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Preventing a RAC Audit “Bloodbath” through Improved Documentation Presented by Susan F. Reynolds, MD, Preventing a RAC Audit “Bloodbath” through Improved Documentation Presented by Susan F. Reynolds, MD, Ph. D Daniel N. Rastein, MD, MPH President and CEO Faculty Member The Institute for Medical Leadership® Community Memorial Health System October 24, 2012

Agenda • What is a RAC/Why RAC? – Dr. Rastein • RACs’ Focus – Agenda • What is a RAC/Why RAC? – Dr. Rastein • RACs’ Focus – Dr. Reynolds Ø Go Where the Money Is Ø RACTrac Facts Ø Red Flags • Troubleshooting at CMHS: Improving Documentation – Lisa Larramendy, RAC Manager • Teaching Your Colleagues: Preventing Financial Loss – Case Studies

Handouts • RAC Appeals Process • Levels of Appeal • E/M Coding and Medical Handouts • RAC Appeals Process • Levels of Appeal • E/M Coding and Medical Necessity Review

Overview (Daniel N. Rastein, MD, MPH) • • • What is a RAC? Will Overview (Daniel N. Rastein, MD, MPH) • • • What is a RAC? Will the RACs affect me? Why RACs? What does a RAC do? What are the providers’ options? What can providers do to get ready? 4

What is a RAC? • The RAC Program Mission • The RACs detect and What is a RAC? • The RAC Program Mission • The RACs detect and correct past improper payments so that CMS and Carriers, FIs, and MACs can implement actions that will prevent future improper payments: • Providers can avoid submitting claims that do not comply with Medicare rules • CMS can lower it’s error rate • Taxpayers and future Medicare beneficiaries are protected.

Will the RACs affect me? • Yes, if you bill fee-for-service programs, your claims Will the RACs affect me? • Yes, if you bill fee-for-service programs, your claims will be subject to review by the RACs • • If so, when? • • The expansion schedule can be viewed at www. cms. hhs. gov/rac

RAC Legislation • Medicare Modernization Act, Section 306 • Required the three year RAC RAC Legislation • Medicare Modernization Act, Section 306 • Required the three year RAC demonstration • Tax Relief and Healthcare Act of 2006, • Section 302 • Requires a permanent and nationwide RAC program by no later than 2010 • Both Statutes gave CMS the authority to pay the RACs on a contingency fee basis

What does a RAC do? • The RAC Review Process • RACs review claims What does a RAC do? • The RAC Review Process • RACs review claims on a post-payment basis • RACs use the same Medicare policies as Carriers, FIs and MACs: NCDs, LCDs and CMS Manuals • Two types of review: • Automated (no medical record needed) • Complex (medical record required) • RACs will not be able to review claims paid prior to October 1, 2007. • RACs will be able to look back three years from the date the claim was paid • RACs are required to employ a staff consisting of nurses, therapists, certified coders, and a physician CMD

The Collection Process • Same as for Carrier, FI and MAC identified overpayments (except The Collection Process • Same as for Carrier, FI and MAC identified overpayments (except the demand letter comes from the RAC) • Carriers, FIs and MACs issue Remittance Advice • Remark Code N 432: Adjustment Based on Recovery Audit • Carrier/FI/MAC recoups by offset unless provider has submitted a check or a valid appeal

What is different? • Demand letter is issued by the RAC • RAC will What is different? • Demand letter is issued by the RAC • RAC will offer an opportunity for the provider to discuss the improper payment determination with the RAC (this is outside the normal appeal process) • Issues reviewed by the RAC will be approved by CMS prior to widespread review • Approved issues will be posted to a RAC website before widespread review

What are providers’ options? • If you agree with the RAC’s determination: • • What are providers’ options? • If you agree with the RAC’s determination: • • Pay by check Allow recoupment from future payments Request or apply for extended payment plan Appeal • Appeal Timeframes • http: //www. cms. hhs. gov/Org. Med. FFSAppeals/Downloads/Appealsp rocessflowchart. AB. pdf • 935 MLN Matters • http: //www. cms. hhs. gov/MLNMatter. Articles/downloads/MM 6183. pdf

Three Keys to Success • Minimize Provider Burden • Ensure Accuracy • Maximize Transparency Three Keys to Success • Minimize Provider Burden • Ensure Accuracy • Maximize Transparency

Minimize Provider Burden • Limit the RAC “look back period” to three years • Minimize Provider Burden • Limit the RAC “look back period” to three years • Maximum look back date is October 1, 2007 • RACs will accept imaged medical records on CD/DVD (CMS requirements coming soon) • Limit the number of medical record requests

Summary of Medical Record Limits (FY 2009) • Inpatient Hospital, IRF, SNF, Hospice • Summary of Medical Record Limits (FY 2009) • Inpatient Hospital, IRF, SNF, Hospice • 10% of the average monthly Medicare claims (max 200) per 45 days per NPI • Other Part A Billers (HH) • 1% of the average monthly Medicare episodes of care (max 200) per 45 days per NPI • Physicians (including podiatrists, chiropractors) • • Sole Practitioner: 10 medical records per 45 days per NPI Partnership (2 -5 individuals): 20 medical records per 45 days per NPI Group (6 -15 individuals): 30 medical records per 45 days per NPI Large Group (16+ individuals): 50 medical records per 45 days per NPI • Other Part B Billers (DME, Lab, Outpatient Hospital) • 1% of the average monthly Medicare claim lines (max 200) per NPI per 45 days

Ensure Accuracy • • Each RAC employs: Certified coders Nurses Therapists A physician CMD Ensure Accuracy • • Each RAC employs: Certified coders Nurses Therapists A physician CMD CMS’ New Issue Review Board provides greater oversight RAC Validation Contractor provides annual accuracy scores for each RAC • If a RAC loses at any level of appeal, the RAC must return its contingency fee

Maximize Transparency • • New issues are posted to the web Vulnerabilities are posted Maximize Transparency • • New issues are posted to the web Vulnerabilities are posted to the web RAC claim status website (2010) Detailed Review Results Letter following all Complex Reviews

What can providers do to get ready? What can providers do to get ready?

Know where previous improper payments have been found • Look to see what improper Know where previous improper payments have been found • Look to see what improper payments were found by the RACs: • Demonstration findings: www. cms. hhs. gov/rac • Permanent RAC findings: will be listed on the RACs’ websites • Look to see what improper payments have been found in OIG and CERT reports • OIG reports: www. oig. hhs. gov/reports. html • CERT reports: www. cms. hhs. gov/cert

Know if you are submitting claims with improper payments • Conduct an internal assessment Know if you are submitting claims with improper payments • Conduct an internal assessment to identify if you are in compliance with Medicare rules • Identify corrective actions to promote compliance • Appeal when necessary • Learn from past experiences

Prepare to respond to RAC medical record requests • Tell your RAC the precise Prepare to respond to RAC medical record requests • Tell your RAC the precise address and contact person they should use when sending Medical Record Request Letters • Call RAC • No later 1/1/2010: use RAC websites • When necessary, check on the status of your medical record (Did the RAC receive it? ) • Call RAC • No later 1/1/2010: use RAC websites

Appeal when necessary • The appeal process for RAC denials is the same as Appeal when necessary • The appeal process for RAC denials is the same as the appeal process for Carrier/FI/MAC denials • Five levels of appeals • Do not confuse the “RAC Discussion Period” with the Appeals process • If you disagree with the RAC determination…Do not stop with sending a discussion letter • File an appeal before the 120 thday after the Demand letter

Appeal when necessary • AHA RACTrac survey: Ø 40% of RAC audits are appealed Appeal when necessary • AHA RACTrac survey: Ø 40% of RAC audits are appealed nationwide (50% are appealed in Region D which includes CA) Ø 75% of appealed audits are overturned

Learn from past experiences • Keep track of denied claims • Look for patterns Learn from past experiences • Keep track of denied claims • Look for patterns • Determine what corrective actions you need to take to avoid improper payments • Educate physicians

Contacts • RAC Website: www. cms. hhs. gov/RAC • RAC Email: RAC@cms. hhs. gov Contacts • RAC Website: www. cms. hhs. gov/RAC • RAC Email: [email protected] hhs. gov

RACs Focus (Susan F. Reynolds MD, PD) • Go Where the Money Is • RACs Focus (Susan F. Reynolds MD, PD) • Go Where the Money Is • AHA RACTrac Facts • Medical Necessity and The Importance of Documentation • Red Flags

Where is the Money? Recoveries RAC National Program FY 2010 Oct 09 – Sep Where is the Money? Recoveries RAC National Program FY 2010 Oct 09 – Sep 10 FY 2011 Q 1 Oct 10 – Dec 10 FY 2011 Q 2 Jan 11 – Mar 11 FY 2011 Q 3 Mar 11 – Jun 11 Total National Program Overpayments collected $75. 4 M $81. 2 M $185. 2 M $233. 4 M $575. 2 M Underpayments returned $16. 9 M $13. 1 M $23. 7 M $55. 9 M $109. 6 M Total Corrections $92. 3 M $94. 3 M $208. 9 M $289. 3 M $684. 8 M The US Congress authorized the nationwide expansion of the Recovery Audit Program through the Tax Relief and Health Care Act of 2006. Recovery Auditors are CMS contractors who are tasked with detecting and correcting past improper payments

AHA RACTrac Facts • $899 million in denials reported in 2 nd Q 2012, AHA RACTrac Facts • $899 million in denials reported in 2 nd Q 2012, up 21% from 1 st Q 2012 • Most commonly cited reason for complex denial was “short-stay medically unnecessary” Ø Also most costly denial Ø Denial due to care provided in wrong setting, not medically unnecessary • Syncope and Collapse, and Stents were most costly medical necessity denials

AHA RACTrac Facts • Reasons for Complex Denials (% of hospitals reporting 2 nd AHA RACTrac Facts • Reasons for Complex Denials (% of hospitals reporting 2 nd Q 2012): Ø Ø Ø Ø Short Stay Medically Unnecessary – 70% Inpatient Coding – 47% Other Medically Unnecessary – 22% Medically Unnecessary Longer than 3 Days – 6% Discharge Status – 23% No Documentation – 5% Outpatient Coding – 4% Other – 7%

Medical Necessity and the Importance of Documentation If It Wasn’t Documented, it Wasn’t Done! Medical Necessity and the Importance of Documentation If It Wasn’t Documented, it Wasn’t Done! 29

Medical Necessity § Medical Necessity is the overarching criterion for E/M Services! 30 Medical Necessity § Medical Necessity is the overarching criterion for E/M Services! 30

Medical Necessity • Defined as accepted health care services and supplies provided by health Medical Necessity • Defined as accepted health care services and supplies provided by health care entities, appropriate to the evaluation and treatment of a disease, condition, illness or injury and consistent with the applicable standard of care.

Non Medically Necessary • Inpatient hospitalizations for treatment that could be safely and adequately Non Medically Necessary • Inpatient hospitalizations for treatment that could be safely and adequately provided on an outpatient basis • Continued inpatient hospital care, when the patient’s medical symptoms and condition no longer required a continued stay in the hospital

Non Medically Necessary • Cosmetic surgery • Treatment provided for the convenience of the Non Medically Necessary • Cosmetic surgery • Treatment provided for the convenience of the patient, such as an elective cesarean section • An advanced procedure or treatment provided without first trying less invasive, less expensive treatments

Medical Necessity is an E/M Service Imperative • Coders often overlook medical necessity in Medical Necessity is an E/M Service Imperative • Coders often overlook medical necessity in the evaluation and management (E/M) code assignment process. They need physician documentation! • Both the 1995 and 1997 physician E/M service coding guidelines recognize seven components, six of which are used in defining levels of service. These components include: • • History • Examination • Medical decision-making • Counseling • Coordination of care • Nature of presenting problem • Time

Medical Necessity is an E/M Service Imperative • The first three of these components Medical Necessity is an E/M Service Imperative • The first three of these components (i. e. , history, examination, and medical decision-making) are considered the key components in selecting a level of E/M service. The undisputed eighth component, not necessarily in priority order, is medical necessity. • Medical necessity is a difficult concept for most coders to grasp and apply on a consistent basis in the E/M assignment process. It is subjective when compared to the hard and fast official 1995 and 1997 CPT® coding guidelines that they must follow as part of the E/M assignment process. Physician Documentation is critical!

The Medical Necessity Reality • Medical necessity from a Medicare perspective is defined under The Medical Necessity Reality • Medical necessity from a Medicare perspective is defined under Title XVIII of the Social Security Act, Section 1862 (a) (1) (a): • No payment may be made under Part A or Part B for expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. • The subjectivity of medical necessity contributes to physician indifference and lack of willingness to embrace this imperative concept not only from an ordering-of-services perspective but also from the physician’s clinical documentation and E/M assignment perspective.

The Medical Necessity Reality • Physicians are not excused from establishing medical necessity when The Medical Necessity Reality • Physicians are not excused from establishing medical necessity when providing and documenting an E/M service. Federal law requires that all expenses paid by Medicare, including those for E/M services are “medically reasonable and necessary. ” As stated in section 30. 6. 1 of the Medicare Claims Processing Manual, Chapter 12: • “Medical necessity of a service is the overarching criterion for payment in addition to the individual requirements of a CPT code. It would not be medically necessary or appropriate to bill a higher level of evaluation and management service when a lower level of service is warranted. The volume of documentation should not be the primary influence upon which a specific level of service is billed. Documentation should support the level of service reported. The service should be documented during, or as soon as practicable after it is provided in order to maintain an accurate medical record. ”

The Medical Necessity Reality • Consider the following points when determining medical necessity for The Medical Necessity Reality • Consider the following points when determining medical necessity for billed E/M services: • Medical necessity of an E/M service is generally expressed in two ways: frequency of services and intensity of service (CPT level) • Medicare’s determination of medical necessity is separate from its determination that the E/M service was rendered as billed. • Medicare determines medical necessity largely through the experience and judgment of clinician coders along with the limited tools provided in CPT and by CMS. • During an audit, Medicare will deny or adjust E/M services that, in its judgment, exceed the patient’s documented needs

The Basis of Medical Necessity v Medical necessity of an E/M service is based The Basis of Medical Necessity v Medical necessity of an E/M service is based on the following attributes of the service: • The number, acuity, and severity and/or duration of problems addressed through the history, physical, and medical decision-making • The context of the encounter among all other services previously rendered for the same problem • The complexity of documented co-morbidities that clearly influenced physician work • The physical scope encompassed by the problems (i. e. , the number of physical systems affected) v Medical necessity as relates to E/M assignment is based upon: • Volume of service, meaning how frequently the patient is seen in the office • Intensity, meaning the level of E/M service billed for the encounter (codes 99201– 99205 for new office patients and 99211– 99215 for established office patients)

It’s in the Details • Coders must take into account the level of detail It’s in the Details • Coders must take into account the level of detail in clinical documentation of chief complaint, history of present illness (HPI), physical exam, and medical decision-making. Depending upon the type of history taken, extent of the physical exam performed, and the degree of decision-making required, a coder assigns a specific office E/M level. If an opportunity arises where the physician may have overlooked documentation of a past family and social history or review of systems (ROS), the coder may seek clarification and documentation of these missing elements and proceed to assign a specific E/M code.

Volume and Intensity of Service • Intensity of service relates to the amount of Volume and Intensity of Service • Intensity of service relates to the amount of work the physician performed and documented in the record as an integral part of the patient encounter. The coder uses this information to determine the particular E/M level (codes 99201– 99215). • Coders need to think about medical necessity when they review the physician documentation and not just assign an E/M level based on the physician’s documented work. • When assigning an E/M code, coders should always ask, “Was it necessary for the physician to perform and document all the work in the chart for the patient encounter and bill a specific E/M level given the nature of the patient’s presenting problem and chief complaint? ”

Volume and Intensity of Service (continued) • Also coders must consider is the acuity Volume and Intensity of Service (continued) • Also coders must consider is the acuity of the chief complaint and nature of the presenting problem and the associated completeness of the HPI. The HPI represents a chronological description of the development of the patient’s present illness from the first sign and/or symptom or from the previous encounter to the present. • Coders must verify the documentation of the HPI fully describes it and the nature of the presenting problem. Having said this, medical necessity of an E/M service is frequently evidenced only through the documented characteristics in specific HPI elements

Appropriate Levels • Providers must be sure the documentation of E/M services includes the Appropriate Levels • Providers must be sure the documentation of E/M services includes the patient’s clinical condition and reason for the service in enough detail for a reasonable observer to understand the patient’s need and the practitioner’s thought process. The E/M code must reflect the patient’s needs, work performed, and medical necessity.

Appropriate Levels • Medical Decision Making Documentation is Essential! Physicians must document the following: Appropriate Levels • Medical Decision Making Documentation is Essential! Physicians must document the following: ü HPI/NPP: All symptoms pre-admission ü PMH: Past conservatives treatment measures that failed necessitating more aggressive therapy/surgery (e. g. joint replacement) ü PMH: Co-morbidities ü Time (with consultants, care coordination, family, counseling)

Red Flag #1 Red Flag #1

Top Issue (National Recovery Audit Program) Health Data Insights (HDI) FY June 2010 – Top Issue (National Recovery Audit Program) Health Data Insights (HDI) FY June 2010 – June 17, 2011) • Minor Surgery and other treatment billed as Inpatient – When beneficiaries with known diagnoses enter a hospital for a specific minor surgical procedure or other treatment that is expected to keep them in the hospital for less than 24 hours, they are considered outpatient for coverage purposes regardless of the hour they presented to the hospital, whether a bed was used, and whether they remained in the hospital after midnight. (Medical Necessity)

Region D – Medical Necessity • Providers need to be cognizant of the correct Region D – Medical Necessity • Providers need to be cognizant of the correct patient status. • The typical recovery period for these minor surgical procedures is usually 4 -6 hours.

Additional Red Flags Additional Red Flags

Region D Approved Issues Part B • • • • For Part B claims: Region D Approved Issues Part B • • • • For Part B claims: Global vs. TC/PC Facility vs. Non-Facility Reimbursement (Inpatient) NCCI Edits Hospice Related Services – B TC of Radiology Not a New Patient Medically unlikely edits CSW During Inpatient Ambulance during inpatient Ambulance SNF to SNF transfer (NN Modifier) Date of death Part B duplicates - automated review Co-surgery not billed with modifier 62

Region D Approved Issues Part B • Global days • Anesthesia care package E/M Region D Approved Issues Part B • Global days • Anesthesia care package E/M services • Practice expense (PE) relative value unit (RVU) increase for CPT code 93503 • Procedures performed during the global period of other procedures • Multiple surgery reduction errors: single line modifier 51 underpayments • Multiple surgery reduction errors - underpayments • Multiple surgery reduction errors – overpayments • Wheelchair seating, mutually exclusive codes • AFO and KAFO custom fabricated versus prefabricated codes • Mohs surgery pathology billed by separate provider J 1 • Visits to patients in swing beds

Region D Approved Issues Part B • Add on codes with denied primary code-by Region D Approved Issues Part B • Add on codes with denied primary code-by clinical laboratory • Add on codes with denied primary code for professional services • Add-on codes paid without required primary code by ambulatory surgery center (ASC) • Add-on codes paid without required primary code for professional services • Add-on codes paid without required primary code-by lab • Reclast (Zoledronic acid) excessive units • Zometa (Zoledronic acid) excessive units

Region D Approved Issues Part A and Part B • For Part A outpatient Region D Approved Issues Part A and Part B • For Part A outpatient and Part B claims: • Newborn Pediatric CPT Codes Billed for Patients Exceeding Age Limit • Once in a Lifetime • Excessive Units—Untimed Codes • Excessive Units—Blood Transfusions • Excessive Units—Bronchoscopy • Excessive Units—IV Hydration • For inpatient hospital claims: • Inpatient admissions without a physician's inpatient admit order

Thank You! Daniel N. Rastein, MD, MPH Faculty Member The Institute for Medical Leadership® Thank You! Daniel N. Rastein, MD, MPH Faculty Member The Institute for Medical Leadership® [email protected] net (310) 466 -2299 Susan F. Reynolds, MD, Ph. D President and CEO The Institute for Medical Leadership® [email protected] com (800) 361 -5321 www. medleadership. com

CMHS Specifics Lisa Larramendy RAC Manager CMHS Specifics Lisa Larramendy RAC Manager

Community Memorial Hospital RAC activity • Total RAC audits to date: 1, 644 charts Community Memorial Hospital RAC activity • Total RAC audits to date: 1, 644 charts going back to 2008 • No Takebacks: 653 • Current Activity: 748 • Successful: 149 • Accept Overpayment 89

Gray Areas: Unclear Medical Necessity • • • Medical Chest pain Syncope Back pain Gray Areas: Unclear Medical Necessity • • • Medical Chest pain Syncope Back pain UTI TIA Surgical Cardiac Procedures TURPS Laparoscopic Procedures Back Procedures Mastectomy

Observation • Observation is when you are sick enough to be in the hospital Observation • Observation is when you are sick enough to be in the hospital but Medicare says you are not sick enough to be admitted to the hospital. • What is Observation? It is a ploy to get the identical hospital services for less money – it is a financial machination without a clinical basis. • When they deny payment because they claim the patient should have been observed rather than admitted, they do not pay for Observationthey pay nothing!

Teaching Your Colleagues Case Studies Partner A = RAC Auditor Partner B = Physician Teaching Your Colleagues Case Studies Partner A = RAC Auditor Partner B = Physician Defending Documentation