Download Slide 1

Pamela E. Clarke
Vice President of Healthcare Finance
and Managed Care
Delaware Valley Healthcare Council of HAP
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General Overview of Hospital Audits
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Recovery Audit Contractors (RACs)
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Medicare Administrative Contractors (MACs)
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Medicare Prepayment Audits: Hip and Joint
Replacements
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Lessons Learned from MAC Audits
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Suggested Audit Strategies
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Future Considerations
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Medicaid Bureau of Program IntegrityCGI audits
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Medicaid RAC Audits
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Medicare RAC Program
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MACs
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Centers for Medicare & Medicaid Services (CMS)
instituted the Recovery Audit Contractors (RAC)
program in accordance with the Medicare
Modernization Act of 2003.
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The RAC program is designed to extract
waste from the Medicare system by
identifying and recovering improper
payments paid to healthcare providers.
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The RAC program has been successful in
reclaiming money through retrospective reviews
of fee-for-service claims.
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RACs are paid on a contingency fee basis, receiving a
percentage of the improper payments they collect
from providers.
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RAC audits focus on site of care, upcoding, and
medical necessity.
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RAC auditors may review the last 3 years of provider
claims and conduct medical record reviews.
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RACs conduct automated reviews of Medicare
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RACs conduct complex reviews of provider
payments to health care providers—using computer
software to detect improper payments.
payments—using human review of medical records
and other medical documentation to identify
improper payments to providers.
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RACs are private firms contracted by CMS to audit
Medicare fee-for-service claims for:
 Hospital inpatient and outpatient
 Skilled nursing facility
 Physician
 Ambulance
 Laboratory
 Durable medical equipment
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RACs look for improper payments such as:
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Incorrect payment amounts;
Incorrectly coded services (including Medicare Severity
diagnosis-related Group [MS-DRG] miscoding);
Non-covered services (including services that are not
reasonable and necessary); and
Duplicate services.
Automated activity includes the traditional automated
activity as described above as well as semi-automated
review activity. These claims are denied in an automated
manner if supporting documentation is not received
timely.
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2266 hospitals have participated in the American Hospital
Association RACTRAC since data collection began in January of
2010.
Participants continue to report dramatic increases in RAC activity:
 Medical record requests are up 22% relative to last quarter.
 The number of denials is up 24% relative to last quarter.
 The dollar value of denials is up 21% relative to last quarter.
Nearly two-thirds of medical records reviewed by RACs
did not contain an improper payment.
More than two-thirds of medical necessity denials reported were
for 1-day stays where the care was found to have been provided
in the wrong setting, not because the care was not medically
necessary.
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Hospitals reported appealing more than 40% of all RAC
denials, with a 75% success rate in the appeals process.
Nearly two-thirds of all hospitals filing a RAC appeal
during the 2nd Quarter of 2012 reported appealing short
stay medically unnecessary denials.
Nearly three-fourths of all appealed claims are still sitting
in the appeals process.
55% of all hospitals reported spending more than $10,000
managing the RAC process during the second quarter of
2012, 33% spent more than $25,000 and 9% spent over
$100,000.
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Hospital staff are spending an
increasing amount of time
responding to RAC activity.
58% of respondents indicated they
have yet to receive any education
related to avoiding payment errors
from CMS or its contractors.
The most frequently cited RAC
process problem is ‘not receiving a
demand letter.’
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The Recovery Audit Program Prepayment Review demonstration
will allow MACs to conduct prepayment claim reviews to assist
in lowering the improper payment rate and to identify potential
fraud and abuse in Original Medicare.
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CMS stated that the agency is encouraging collaboration
between contractors, so that providers are not subject to
review for the same topic or issue by two different contractors.
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For claims denied through prepayment review, providers will
have the right to appeal the denials.
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CMS stated that claims reviewed as part of the demonstration
project will be "off-limits" from future post-payment reviews
from MACs and RACs.
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Through the prepayment review
demonstration project, a hospital will
be eligible to receive an additional
400 requests for medical records
every 45 days for prepayment review.
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Physicians associated with hospitals may
start to see an uptick in requests, as the
auditors look for errors at the physician
level and the facility level.
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In order to meet the criteria for a total knee replacement
procedure, all of the following must be documented in the
patient’s medical record :
 Documentation of pain at the knee, including
the level of pain and worsening of pain
 Pain that is increased with activity
 Pain that is increased with weight bearing
 Pain that interferes with activities
of daily living
 Pain with passive range of motion
 Limited range of motion
 Crepitus
 Joint effusion
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In order to meet the criteria for a total hip procedure,
all of the following must be documented in the
patient’s medical record:
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Pain at hip
Pain increased with activity
Pain increased with weight bearing
Pain that interferes with activities of
daily living
Pain with passive range of motion
Limited range of motion
Antalgic gait
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An x-ray must be obtained and must have at least
two of the following findings:
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Subchondral cysts
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Subchondral sclerosis
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Periarticular osteophytes
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Joint subluxation
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Joint space narrowing
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Appeal decision by Novitas Solutions, Inc. is unfavorable.
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A claim was submitted for a 4-day inpatient hospital stay
and denied because the information submitted did not
support the need for this service.
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Hospital request for redetermination with submission of
medical records. Case denied as not covered by
Medicare.
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Explanation: Total joint replacements require specific
documentation re: patient’s condition prior to the joint
replacement being performed.
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To meet criteria for joint replacements, medical record (MR)
must include documentation to identify how the patient’s right
knee pain interfered with ADLs, range of motion and weight
bearing.
MR needs to include tx such as medications, physical therapy or
external joint supports that may have been tried.
MR needs to include an x-ray to support the disease process.
X-ray result must have at least 2 of the following findings:
 Subchondral cysts
 Subchondral sclerosis
 Periarticular osteophytes
 Joint subluxation
 Joint space narrowing
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MR indicated that patient had increasing right knee pain
that limited range of motion.
MR revealed that patient had tried conservative measures
such as Mobic, Synvisc injections and ambulating with a
cane, with little relief.
X-ray provided evidence of bone on bone disease of the
right knee.
MR did not include a second type of evidence to support
the disease process such as subchondral cysts,
subchondral sclerosis, periarticular osteophytes, or joint
subluxation.
Therefore joint replacement procedure and hospital stay
cannot be allowed.
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MR documentation must clearly demonstrate that a
patient has end-stage joint disease and should include
evidence of prior failed conservative therapy.
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It is important to note that general physician declaration
statements such as “failed outpatient therapies” or
“bone on bone” are insufficient to support the
indications for joint replacement.
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Information in the MR must include details such as
therapy from/to dates, specific treatments, therapies
and/or drugs used.
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History of patient’s illness from the onset until present
including patient’s response and appropriateness (or
inappropriateness) of medical management choices for
the patient.
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Describe the patient’s deterioration, the impact on
Activities of Daily Living (ADLs) and any activity restrictions.
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Current symptoms and functional limitations due to disease.
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It is important to document details about pain, such as the
quality, level and what affects it (e.g., movement).
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Clearly document the patient’s use of medications,
such as analgesics or anti-inflammatory agents.
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Document participation in flexibility and muscle
strength exercises, including supervised physical
therapy, use of assistive devices or weight reduction,
and use of joint injections including dates of
administration and length of time effective.
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Document the patient’s response to each type of
therapeutic treatment. If any treatments are
contraindicated, document the rationale for why it is
not appropriate for this patient.
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Joint examination with objective findings consistent
with historical details.
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Describe the details of the joint examination to include
range of motion, crepitus, marginal osteophytes, etc.
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Include the detailed results of radiographs.
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Cases will be denied for lack of admission history and
physical or for neglecting to include the physician order
for inpatient treatment.
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To protect against prepayment denials one hospital
established a specific policy and procedure that required all
the necessary documentation to be collected and reviewed
prior to scheduling the procedure.
Hospital staff training should include education for the
patient access representatives and pre-admission testing
department.
Hospitals need to communicate with physician practices what
is required for prepayment audits from a policy and
procedure standpoint.
Implement a checklist for physician offices that includes all of
the required documentation for the prepayment audits.
Hospitals may need to obtain records from both specialists
and primary care physicians to document the full history.
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Hospitals might proactively obtain previous diagnostic and
therapeutic records from the surgeon and other pertinent
practitioners. These records include pertinent physician
history and physical, progress notes, “consultations,” physical
and occupational therapist evaluations and therapy notes,
radiologic reports, and relevant therapeutic procedure (such
as joint injection) notes.
One large orthopaedic practice decided to designate a MR
coder who would review all the documentation prior to
sending it to the hospital.
Physician office staff could tag information in the MR so that
the auditor can more easily find it.
Send copies of the x-rays with the MRs so that the auditors
can clearly see the degeneration of the hip or knee.
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Medicare Audit Improvement Act of 2012 introduced by
Reps. Sam Graves (R-MO) and Adam Schiff (D-CA) would
improve the RAC program and the MACs by:
 Establishing a consolidated limit for medical record
requests
 Improving auditor performance by implementing
financial penalties
 Requiring medical necessity audits to focus on
widespread payment errors
 Improving recovery auditor transparency
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Medicare Audit Improvement Act of 2012 would improve
national audit programs by:
 Allowing denied inpatient claims to be billed as
outpatient claims when appropriate
 Requiring physician review for Medicare denials
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Contact your representative today and urge him or her to
co-sponsor the bill (H.R. 6575).
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It may be worth the industry considering whether or not a
better approach to the medical necessity review process
would be to institute a pre-certification process rather than
pre-payment reviews.
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It is important for the dialogue to continue between CMS,
the MACs, the physician community and the hospitals so
that all of the stakeholders are confident that the best
systems are in place to provide appropriate, quality,
reimbursable services for the patients that need treatment.
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Sources:
Novitas Solutions, Inc. Total Joint Replacement-Understanding Documentation
Requirements for Inpatient Admission, Provider Bulletin, July 24, 2012.
https://www.novitas-solutions.com/bulletins/all/news-07242012.html
American Hospital Association. The American Hospital Association’s RACTrac
Initiative. Exploring the Impact of the RAC Program on Hospitals Nationwide,
Results of AHA RACTrac Survey, 2nd Quarter 2012, August 22, 2012.
http://www.aha.org/advocacy-issues/rac/ractrac.shtml
Trailblazer Health Enterprises, LLC. Joint Replacement Documentation, Notice
ID: 14362, March 14, 2012. http://www.trailblazerhealth.com/tools/notices
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Contact:
Pamela E. Clarke
VP, Health Care Finance and Managed Care
Delaware Valley Healthcare Council of HAP
(215) 575-3755
[email protected]
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