by denying claims before they were paid. Unlike RACs, which perform revisions only after a claim has been paid, Medicare claims processing contractors may review claims or choose claims for medical review automatically before they are paid. The $1.8 billion figure includes both automated and complex prepay review.

 

The math alone indicates that MACs may be of more concern to providers than the RACs. Additionally, MACs can impose "severe administrative action," such as 100 percent prepayment review, payment suspension and use of statistical sampling for overpayment estimation of claims.

 

Despite evidence of the significant financial impact MAC activity can have, providers appear to be less reactive to MACs than to the RACs. For instance, CMS has reported that providers chose to appeal only 14 percent of RAC claim determinations, with 4.6 percent overturned on appeal.[1]

 

By comparison, from FY 2005 through FY 2007, Medicare claims processing contractors in all states denied 312 million claims, and providers chose to appeal only four percent of those determinations (12.2 million claims). Only 2.3 percent (7.2 million claims) of those were overturned on appeal.

 

Query:        Are MACs more capable of determining alleged improper payments than RACs, or are providers simply more complacent with respect to MAC denials and/or unprepared to respond to MAC denials?

 

 

So what is a provider to do?

 

I suggest that if you have not done so already, convert your "RAC Team" into a "Medicare Team" to expand the scope of your preparedness and prevention activities. Furthermore, a "RAC Tracking Tool" probably is not sufficient. Optimally, all Medicare denials should be tracked on one platform.

 

One task on your Medicare Team's agenda should be reviewing the Medicare Program Integrity Manual, which provides information on the various Medical Review (MR) programs.

 

CMS contracts with carriers, FIs, Zone Program Integrity Contractors (ZPICS - formerly Program Safeguard Contractors) and MACs to analyze data, write local coverage determinations (LCDs), review claims and educate providers. All of these entities are referred to by CMS as Medicare "contractors."

 

Contractors may perform medical review functions for all claims appropriately submitted to a Medicare fiscal intermediary, Medicare carrier, Part A and B Medicare administrative contractor (A/B MAC) or durable medical equipment Medicare administrative contractor (DME MAC).

 

The goal of the medical review program is to identify and address billing errors tied to coverage and coding rendered by providers.

 

With respect to errors, CMS acknowledges that most do not represent fraud since most are not acts that were committed "knowingly, willfully, and intentionally." However, CMS states that in situations in which a provider has submitted claims in error repeatedly, the MR unit shall take additional action.

 

Examples of additional actions include the following:

 

  • Provider notification or feedback and re-evaluation after notification;
  • 100 percent prepayment review;
  • Payment suspension;
  • Use of statistical sampling for overpayment estimation of claims.

Obviously, it is of critical importance for your "Medicare Team" to implement a process that ensures claims are not submitted in error repeatedly. Hence the need to do the following:

 

  • Vigorously defend and appeal all wrongfully denied claims.

 

  • Track all Medicare denials on one platform for feedback purposes.

 

MAC Facts to consider:

 

MAC Fact 1:

 

MACs can request documentation from a third party if they simultaneously solicit the same information from a billing provider or supplier. Some examples of third parties include a physician's office (if a claim is for lab, x-ray, or Part A service requiring medical documentation) or a hospital (if a claim is for physician's inpatient services). Beneficiaries are not third parties.



But here is the problem
:

 

If information is requested from both the billing provider or supplier and a third party (i.e., a physician's office) and no response is received from either within 45 days of the date of the request (or extension), the contractor will deny the claim, in full or in part, as unreasonable and unnecessary.

 

If information is requested from both the billing provider or supplier and a third party, and a response is received from one or both but the information fails to support the medical necessity of the service, the contractor shall deny the claim, in full or in part, using appropriate denial codes.

 

Therefore, payment of a hospital's inpatient Part A claim could depend upon a physician's office supplying requested documentation in a timely manner. Since so much is at stake with simultaneous documentation requests, your Medicare Team should consider implementing a process to follow up with the other parties to ensure compliance with the documentation request.

 

MAC Fact 2:

 

MACs may choose to deny claims without reviewing attached or simultaneously submitted documentation when "clear policy serves as the basis for denial, and in instances of medical impossibility."  It is concerning this that CMS defines "clear policy" as follows:

 

"The term ‘clear policy' means a statute, regulation, NCD, coverage provision in an interpretive manual or LCD that specifies the circumstances under which a service will always be considered non-covered or incorrectly coded. Clear policy that will be used as the basis for frequency denials must contain utilization guidelines that the contractor considers acceptable for coverage."

 

In my experience, utilization guidelines, LCDs and even NCDs are often subjective and open to interpretation. If MACs choose to decline review of "simultaneously submitted documentation," it appears that even provider appeals may not be reviewed. Accordingly, an appealed claim may not receive any type of fair consideration until the Administrative Law Judge level.

 

In conclusion, our plates are full with RAC preparedness, but there is every reason to expand the scope of our efforts to meet the challenges presented by other Medicare contractors.

 

About the Author

Linda Fotheringill, Esq, is a founding member of Washington West LLC and a nationally recognized expert on denial and appeals management. Ms. Fotheringill successfully assists hospitals across the country in overturning "hopeless" denials and generating millions of dollars in otherwise lost revenue.



[1] CMS June 2008 Program Evaluation of the RAC Demonstration

Linda Fotheringill, Esq.

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