RecoveryAudits Booklet | Medicare (United States) | Fee For Service

Prepare for Recovery Audits

American Academy of Professional Coders 2480 South 3850 West, Suite B Salt Lake City, Utah 84120 800-626-CODE (2633), Fax 801-236-2258 www.aapc.com

Prepare for Recovery Audits Protect Your Practice
Written by:

Deborah Grider, CPC, CPC-I, CPC-H, CPC-P, COBGC, CEMC, CDERC, CCS-P

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DISCLAIMER
This course was current at the time it was published. The materials are offered as a tool to assist the participant in understanding how to prepare for a Recovery Audit to protect the medical practice. Every reasonable effort has been made to assure the accuracy of the information within these pages. Every insurance company has processing and reimbursing procedures particular to it. As such, instructions and recommendations given in this booklet may not apply to all insurance carriers. Check with your individual carriers for specific coding and policy guidelines. The American Academy of Professional Coders (AAPC) employees, agents, and staff make no representation, warranty, or guarantee that this compilation of information is error-free, and will bear no responsibility or liability for the results or consequences of the use of this course.

NOTICES Current Procedural Terminology (CPT®) is copyright © 2008 American Medical Association. All Rights Reserved. CPT® is a registered trademark of the American Medical Association (AMA).

PREPARE FOR RECOVERY AUDITS: PROTECT YOUR PRACTICE

Written by:
Deborah Grider, CPC, CPC-I, CPC-H, CPC-P, COBGC, CEMC, CDERC, CCS-P

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CONTENTS FORWARD.....................................................................................................................................4 INTRODUCTION ..........................................................................................................................5 WHAT TRIGGERS AN AUDIT………………………………………………………………….7 What Auditors Look For……………………………………………………..……………7 The Insurance Audit………..…………………………………………………………….12 RECOVERY AUDITS…..............................................................................................................15 The Retrospective Audit…………………………………………………………………16 Government Audits………………………………………………………………………18 Comprehensive Error Rate Testing Program (CERT).....………………………………..19 Recovery Audit Contractors (RAC)…………………………………………………..…33 The Permanent RAC Program…………………………………………………………...42 Preparing for a RAC Audit………………………………………………………………44 APPEALS……………….……………………………………………………………………….47 The Medicare Appeals Process…………………………………………………………..47 Responding to Post-Payments Audits and Refund Requests…………………………….50 Responding to a CERT, RAC, or Government Audit..…………………………………..53 Refunding Overpayments….………………………………………...………………......55 PREVENTION…………..............................................................................................................57 CONCLUSION………………………………………………………………………………..…59 APPENDICES and SLIDE PRESENTATION…………………...…………………………..…60

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FORWORD
Internal billing audits are vital to the health of a medical practice. An annual audit allows the medical practice to identify specific coding issues that may occur or repeat in similar claims submissions. If you identify abhorrent coding patterns, more frequent audits may be beneficial. Careful pre-submission monitoring and review of similar claim types may safeguard against errors that could result in either claim denial or audit recovery from an insurance carrier (commercial payer, third-party payer, or a government carrier). An internal audit gives the physician and medical practice staff the opportunity to identify incorrect coding and billing patterns, and over utilization of procedures and services, before an outside auditor recovers payments or assesses fines and penalties. This guide is a general summary of types of Recovery Audits and steps the medical practice might take to inoculate itself from paying back a carrier for inappropriate claim submission, paying fines or penalties, or criminal charges. An Internal Billing Audit can help insure appropriate payment and compliance with applicable laws and carrier regulations.

Auditing physician charges and billing practices is burdensome, but ultimately will improve claims management processes, cash flow, and compliance with insurance carriers and applicable laws and regulations.

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INTRODUCTION
The practice of medicine has undergone a transformation with the advent of federal coding and reimbursement regulations. Medical coding is a language all its own, but not an exact science. Procedure codes describe services, provided by the practitioner and billed to the insurance carrier, using the Current Procedural Terminology (CPT®) and the Healthcare Common Procedural Coding System (HCPCS). The CPT and HCPCS Level II manuals assist in capturing, recording, and reimbursing medical procedures. Many codes are added, deleted, and revised each year.

Medical necessity for services provided must be supported using the International Classifications of Diseases, Clinical Modification-9th revision (ICD-9-CM) to report diagnoses. These codes are subject to intense review, and are used for analysis by government and the insurance industry. The most significant use of statistical analysis in the health care industry is to identify and recover dollars spent for fraud, waste, and abuse.

To ensure that documentation satisfies the level and scope of services provided, health care providers should be aware of government and third-party insurance carrier billing requirements. Many insurance carriers recoup millions of dollars in refunds from providers unable to justify the care provided.

Providers should know that the insurer’s fundamental existence and financial success requires detailed analysis of each provider’s practice patterns using information management systems. Insurance companies make a huge financial commitment to information technology that identifies over-utilization of medical services.

As a result of this technology, insurance carriers have extensive data banks. The insurance carrier generates profiles by gathering data indicating how often a provider performs a particular procedure, where the procedure is performed, and what CPT code is reported for that procedure.

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Insurance companies then compare the provider’s profile to other providers with similar patient populations.

Insurance carriers maintain data banks that compare how often a provider orders laboratory tests and what tests he or she orders, and that generate provider profiles based on this information. In addition, diagnoses codes are also tracked to determine frequency and medical necessity for the service provided. This data-mining activity is performed by highly-qualified, trained individuals, whose job it is to conduct data-runs to help the carrier optimize its efforts to identify the most frequently billed codes and compare that information across specialty areas.

If the insurance carrier determines that the provider or group of providers has billing or coding patterns that deviate from other providers of similar specialties in a geographical area, the insurance carrier likely will perform an investigation such as an audit, or request refund of services based on the claims data compiled. Unfortunately, a provider is usually unaware that his or her billing patterns are unusual until the carrier begins an expanded investigation. In most cases, the provider is completely surprised to learn that he or she is subject to an insurance audit.

Collecting from insurance carriers has become more difficult each year. Delays and denials of payments have forced practitioners to spend money hiring additional staff, or to employ a company to collect their submitted claims, which in turn has reduced the profits within the practice. The latest challenges we must overcome is post-payment audits (paybacks) and take backs, in which the insurance carrier just “takes back” the money by deducting future payments without requesting the return of monies paid.

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Today, many providers of health care services are receiving notices from insurance carriers demanding that the provider repay a substantial sum for claims previously billed and paid without objection. You might hear all the time from the provider, “I was paid for the service, so the coding must be correct.” But that is not always the case: Insurance companies pay claims every day they should have denied or suspended for further investigation. Especially today, with our downturned economy, insurance carriers are looking for ways to recoup dollars spent on health care.

WHAT TRIGGERS AN AUDIT
A retrospective audit is a cost containment mechanism that health plans use to determine whether overpayment on claims have been made to a particular physician, practitioner, or hospital. In today’s regulatory environment, it is not if, but when your practice will receive a letter from the insurance carrier, either asking for medical records or announcing a planned visit to your practice. There are many innocuous activities that could trigger a “red flag” to a carrier. These red flags include using the same procedure code consistently—for example, the same level of service for all evaluation and management claims. Many insurance carriers are concerned with the constant use of level four and five visits because reimbursement is higher for these services. Another trigger is the performance of diagnostic procedures in the medical office as “routine.” For example, if the cardiologist orders a stress test on every new patient, the pattern might draw attention from the insurance carrier who will investigate claims for medical necessity.

What Auditors Look For

Despite provider fears that the smallest slip-up might land them in deep legal trouble, federal officials aren’t likely to waste their time on a $100 billing error. Instead, they are most likely to prosecute cases that involve persistent or routine improper claims despite clear guidance from authorities and extensive notices to correct that behavior.

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Let’s review other areas that might trigger an audit from any insurance carrier. Inconsistent coding among partners within a group. Coding high levels of evaluation and management services for a new patient or always reporting a consultation for every new patient Upcoding evaluation and management services Unbundling procedures and services Improper use of modifiers Inadequate documentation Submitting “unspecified” diagnoses consistently Patient and/or provider complaints

Cases that are prosecuted most often involve suspected fraud for such activities as: Billing for goods and services not rendered Billing for phantom patients Upcoding or billing for more time than the duration of the actual service Charging Medicare patients more than non-Medicare patients for the same services Paying kickbacks in exchange for referrals Misrepresenting non-covered services as covered Billing for medically unnecessary tests Misrepresenting the quality of care provided Double billing Billing incident to services when the physician is not present

Below are some examples of federal fraud cases that were closed between 2006 and 2009.

1. An allergist was accused of fraud when auditors learned he was billing for different patients who received allergy shots in one office and his satellite office on the same day and time.

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2. A medical practice administrator was convicted of Medicare fraud and sentenced to prison for billing the preparation of allergy serum using 99 units each time the patient received allergy injections, and in turn received over a million dollars in reimbursement over several years. The physician pleaded guilty, was sanctioned from the Medicare program, paid a substantial fine with penalties, and is still practicing today. The practice was also billing over the allowable amount, and the administrator was threatening patients with law suits and collections for amounts they did not legally owe. After numerous complaints from patients, Medicare investigated the allegation and uncovered many areas of fraud and abuse in the practice.

3. A surgeon who took advice from an Internet list-serv was convicted of Medicare fraud and was sentenced to 20 years in prison for unbundling surgical procedures. The surgeon assumed all advice on a list-serv from a certified coder/consultant was correct. The coder/consultant was not investigated.

4. In Florida, a physician was sentenced to 24 months incarceration and ordered to pay $727,000 in restitution. For cash payments, the physician signed blank prescriptions and certificates of medical necessity for patients he never saw. In turn, co-conspirators submitted claims to Medicare for DME and other items or services that were either not medically necessary or were not provided to beneficiaries.

5. In Oklahoma, a physician was sentenced to 33 months in prison and ordered to pay $544,000 in restitution for health care fraud. From January 2000 to May 2005, the physician billed for dosages of Remicade and Procrit that far exceeded the amount of those drugs in his inventory.

6. In Florida, a doctor was sentenced to 78 months in prison and ordered to pay $504,000 in restitution and forfeit an additional $705,000, after a jury found her guilty on all counts of an 89-count indictment, including 44 charges of health care fraud. The physician, who practiced dermatology, billed Medicare as if she performed highly complex surgical
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closure procedures when she actually performed only simple surgical stitches—or no procedure at all.

7. A podiatrist was sentenced to 78 months incarceration and ordered to pay $528,000 in restitution for conspiracy, health care fraud, and false statements. The podiatrist, after being reinstated to the Medicare program in 2002, billed Medicare for non-covered routine foot care. Patient charts contained no documentation other than the handwritten date of service. In 2000, the Department of Justice recommended that the podiatrist be excluded for failure to repay his Health Educational Assistance Loan. To avoid the exclusion, the podiatrist submitted a fraudulent provider application to Medicare listing the owner of his new company as his dying friend, who was also a podiatrist, and began billing under the false identity.

8. In Michigan, pursuant to his guilty plea, a certified social worker (CSW) was sentenced to 100 hours of community service and ordered to pay $356,000 in restitution for health care fraud. Investigation revealed that the CSW billed Medicare and a private insurer for psychotherapy services that were never rendered.

9. An internist who ran an alcohol and drug clinic was convicted of health care fraud after
submitting false claims for reporting high levels of evaluation and management services never rendered to Blue Cross Blue Shield patients. After the practitioner was indicted he fled to Mexico and was later arrested and sentenced to a 20 year prison term.

In all of these cases, a “red flag” triggered an audit investigation. It could have been a patient complaint, or over utilization of services that prompted an investigation. This is just a small sample. There are many more cases of fraud and abuse prosecuted on an annual basis. Many cases are not considered criminal, however. The government might enter into an agreement with the practitioner to pay fines and penalties as well as recover the overpayment from the provider. The government typically will offer the practitioner or medical group a “Corporate Integrity Agreement” (CIA) in which the practitioner or medical group is under federal government
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scrutiny for several years. A yearly audit is conducted by an uninterested third party approved by the government. If the practitioner or group has more than a 5 percent error rate as a result of the audit, other penalties might apply.

Another type of agreement is a Certificate of Compliance Agreement (CCA). CCAs are an alternative to CIAs for those organizations facing the consequences of alleged compliance violations. The factors that can be considered by OIG officials when deciding whether to issue a CCA or a CIA might include: an assessment of whether the provider itself disclosed its alleged violations the amount of monetary damage inflicted upon federal health care programs whether successor liability is involved whether the organization is still an active participant in government health care programs, or is still engaged in the same line of business whether the alleged misconduct could, in fact, be repeated how far in the past the incident(s) may have occurred whether an acceptable compliance program is in place, and the willingness of a provider to certify its compliance, annually, to the OIG Any other pertinent circumstances

The CCA would be issued only in the aftermath of a violation committed by a provider: The OIG, in doing so, would be inferring that the rest of an organization’s compliance program is operating efficiently enough so that a CIA would not be necessary. As a result, federal officials attempt to be very specific in their requests for documentation from providers who are seeking a CCA instead of a CIA. The most important materials that the OIG requires are audit reports and documents that detail an organization’s efforts to follow up and take corrective action when a violation has occurred. The agency also looks for descriptions of a provider’s efforts to voluntarily disclose its violations.

Audits of billing practices result from the following four actions:

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1. Random sampling: Many insurance carriers, including Medicare, are required to audit 10 percent of its providers randomly on an ongoing basis. 2. Focused Medical Review: An insurance carrier chooses specific CPT codes to review in post-payment audits. Statistics are run to determine a median number for each of these codes. A physician who submits those codes in a volume greater than the mean will be audited. 3. Complaints by staff: The False Claims Act encourages “whistleblowers” to turn in employers suspected of submitting false claims by offering rewards of 15 percent to 30 percent of the total amount recovered by the government. 4. Patient complaints: Medicare is required by law to investigate all complaints brought by Medicare beneficiaries. Many insurance carriers respond to patient complaints in the same manner.

The Insurance Audit
A chart audit is an examination of medical records to determine what procedure or service is performed, and to determine if the documentation is compliant and correctly coded, and that all charges are captured. There are countless performance components that can be measured in a chart audit. Insurance carriers

frequently conduct audits (reviewing the practitioner’s medical record documentation) to validate that the service the practitioner has reported on the claim form is reported correctly and that chart documentation supports the service billed. Many insurance carriers, including Medicare and Medicaid, conduct these types of audits routinely. These are prepayment audits, prospective payment audits, and focused reviews. Insurance companies may employ or contract with companies to perform these audits. The insurance carrier will contact the medical practice, typically by letter, to advise the practitioner that an investigation or audit will be conducted. If the physician is a participating physician in an insurance carrier’s network, he or she agrees by contract to carrier audits pursuant to the provider agreement.

Even if a physician is not part of the insurance carrier’s network, or is not a network provider, an audit request made by the insurance carrier can still be valid based on applicable federal and state laws. Both federal law (HIPAA) and state laws contain stringent requirements as to the written
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authorization required from a patient or authorized person for the release of patient information. Violation of these requirements could expose the practitioner to civil or criminal liability.

The insurance carrier must provide the appropriate authorization before medical information can be released. In cases where an insurance company alleges fraudulent practices, the insurance carrier could report the physician

A physician should always be given the opportunity to review medical records subject to audit prior to a review.

to the Office of Professional Medical Conduct in his or her state, resulting in an investigation that might affect the provider’s medical license. Each state has laws related to public health that are applicable to any insurance carrier in which a practitioner’s performance—including billing and utilization patterns—is evaluated. Each state provides safeguards to practitioners and imposes specific obligations on insurance carriers who conduct audits. It is extremely important that each provider understand his or her rights based on federal and state laws, as well as the potential repercussions of a carrier audit.

Many insurance carriers, prior to performing an audit, will send the practitioner a letter identifying the practitioner as an “outlier.” This is a warning to the practitioner to begin an internal review of his or her coding practices to ensure, in light of a coding audit from a carrier, that his or her documentation will withstand scrutiny. If there are errors in coding, this gives the practitioner ample time to make changes to his or her documentation, to change coding patterns prior to a carrier audit, to self-disclose coding or billing errors, and to refund overpayments to the insurance carrier.

An audit or investigation might begin when the carrier requests the original documentary evidence, which might include the medical record on a specific date of service along with other supporting documentation. When you have been contacted by the insurance company and advised it intends to audit the practice, plan and formalize the process for responding to the audit. You should have a keen awareness that what you provide to the insurance carrier potentially could be used against you at a later date.

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Your initial response and/or contact with the insurance carrier should be as well thought out and implemented as the insurance carrier’s strategic plan to audit the practitioner. Your response to the audit or review depends upon the type, scope, and duration of the audit, requires an evaluation of the insurance carrier’s demand and, in most cases, the assistance of a coding expert. Some requests for an audit will be in the form of a letter requesting specific medical records and/or documentation for specific dates of service. You should also include any supporting documentation such as lab reports, radiology reports, etc., if it will help support the service provided.

Many insurance auditors will make a site visit to the medical practice. The insurance carrier will request specific records, typically by patient name and identification number. They will request a quiet place to work, and access to the medical records. Before you allow an auditor access to your medical records, check his or her identification and authorization. An audit investigation might include your practice’s sign-in sheet, superbills or charge tickets, daily appointment schedule, or other supporting evidence the carrier requests.

Any information provided to the insurance company’s auditor or investigator during the initial contact will be added to his or her file, log, or note pad and used to compare against information already received. Some information might come from a patient interview, which typically confirms types of treatment, duration, and times of appointments. The initial contact should not be taken lightly. It is crucial to understand the significance of a “formal” approach in responding to any audit investigation because the insurance carriers rely heavily on data-mining software, coordination with law enforcement, and potential civil litigation.

The medical practice should assign a point person to be the liaison between the insurance carrier and the practice. This person should make sure that all requests and office policies for releasing the information are compliant. Each contact with the insurance carrier—either by phone, e-mail, or in person—should be well-planned so that any statements made by either party are clear and documented. The practitioner and his or her staff should understand the scope of the request, and when in doubt clarify this information with the auditor. He or she should also understand the
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time frame during which the carrier demands records or a site audit, and whether retrieval of the files and/or information is disruptive to the practice given the insurance carrier’s time constraints.

If the time frame is not reasonable due to extenuating circumstance, contact the auditor for an extension to comply with the request. If it will take you more time to produce the information requested, tell them. By no means should you ignore the request. Every communication with the insurance carrier regarding the audit, such as timing and scope of review, must be in writing.

It is a good idea to allow the practitioner the opportunity to review the documents if sending the information to the insurance carrier auditor. It is also good practice to have a coding expert review the documentation. In most cases, he or she can provide assistance with problems that might be found. The expert might uncover coding policies the practice is not aware of relative to the specific claims. The practitioner must not change the documentation. The coding expert is providing guidance, not a way to come out of the audit without recovered dollars if the coding does not support the documentation. For example, the coder might advise the practitioner that his or her handwriting is not legible, and that he or she might want to dictate the notes prior to sending the records. This is allowed by most insurance carriers (including Medicare) if the handwriting is in question. The original handwritten notes must be included, however. The practitioner must also disclose to the insurance carrier that he or she dictated for clarity. To support medical necessity, the practitioner might also want to send a letter to the auditor explaining unusual circumstances or difficult procedures or patient conditions, using easy-tounderstand lay language.

RECOVERY AUDITS
There are various types of recovery audits and all carriers, including government payers, audit medical records to ensure the reimbursement for medical services meets coding guidelines, applicable policies and procedures, as well as medical necessity for the service provided.

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The Retrospective Audit It is vital that the practitioner bill  evaluation and management  services based on the medical  complexity of the patient and  report each service case by case,  based on documentation and  medical necessity for the service 

A recovery audit is a post-payment review performed retrospectively. This audit is an analysis of the provider’s documentation and other supporting information to support its payment to the provider. The audit is designed to identify overpayments. Though some attempts to recoup

overpayments may be appropriate, such as when honest mistakes are made, retrospective audits are burdensome and add an administrative expense to the practice.

If an insurance carrier determines through a retrospective audit that overpayments have been made for procedures and services because documentation does not support the charges submitted, the practitioner might be asked to make repayment for procedures already provided, or unwillingly accept automatic reduction of future payments. This practice has become more widespread the past several years.

The initial stage of a retrospective audit is typically conducted without providing notice to the practitioner. If the insurance carrier determines (based on its own medical payment policies) that an overpayment(s) was made, the insurance carrier will notify the practitioner in writing. Such notices should be dealt with immediately. These notices should include the reason for the suspected overpayment(s), such as: Compliance with coding requirements for evaluation and management services, Surgical procedures and modifiers Documentation requirements Medical necessity supported by the diagnosis code

If the insurance carrier disputes medical necessity or eligibility for reimbursement of procedures or services, the insurance carrier might request additional information, such as medical record documentation, to assist in making a determination.
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A health plan might elect to perform what is typically referred to as a “focused medical review,” or an in-depth look at a specific area of the practitioners coding or billing practices. Typically, this type of review requires the insurance carrier to use national statistics to identify a medical practice with high numbers of expensive procedures. When performing a focused review, the insurance carrier typically requests a significant sample of medical records (more than 20) and most likely is targeting a specific area, such as:

High Volume of services: Overutilization or frequency of services that may be identified by specialty, size of practice, patient population, or other factors that affect a practitioner’s billing practice.

Coding: High-level evaluation and management services are consistently on the insurance carrier’s radar. Because patient encounters vary in complexity, insurance carriers expect service levels will vary as well. Practitioners who consistently bill higher levels of service will more likely be audited. The insurance carrier takes into account the patient population and specialty when making this determination. Utilization patterns will be identified and, if the practitioner is an “outlier” (meaning that he or she reports higher levels of service than other providers within the same specialty and specific region), in all likelihood documentation will be requested.

Misuse of Modifiers: Overuse of modifiers 25 and 59, for instance, might trigger a retrospective audit from an insurance carrier. A high reporting volume of evaluation and management service with modifier 25 appended will, in many cases, alert the carrier that an audit is indicated to review the documentation and determine whether additionally reported services were above and beyond the service performed during the visit, based on the insurance carrier’s medical payment policy.

Modifier 59 has been slated by the Office of the Inspector General, the Centers for Medicare & Medicaid Services, and the American Medical Association as the “Modifier
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of last resort.” This modifier should only be used when a procedure or service is normally bundled but the service, in the particular instance, is separate and distinct from the primary procedure performed. This modifier is often misused and should only be reported if the procedure is a National Correct Coding Initiative edit and the modifier is allowed to bypass the edit, when all criteria is met. Unbundling refers to the duplicative coding of services or procedures that a provider submits as being performed on the same day. Payers consider even unintentional unbundling to be a form of fraudulent or reckless billing.

This information may be obtained at: Modifier 25: http://www.oig.hhs.gov/oei/reports/oei-07-03-00470.pdf Modifier 59: http://www.oig.hhs.gov/oei/reports/oei-03-02-00771.pdf

Other reasons: A practitioner might be selected for a retrospective audit for various additional reasons, including previous noncompliance with insurance carrier policies.

Government Audits The Medicare fee for service program consists of a number of payment systems, with a network of contractors who process more than 1.2 billion claims each year submitted by over 1 million providers of health care services. Contractors process claims, make payments to health care providers in accordance to Medicare regulations, and educate provides on how to accurately submit claims that meet medical necessity guidelines. Medicare claims contractors (because of the large volume of claims they receive) pay most claims without initially scrutinizing the medical records associated with the services submitted for payment.

The Centers for Medicare & Medicaid Services (CMS) conducts audits frequently to ensure compliance with coding guidelines, and local and national carrier determination(s) and coverage issues. The two most common types of audits are the Comprehensive Error Rate Testing Program (CERT) and the Recovery Audit Contractors (RAC). The CMS contractor also may audit based on utilization patterns or other identified coding and billing patterns of a practitioner.
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Comprehensive Error Rate Testing Program (CERT)

The primary goal of each contractor is to “Pay it Right”—to pay the right amount to the right provider for covered and correctly coded services. Budget constraints limit the number of claim reviews these contractors can conduct; thus, they must choose carefully which claims to review. To improve provider compliance, contractors must also determine how best to educate providers about Medicare rules and implement the most effective methods for accurately answering coverage and coding questions.

As part of its Improper Payments Information Act (IPIA) compliance efforts, and to help all Medicare FFS Contractors better focus review and education, CMS has established the Comprehensive Error Rate Testing (CERT) program and Hospital Payment Monitoring Program (HPMP) to sample and review randomly claims submitted to Medicare.

CMS uses several types of contractors to prevent improper payments for Medicare claims and admissions, including: Medicare Administrative Contractors (MACs) Contractor (carriers) Durable Medical Equipment Regional Carriers (DMERCs) Fiscal Intermediaries (FIs) Quality Improvement Organizations (QIOs)

Both programs (CERT and HPMP) are designed to be a measurement of improper payments. Any claim that was paid when it should not have been is an improper payment. This includes claims that may have been fraudulent. Neither program, however, can be considered a measure of fraud. Because both programs use random samples to select claims, reviewers are often unable to see provider billing patterns that indicate potential fraud when making payment determinations.

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The CERT program does not, and cannot, label a claim fraudulent; however, one scenario of potential fraud that the CERT program is able to identify occurs when the CERT documentation contractor is unable to locate a provider or supplier when requesting medical record documentation. This lack of provider or supplier response results in no documentation errors.

The Department of Health and Human Services (HHS) and the Office of the Inspector General (OIG) produced Medicare FFS error rates from 1996-2002. The OIG designed a sampling method that estimated only a national dollar weighted fee for service (FFS) paid claims error rate. Beginning in 2003, CMS elected to calculate a provider compliance error rate in addition to the paid claims error rate. The provider compliance error rate measures how well providers prepare Medicare FFS claims for submission.

CMS calculates the Medicare Fee-For-Service error rate and estimate of improper claim payments using a methodology the OIG approved. The CERT methodology includes: Randomly selecting a sample of approximately 120,000 submitted claims Requesting medical records from providers who submitted the claims Reviewing the claims and medical records for compliance with Medicare coverage, coding, and billing rules

In 2004 the national gross paid claims error rate was 10.1percent. A portion of this error rate was due to practitioners not sending requested supporting documentation to the CERT contractor. Practitioners who fail to submit documentation to the CERT contractor receive a demand letter requesting a refund of payments received for what CMS considers an “erroneous” claim.

In 2008, the CERT program used the following methodology: CERT randomly selecting a sample of 129,875 claims submitted to Carriers/DMERCs/FIs during the reporting period HPMP randomly selecting a sample of 39,841 acute care inpatient hospital discharges Requested medical records from the health care providers based on submitted claims by provider to be included in the sample
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Where medical records were submitted by the provider, reviewing the claims in the sample and the associated medical records to see if the claims complied with Medicare coverage, coding, and billing rules, and, if not, assigning errors to the claims Where medical records were not submitted by the provider, classifying the case as a no documentation claim and counting it as an error Sending providers overpayment letters/notices or making adjustments for claims that were overpaid or underpaid
 

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Types of Claims/Admissions Reviewed By CERT and HPMP

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Both programs are designed to be a measurement of improper payments. Any claim is paid when it should not have been is considered an improper payment. This includes claims that may have been fraudulent. By May 2008 the error rate has declined significantly from 2004, from 10.1 percent to an overall 3.7 percent.
 

2008 Error Rate
(Overpayments + Overpayments Type of Contractor Carrier DMERC FI QIOs All Medicare FFS   $276.2B $9.3B 3.4% $0.9B 0.3% $10.2B 3.7% Total Dollars Paid $74.9B $9.9B $89.4B $102B Underpayments Underpayments) Improper Payment Rate Payment Rate Payments $3.2B $0.9B $1.2B $4B 4.2% $0.2B 8.9% $0B 1.3% $0.1B 4.0% $0.5B 0.3% $3.4B 0.1% $0.9B 0.2% $1.3B 0.5% $4.6B Error Rates 4.5% 9.0% 1.5% 4.5%

CERT Samples

Sampling and Medical Records requested totaled 129,875 claims for 2008 from CMS contractors (carriers), DMERCs, FIs, and MACs. The CERT contractor was assigned to select randomly approximately 172 claims each month from each CMS Contractor. Each claim was a “blind” electronic sample of claims that providers submitted that day. Then, the CERT contractor requested the medical record from the practitioner associated with the sample claim. A written request for the medical record allowing 30 days to provide the information was sent to each practitioner sampled. If the documentation was not received within 30 days, the contractor was instructed to send three subsequent letters and to follow up with phone calls. For the sample to be
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considered a “no documentation” claim, the CERT contractor allowed 75 days to receive the late documentation. If the CERT contractor received the documentation within the 75 day period, the documentation was included in the report and the error rate was adjusted. If the CERT contractor received no documentation, it was counted under the “No documentation error.”

What Does the CERT Contractors Do with the Claims?

When the CERT contractor receives the requested documentation, a review of the claim is conducted to identify coding errors, medical necessity errors, etc., and to identify improper payments. The Common Working File is reviewed to identify beneficiary eligibility and to see if no other insurance carrier is responsible for paying the claim. Medicare regulations, National Coverage Determinations (NCDs), Local Coverage Determination (LCDs), and carrier manuals are reviewed, along with CMS articles, when performing the review. In 2008, any successful appealed claim was entered into an appeals tracking system prior to the production of the error rates.

CERT Outcomes

Contractors are notified of detected provider overpayments so they can request refunds from the provider. Contractors are notified of underpayments also, but they are not currently required to make payments to providers for underpayments identified in the CERT program. The contractors are encouraged to correct the underpayments, however. Providers have the right to appeal denials, including “no documentation” denials, using the Medicare claims appeal process by submitting the appropriate paperwork and the supporting documentation to validate his or her claim.

In 2008, the CERT program identified $875,005 in actual overpayments and has collected to date $650, 418 of these overpayments. All overpayments have not been collected because: The provider has gone out of business, or; The provider appealed the overpayment and overturned the CERT decision
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Purpose of Error Rate Findings

CMS uses the error rate findings to determine underlying reasons for claim errors and to adjust the CMS action plans to improve compliance in: Coding Documentation Provider billing practices Payment

Tracking and reporting error rates can help CMS to identify emerging trends and to implement corrective action to manage all Medicare fee for service contractors’ performance. Error rates will provide the contractors with additional guidance to direct claim review activity (audits), provider education, and data analysis. This information is also useful to assist with adjustment of the contractors’ error rate reduction plans.

The national error rate by year illustrates underpayments and overpayments, including the total dollars paid and percentage rate of improper payments. The error rate of 14.2 percent in 1996 was reduced to 6.4 percent in 2003, escalated in 2004, and has steadily declined since that time.

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National Error Rates by Year

Year

Total Dollars Paid

Overpayments

Underpayments

Overpayments + Underpayments

Payment Rate 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 May 2008   $168.1 B $177.9 B $177.0 B $168.9 B $174.6 B $191.3 B $212.8 B $199.1 B $213.5 B $234.1 B $246.8 B $276.2 B $276.2 B $23.5B $20.6B $13.8B $14.0B $14.1B $14.4B $15.2B $20.5B $20.8B $11.2 B $9.8 B $9.8 B $9.3 B

Payment Rate

Improper Payments

Rate 14.2% 11.8% 8.4% 8.6% 9.4% 8.8% 8.0% 6.4% 10.1% 5.2% 4.4% 3.9% 3.7%

14.0% $0.3 B 11.6% $0.3 B 7.8% 8.3% 8.1% 7.5% 7.1% $1.2 B $0.5 B $2.3 B $2.4 B $1.9 B

0.2% $23.8 B 0.2% $20.9 B 0.6% $14.9 B 0.3% $14.5 B 1.3% $16.4 B 1.3% $16.8 B 0.9% $17.1 B 0.5% $12.7 B 0.4% $21.7 B 0.4% $12.1 B 0.4% $10.8 B 0.4% $10.8 B 0.3% $10.2 B

10.3% $0.9 B 9.7% 4.8% 4.0% 3.6% 3.4% $0.9 B $0.9 B $1.0 B $1.0 B $0.9 B

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This illustration summarizes the percent of the total dollars improperly allowed by the error category from 1996 through the last CERT audit in May 2008.

Summary of Error Rates by Category

May 1996 Type Of Error Net 1997 Net 1998 Net 1999 Net 2000 Net 2001 Net 2002 Net 2003 Net 2004 Gross 2005 2006 2007 2008 Gross

Gross Gross Gross

No Documentatio n Errors Insufficient Documentatio n Errors Medically Unnecessary Errors Incorrect Coding Errors Other Errors IMPROPER PAYMENTS CORRECT PAYMENTS
86.2% 88.6% 92.9% 92.0% 93.2% 93.7% 93.7% 90.2% 89.9% 94.8% 95.6% 96.1% 96.3% 13.8% 11.4% 7.1% 8.0% 6.8% 6.3% 6.3% 9.8% 10.1% 5.2% 4.4% 3.9% 3.7% 1.2% 1.1% 1.7% 0.5% 1.3% 0.7% 1.3% 0.9% 1.0% 0.4% 1.1% -0.2% 0.9% 0.0% 0.7% 0.1% 1.2% 0.2% 1.5% 0.2% 1.6% 0.2% 1.5% 0.2% 1.4% 0.2% 5.1% 4.2% 3.9% 2.6% 2.9% 2.7% 3.6% 1.1% 1.6% 1.6% 1.4% 1.3% 1.3% 4.5% 2.9% 0.8% 2.6% 1.3% 1.9% 1.3% 2.5% 4.1% 1.1% 0.6% 0.4% 0.5% 1.9% 2.1% 0.4% 0.6% 1.2% 0.8% 0.5% 5.4% 3.1% 0.7% 0.6% 0.6% 0.3%

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The following illustrate the paid claim error rates and projected improper payments by contractor type.

Paid Claims Error Rates by Contractor Type

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The top twenty (20) coding errors were identified for 2008. Most of the top coding errors involve evaluation and management services.

Top 20 Services with Incorrect Coding Errors

Incorrect Coding Errors Carriers (HCPCS), DMERCs (HCPCS), FIs (Type of Bill), and QIOs (DRG) Office/outpatient visit, est (99214) SNF-inpatient (including Part A) (21) Subsequent hospital care (99233) Hospital-outpatient (HHA-A also)(under OPPS 13X must be used for ASC claims submitted for OPPS payment -- eff. 7/00) (13) Office/outpatient visit, est (99215) Office consultation (99244) Initial hospital care (99223) Inpatient consultation (99254) Subsequent hospital care (99232) Office/outpatient visit, est (99213) Inpatient consultation (99255) Office/outpatient visit, new (99204) Office consultation (99245) Office consultation (99243) Emergency dept visit (99285) HHA-inpatient or home health visits (Part B only) (32) Office/outpatient visit, new (99203) PERM CAR PACER IMPL W MAJ CV DX/AICD LEAD/GNRTR (551) 4.5% $41,428,669 ( 0.1%) - 9.0% 0.6% 18.6% 17.5% 12.7% 15.5% 3.5% 1.7% 17.7% 20.8% 19.1% 9.6% 5.4% 0.5% 10.4% $149,077,042 $128,689,331 $120,385,360 $106,820,039 $106,671,540 $91,410,988 $75,715,227 $75,543,920 $66,046,693 $65,230,754 $48,749,995 $47,404,916 $44,834,494 $42,348,998 0.4% - 0.8% 16.1% - 21.1% 14.2% - 20.8% 10.0% - 15.4% 12.8% - 18.3% 2.8% - 4.3% 1.4% - 1.9% 13.1% - 22.3% 16.8% - 24.8% 14.3% - 23.9% 7.4% - 11.9% 3.9% - 6.9% 0.2% - 0.8% 7.9% - 12.9% Paid Claims Error Rate 5.5% 1.1% 16.8% Projected Improper Payments $244,047,384 $231,568,336 $220,483,945 95% Confidence Interval 5.0% - 6.1% 0.5% - 1.6% 14.7% - 18.9%

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ECMO/TRAH W MV 96+ HR/PDX EXC FCE MTH & NCK W MAJ OR (541) EXT OR PROC UNREL TO PRINC DIAG (468) Overall 1.3% 3.1% 1.4% $38,134,963 $37,800,101 $3,866,320,182 ( 1.2%) - 3.8% 1.1% - 5.1% 1.3% - 1.5%

 

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This next illustration identifies the types of services which were paid improperly along with the paid claims error rate.

Top 20 Service Types with Highest Improper Payments: Carriers and MACs

Type of Error Paid Service Type Billed to Carriers (BETOS codes) Office visits established Hospital visit subsequent $602,033,573 12.2% $622,528,034 6.0% 5.6% - 6.4% 10.9% 13.5% 15.1% Consultations All Other Codes Hospital visit initial Minor procedures other (Medicare fee schedule) $172,040,758 6.9% 5.3% - 8.4% 11.3% Nursing home visit $159,919,505 14.2% 17.2% 13.2% Office visits - new Ambulance Emergency room visit Standard imaging nuclear medicine Ambulatory procedures - other Chiropractic $56,649,382 $55,126,448 7.6% 10.2% 0.0% - 15.3% 7.9% - 12.6% 74.1% 2.4% 8.2% 56.3% 0.9% 23.8% 16.3% 16.5% 0.5% 1.1% $56,886,773 3.1% $80,316,367 5.3% 4.0% - 6.6% ( 0.6%) 6.8% 61.1% 7.5% 6.6% 24.8% 0.0% 9.4% 5.3% 0.0% 85.3% 0.0% $156,017,076 $85,194,498 15.5% 2.2% 17.7% 1.2% - 3.1% 1.2% 17.6% 8.0% 26.8% 0.0% 39.9% 90.8% 14.9% 0.0% 0.9% 10.1% 17.4% 0.8% 71.7% 0.0% 4.7% 68.4% 11.5% 10.6% 4.8% $211,886,063 17.6% $516,912,824 $346,805,535 16.6% 1.2% 18.2% 1.0% - 1.4% 14.7% 20.6% 1.1% 25.7% 0.0% 68.7% 4.5% 3.0% 23.1% 10.2% 43.7% 0.0% 5.2% 86.4% 23.5% 0.4% 4.4% 9.2% 33.8% 0.1% 55.2% 1.7% 4.4% 14.8% 1.2% 79.4% 0.3% Projected Improper Payment Claims Error Rate 95% Confidence Interval No Documentation Insufficient Documentation Medically Unnecessary Services Incorrect Coding Other

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Eye procedure other Hospital visit critical care Other tests - other Other drugs Lab tests - other (non-Medicare fee schedule) Dialysis services (Non MFS) Echography - heart Oncology - radiation therapy All Type of Services (Incl. Codes Not Listed) $3,366,409,599 4.5% $22,698,932 1.6% $28,735,555 $25,197,633 4.9% 1.8% $30,070,017 1.4% $36,045,736 $31,878,027 $31,758,233 5.0% 2.7% 0.6% $37,708,628 6.8%

( 4.5%) 18.1% 0.0% 100.0% 0.0% 0.0% 0.0%

2.0% - 8.0% 1.1% - 4.3% 0.1% - 1.2%

4.4% 29.6% 57.6%

33.6% 52.5% 15.3%

0.0% 0.1% 1.2%

62.0% 14.9% 25.8%

0.0% 2.8% 0.0%

0.7% - 2.2%

11.9%

38.7%

13.5%

30.8%

5.0%

1.6% - 8.3% 0.3% - 3.3% ( 0.5%) 3.7%

29.5% 47.7%

40.6% 52.1%

0.0% 0.1%

29.8% 0.0%

0.0% 0.0%

1.8%

98.2%

0.0%

0.0%

0.0%

4.2% - 4.8%

10.7%

27.0%

3.1%

57.7%

1.5%

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If your practice or organization receives a letter from CERT with a request for medical record documentation, you should respond promptly by submitting the documented requested in the specified time. Practitioners do not need to obtain beneficiary authorization to forward medical record documentation to the CERT contractor.

Recovery Audit Contractors (RAC)

Section 306 of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) paved the way for the Department of Health and Human Services (HHS) to conduct a three-year demonstration program to identify and correct Medicare overpayments and underpayments. The RAC demonstration program was conducted in Florida, California, and New York. The RAC demonstration was an important tool in helping CMS to prepare for the permanent RAC program, which was suspended in 2008 and reinstated in February 2009. The RAC demonstration program proved to be successful in returning dollars to the Medicare Trust Funds and identifying monies that need to be returned to providers. It has provided CMS with a new mechanism for detecting improper payments made in the past, and has also given CMS a valuable new tool for preventing future payments. Section 302 of the Tax Relief and Health Care Act of 2006 makes the RAC Program permanent, and requires the Secretary of Health and Human Service to expand the program to all 50 states by no later than 2010.

Overview of Concerns from the Office of Management and Budget (OMB)

According to a January 2008 report by the OMB, Medicare alone estimated $10.8 billion in improper payments in 2007. With the advent of the Obama stimulus package and increasing expenditures, along with the growing Medicare beneficiary population, the government has taking a proactive approach to safeguard the Medicare Program. CMS, which operates the Medicare program, has a long history of calculating improper payment estimates and developing strategies to protect the Medicare program’s fiscal integrity. The CERT program, implemented in 2003, began producing error rates and estimates of improper payments to evaluate the CMS contractors and program performance. CMS uses the error rate data to identify problems that
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exist and target improvement efforts. The cornerstone of these efforts is the Error Rate Reduction Plan (ERRP), which identifies strategies to clarify CMS policies and implement new initiatives to reduce improper payments.

The Improper Medicare FFS Payments Report for November 2007 estimates that 3.9 percent of the Medicare dollars paid did not comply with one or more Medicare coverage, coding, billing, or payment rules. This equates to $10.8 billion in Medicare FFS overpayments and underpayments.

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RACs Identified and Corrected $371 Million Dollars of Medicare Improper Payments during FY 2007

Most improper payments occur when providers submit claims that don’t comply with Medicare coding rules or medical necessity guidelines. Over 96 percent of these improper payments were overpayments collected from providers; the remaining 4 percent were underpayments repaid to providers. Two factors explain why only 4 percent of the improper payments identified were underpayments. First, although all three RACs have years of experience working in the private industry identifying overpayments, none of them had experience identifying underpayments before the RAC program. Each RAC had to build the algorithm software to seek out these underpaid claims. Second, a lower percentage of underpayment identifications is expected, according to the Improper Medicare FFS Payments Report, which estimated that only 9 percent of Medicare improper payments were underpayments.

Summary of Total Improper Payments Corrected By the RAC Program – FY 2007
 

New York Florida California Total

$ $ $ $

Overpayments Collected6 112.5 m + 124.6 m + 120.1 m + 357.2 m +

Underpayments Repaid7 $ 1.8 m $ 4.1 m $ 8.4 m $ 14 .3 m

Total Improper Payments Corrected $ 114.3 m = $ 128.7 m = $ 128.5 m = = $ 371.5 m

During 2007, the RACs returned a significant amount of improper payments to the Medicare Trust Funds. Only 5 percent of RAC determinations were overturned by appeal. In comparison, as of August 31, 2008 a cumulative total of 7.6 percent of all Part A and Park B claims were overturned by appeal. Overall, the RACs determined that 525,333 claims were overpaid. Providers appealed 118,051 of these overpayment determinations, and 40,115—34 percent— were overturned in favor of the provider as of August 31, 2008. During the RAC demonstration, the auditors reviewed claims based on accepted standards of medical practice, CMS medical policies, and National and Local coverage determinations (NCDs and LCDs).

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RACs succeeded in correcting more than $1.03 billion of Medicare improper payments. Approximately 96 percent of these improper payments were overpayments collected from providers, while the remaining 4 percent were underpayments repaid to providers.

Improper Payments Corrected by the RAC Demonstration Cumulative through 3/27/08, Both Claim RACs and MSP RACs (Million Dollars)

RAC

Overpayments Collected

Underpayments Repaid

Total Improper Payments Corrected

Connolly HDI PRG Claim RAC Subtotal HMS DCS MSP RAC Subtotal

$266.1 $396.1 $317.8 $980.0 $1.3 $11.4 $12.7

$4.3 $20.8 $12.7 $37.8 $0.0 $0.0 $0.0

$270.4 $416.9 $330.5 $1,017.8 $1.3 $11.4 $12.7 $

Grand Total

$992.7

$37.8

1,030.5

Source: For Claim RACs, RAC invoice files and RAC Data Warehouse. For MSP RACs, Treasury Deposit Slips.

Future improper payments can be avoided by analyzing the RACs’ service-specific findings. CMS can use this information to implement more provider education and outreach activities, or to establish new system edits with the goal of preventing future improper payments. Hospitals and other health care providers can use this information to help ensure that they are submitting correctly-coded claims for services that meet Medicare’s coding and medical necessity policies.

From the inception of the RAC demonstration through June 30, 2008, providers chose to appeal only 19.6 percent (102,705) of the RAC determinations. Overall, the data indicate that of all the RAC overpayments determinations (525,133), only 6.8 percent (35,819) were overturned on appeal.

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Before the demonstration ended in March, the RACs speeded up their process and requested large numbers of records in December 2007, which resulted in huge take backs in the months of January and February, 2008. For many hospitals, the take back in these two months accounted for 90 percent of the money taken back. The updated totals report was released in a July 11, 2008 Evaluation report from CMS to Congress, and identified $1.03 billion in improper Medicare payments for the demonstration (March 2005 to March 2008). The full report may be referenced at: http://www.cms.hhs.gov/RAC/Downloads/Appealupdatethrough63008ofRACEvalRept.pdf.
 

Much like the Medicare claims processing contractors, the RACs use medical personnel, such as nurses and therapists, to review claims for medical necessity. In addition, each RAC utilized a physician Medical Director to oversee the medical record review process, assist nurses, therapists, and certified coders upon request during complex review, manage the quality assurance procedures, and inform provider associations about the RAC demonstration.

The two review processes the RACS use are: automated review complex review

An automated review is where the claims contained clearly-identifiable errors without review of the medical records. The RACs used information systems to identify claims errors. Providers were contacted to pay the overpayment amounts, or underpayment amounts were paid. For example, a RAC could use information systems to search for claims for two or more identical surgical procedures for the same beneficiary on the same day at the same hospital. The duplicate surgical procedures are clearly not medically necessary, should not have been billed twice by the hospital, and should not have been paid twice by the Medicare claims processing contractor. The RAC could perform automated review only when the improper payment was obvious (e.g. a duplicate claim) or a written Medicare policy, Medicare article, or Medicaresanctioned coding guideline (e.g., CPT guidelines, CPT Assistant and/or Coding Clinic guidance, etc.) existed and precisely described the coverage conditions.

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Example: HCPCS Level II code J2505 Injection, pegfilgrastim, 6 mg (Neulasta)—The provider billed one service per 1 mg, but the definition of this code is one service per 6 mg. The provider administered 6 mgs of Neulasta to the beneficiary but billed for six units of J2505. According to the definition of the code, six units of J2505 would equal 36 mg of Neulasta.

Example: Outpatient Hospital Speech Therapy—The outpatient hospital billed for each 15 minutes of therapy. The code definition specifies that the code is per session, not per 15 minutes. The units billed exceeded the approved number of sessions per day. The RAC determined that the excessive services billed were MEDICALLY UNNECESSARY and issued a repayment request letter for the payment amount for the unnecessary services. These errors were identified by the RAC using data mining during the automated review.

A complex review is the review of the medical record in which claims likely contained errors. Based on the medical record documentation, the RAC auditor could determine whether the claim was paid correctly or whether an overpayment or underpayment existed.

From the inception of the demonstration through March 27, 2008, CMS provided each RAC with claims data from 2001 through 2007 for its jurisdiction (which accounted for an estimated total value of $317 billion). Some RACs focused their reviews on inpatient claims. Others targeted physician claims. CMS did not specify which claim types a RAC must review. It was up to each RAC to identify the claims most likely to contain an improper payment. For the demonstration, the RACs: Reviewed all claims to identify overpayments and underpayments that can be detected without medical record review, using their proprietary automated review software algorithms. Conducted medical record reviews of claims that the RAC thought—based on OIG/GAO/CERT reports, their knowledge of the health care industry, etc.—were likely to contain improper payments.

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The audits entailed requesting medical records from the health care provider that submitted the claim. Though not required by CMS, some RACs developed self-imposed limits on the number of medical records they would request from a given provider over a 30 or 45-day period. Each RAC attempted to target these reviews to the greatest extent possible to minimize the burden on the provider and maximize the RAC’s return on investment. The RACS notified providers and directed the Medicare claims processing contractors to make adjustments for claims that were either overpayments or underpayments. During the demonstration project—and continuing with the permanent RAC inception—the RAC auditors are paid based on a contingency fee (dollars recovered). The permanent program, however, will require the RACs to return contingency fees if the claim is overturned on appeal.

During the demonstration project certain claims were excluded from review. They included: Incorrect levels of evaluation and management services—however, RACs could review E/M services for duplicate payments, violation of global surgery rules, type of service, etc. Hospice and home health services Payments made to providers under a CMS demonstration Claims previously reviewed by another Medicate contractor Claims involving a potential fraud investigation

CMS has posted a FAQ section on the RAC’s on their Web site. The following Q&A regarding RAC review of E/M services was posted on 11/25/2008:

Question: “Will the Recovery Audit Contractors (RAC) review evaluation and management (E&M) services on physician claims under Part B?”

Answer: Yes, the review of all evaluation and management (E & M) services will be allowed under the RAC program. The review of duplicate claims or E & M services that should be included in a
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global surgery were available for review during the RAC demonstration and will continue to be available for review. The review of the level of the visit of some E & M services was not included in the RAC demonstration. CMS will work closely with the American Medical Association and the physician community prior to any reviews being completed regarding the level of the visit and will provide notice to the physician community before the RACs are allowed to begin reviews of evaluation and management (E & M) services and the level of the visit.

RACs will be able to review claims up to three years past the date of the initial payment. The Contractors responsible for the independent audits are compensated on a contingency fee basis determined by the principal collection amount or the amount paid back to the provider.

What happens if a provider appeals and wins? Under the demonstration project, RACs were entitled to keep their contingency fees if a denial was upheld at the first stage of appeal, regardless of whether a provider won subsequent appeals. Claims submitted prior to October 1, 2007 may be reviewed according to the most recent Scope of Work released 11/07/08. This information can be referenced at:  https://www.fbo.gov/index?s=opportunity&mode=form&id=5c8c7d4b00249ba579d4d77d64bd0 aea&tab=core&_cview=1.

Because they are incentivized to find errors, RACs to date have been extremely aggressive in their review and denial of claims. Forty percent of alleged overpayments identified during the demonstration program were denied for medical necessity reasons. To further sweeten the incentive for future findings, RAC auditors were paid $187.2 million in contingency payments during the demonstration project. Fees paid to these auditors range from 9 to 12 percent of the overpayments they uncover.

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Review the illustration of RAC errors by provider type.

 

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Now review the RAC errors identified by error type

The Permanent RAC Program

The RAC programs will be implemented in stages throughout the country over several months. Section 302 of the Tax Relief and Health Care Act of 1996 (TRHCA) requires full implementation no later than January 1, 2010. CMS is implementing the RAC permanent program gradually, and it will ultimately affect every provider in every state.

RACs will use their own proprietary software, experiences, and resources, as well as the CMS complex medical review process, to identify overpayments and underpayments. The medical review process may entail on-site visits or requests for medical records by the claims review RAC. RACs will apply National and Local Coverage Determinations in the claims review process. The RACs are authorized to recover claims overpayments and will be referring underpayments to the fiscal intermediary or carrier for processing and payment to the provider. All RACs must have a medical director to oversee the recovery process under the permanent program.

Review the updated RAC Phase-in Schedule. The first phase began in March 2009 and will cover various states with the second phase to begin in August of 2009.

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RAC Schedule

 

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Preparing for a RAC Audit

Make sure you understand the target areas for audit. Your practice may be selected for review through the Medicare data mining process. Medicare will compare your practice coding and claims data based on a distribution of the national or state statistics. If your medical practice is outside the normal coding or billing patterns, you may be selected for review. Your first step is to review the distribution of your procedures and services with state and national statistics and take a closer look through an internal audit process. E/M services are the most frequently audited procedures for most practitioners. Some providers have been hit very hard with initial recoveries, adding up to hundreds of thousands of dollars.

Although there may be a good reason why your practice is reporting level four and five services consistently, it will not stop CMS from taking a closer look. Your utilization reports should help guide you as to what areas to focus on internally to review documentation before the RAC requests medical records. This should be a routine exercise in your practice. However, too many medical practices fail to recognize the importance of this process and fail to monitor their E/M distribution and are caught off guard when an insurance carrier audits. It is also wise to monitor any office procedure, along with modifiers and surgical procedures, performed by your practitioners. If your finding based on an internal audit are the result of overcoding based on the documentation, you must be prepared to self disclose the overpayments and refund the amount to the carrier.

If a RAC audit identifies a specific overpayment amount in the selected sample after reviewing your medical records, and then extrapolates that amount for all claims submitted for the time frame under review, the cost could be enormous. For example if the average overpayment of your claims audited in your practice amounts to $25.00 per claim, and claims were submitted for 10,000 Medicare patients, the overpayment amount of $250,000 plus interest of 11.124 percent on any unpaid balance calculated from the thirty first day after notification (42CFR405.378) must be refunded, even though an appeal may be warranted. This means Medicare will recover reimbursement before the appeals process has begun. And, Medicare is entitled to keep the fund
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for the 180 days you have to appeal, plus an additional 60 days during which Medicare may prepare its response. This could result in a loss of significant revenue to the medical practice.

If you are audited by the RAC, you must be prepared to appeal if the documentation for any procedure and service targeted can be defended. In the instance of a dispute, providers have the right to discuss findings with RAC representatives and to appeal the RAC’s findings to the Medicare Audit Contractor (carrier, fiscal intermediary, or durable medical equipment regional carrier). The current CMS administrative appeal rights remain unchanged. It is also a good idea to obtain guidance from an attorney experienced in health care law prior to the appeal. An attorney can be an excellent resource to ensure that all rules and regulations have been followed and to identify any areas of concern or areas in which the provider might be able to win the appeal.

There is a potential for significant repayments to the Recovery Audit Contractors, and it is important for all providers to be prepared. To begin with, health care organizations should confirm that there are adequate processes in place to respond to demand letters, requests for medical records, and on-site medical record reviews received from the RACs.

It is also recommended that a point person be designated to manage the process, because it is unknown where the initial demand letters may be mailed. There are still a number of unknown variables—which means that health care entities must be prepared for anything and everything. The Center for Medicare and Medicaid Services has resources available at the following Web sites for additional information: http://www.cms.hhs.gov.

Each RAC will be responsible for identifying overpayment and underpayments in approximately one-fourth of the country. The new RAC jurisdictions match the DME MAC jurisdictions. It is important to know where your jurisdiction is and what RAC will handle you specific state. As of February 4, 2009, the stop work order was lifted and CMS is continuing with the RAC program

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The national permanent RACs are: Diversified Collection Services, Inc. of Livermore, California, in Region A, initially working in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and New York. CGI Technologies and Solutions, Inc. of Fairfax, Virginia, in Region B, initially working in Michigan, Indiana, and Minnesota. Connolly Consulting Associates, Inc. of Wilton, Connecticut, in Region C, initially working in South Carolina, Florida, Colorado, and New Mexico. Health Data Insights, Inc. of Las Vegas, Nevada, in Region D, initially working in Montana, Wyoming, North Dakota, South Dakota, Utah, and Arizona.

The four RACs will contract with subcontractors to supplement their efforts. PRG-Schultz, Inc. will serve as a subcontractor to Health Data Insights, Inc, Diversified Collects Services, Inc. and CGI Technologies and Solutions, Inc. in regions A, B and D. Viant Payment Systems, Inc. will serve as a subcontractor to Connolly Consulting in region C. Each subcontractor has negotiated different responsibilities in each region, including some claim review.

The number of medical records selected for a RAC audit might depend on the size of the medical practice or organization. Under the RAC permanent program, there is a limit of medical records that may be requested based on type and size of practice or facility. Make sure the documentation submitted is complete and legible. Keep in mind that a medical record that is not legible will be considered an The record requests are: Inpatient Hospital, IRF, SNF, Hospice   
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“error.”

10 percent of average monthly Medicare claims (max of 200) per 45 days

Other Part A Billers (Outpatient Hospital, HH) 1 percent of average monthly Medicare services (max of 200) per 45 days

Physicians Solo Practitioner: 10 medical records per 45 days
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   

Partnership of 2-5 individuals: 20 medical records per 45 days Group of 6-15 individuals: 30 medical records per 45 days Large Group (16+ individuals): 50 medical records per 45 days

Other Part B Billers (DME, Lab) 1 percent of average monthly Medicare services per 45 days

Be certain your practice recognizes a RAC audit request and complies with that request immediately. Make this project “top priority.” If the RAC auditor, after conducting the audit, determines the practitioner needs to refund an overpayment, immediately identify the records that can be appealed, preparing a detailed statement or report for each record, document rational and gather supporting documentation. Submit your rebuttal within 15 days of the RAC audit results, or begin the Medicare appeals process. Keep in mind you will only have 120 days after refunding the overpayment to file an appeal.

APPEALS
The Medicare Appeals Process

Hospitals, physicians, and other health care providers have a right to appeal a claims decision after the initial determination is made by a CMS Contractor, a CERT audit, or a RACs determination. Keep in mind, however, that this does not keep you from refunding alleged overpayments within the required time frame. You must send overpayment(s) back to CMS before the appeals process is exhausted. Providers and suppliers who do not accept assignment have limited appeal rights. Beneficiaries may assign their appeal rights to the provider who provides items or services on their behalf.

First Level of Appeal—Redetermination

All first level Medicare appeals are now called “redeterminations.” Upon notification that Medicare has audited a sample of claims in your practice and requested overpayment, a
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redetermination may be submitted in writing within 120 calendar days from the date on the demand letter. If a redetermination appeal is filed within 30 days of the date on the demand letter, the automatic recoupment process will not start. The FI/Carrier/MAC must render a decision within 60 days of receipt of the redetermination request. See Appendix A for Redetermination form.

Second Level of Appeal—Reconsideration

Second level appeals are called “reconsiderations” and are conducted by Qualified Independent Contractors (QICs). If a redetermination does not result in your favor, you may file for reconsideration. This must be filed within 180 calendar days of the date on the notice of the redetermination decision. The QIC must process and render a decision within sixty (60) days of the reconsideration request.

NOTE: “Medical necessity reviews must be performed “by a panel of physicians or other appropriate health care professionals, and be based on clinical experience, the patient’s medical records, and medical, technical, and scientific evidence of record to the extent applicable.” 42 CFR § 405.968 (a).

This step can become more labor or resource intensive because the medical practice is required to submit a full presentation of evidence, and explain the rationale for disagreement with the first level of appeal. If the practice fails to produce this information at this level of appeal, the information may not be submitted later. If a reconsideration appeal is filed within 60 days of the date on the redetermination decision letter, the automatic recoupment process will not start. All supporting evidence should be produced at this level. The reconsideration level of review is a paper review; CMS states clearly in the preamble to the final regulations that QICs will not be conducting hearings. The QIC is supposed to solicit the view of the beneficiary, however. As noted above, providers and suppliers are required to submit all of the evidence they want considered in the claim to the QIC. Evidence not submitted may be excluded at subsequent levels of review. See Appendix A for Reconsideration form.

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Third Level of Appeal—Administrative Law Judge (ALJ)

The third level of appeal is through an Administrative Law Judge (ALJ) hearing. The ALJ review has, in the past, been handled through hearings at more than 140 Social Security offices around the country. HHS has taken over the responsibility and all ALJs is located at four sites— Cleveland, Ohio; Miami, Fla.; Irvine, Calif.; and Arlington, Va. CMS will begin the recoupment process (if it has not already started) at this level and higher levels. The request for an ALJ hearing must be submitted within 60 days of the QIC reconsideration decision. A $120 minimum claim amount must be in controversy.

To compensate for the limited number of sites, the majority of hearings will be held with videoconference equipment or by telephone. A beneficiary who wants to appear in person before a judge must show that “special or extraordinary circumstances exist.” HHS defended its new policy of using video-conference equipment by stating that such equipment would enable judges “to complete more cases” within the required 90 day deadline. The ALJ form for the appeal request is located in Appendix A.

Fourth Level of Appeal—Medicare Appeals Council (MAC)

The fourth level of appeal is a review by the Medicare Appeals Council (MAC), which is part of the Departmental Appeals Board (DAB) of HHS. The MAC is the final administrative appeal review for all Medicare cases before a review by a federal district court. An unsatisfied party has 60 days to request a review of an ALJ decision and the MAC review must be completed within 90 days of receipt of a request, with some exceptions.

The MAC is supposed to conduct the review, with only evidence in the record considered unless a new issue is raised on appeal. The parties have no right to a hearing at the MAC level. A party, including CMS if it was a party at the ALJ level, may request an oral argument. The MAC may grant the request if the claim raises an important question of law, policy, or fact that cannot be decided on written submissions. Generally, a MAC decision is a prerequisite for proceeding with
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an appeal in federal court. There is no formal request form. All request for a MAC council hearing must in writing.

Fifth Level of Appeal—Federal District Court

The fifth level of appeal is the federal district court. This is the final level of appeal and is a judicial review which must be filed within 60 days of receipt of the MAC decision. When the practitioner is not satisfied with the council’s decision, a request for a hearing before a federal district court can be requested within 60 days as long as the amount of the appealed claim exceeds $1,220. The practitioner will need to hire an attorney to participate in this level of appeal, and the finding of fact at this final stage is binding and conclusive.

At each level of appeal, manage the process by keeping track of appeal letters, supporting documentation, billing information, deadlines, outlines of discussions, and results of each appeal level. It is recommended that the practice create a special file for handling these types of appeals.

Responding to Post-Payment Audits & Refund Requests for Commercial, Managed Care and Third Party Payers

Before refunding the insurance carrier you should research the accuracy of the payment in question. Request that the insurance carrier provide an explanation—in writing—as to why they believe the refund is legitimate, including details of bundling edits, fee schedules, criteria for payment, and provider bulletins. Review your state’s laws concerning limitations on detecting and recovering overpayments. Due to the increase in the number of carriers requesting refunds after payment have been issued, some states have enacted legislation or revised their prompt payment laws to limit the time frame in which insurers can detect and recoup overpayments. If you know the claim resulted in double payment, was submitted fraudulently, or was incorrectly submitted, it is the medical practice’s responsibility to return payment to the insurance carrier. If you believe the claim was submitted correctly and the service was medically necessary, however, appeal the insurance carrier’s decision.
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Recommended Tips

1. You should review the provider contracts to determine how to respond to refund requests. Provider contracts often outline the insurance carrier’s claim and utilization review processes, as well as their policy for recovering overpayments or retrospective audits.

2. If the contract does not outline the time frame for refund requests, renegotiate your contract to include an amendment setting a time limit the insurance carrier has to request a refund. For example, if state law prohibits carriers from rescinding payment more than 120 days after receiving the payment, a similar time frame should be included in your provider contract. If your state does not mandate a time frame, a time frame possibly may be negotiated with the carrier. One “rule of thumb” for negotiation is that the carrier should have the same amount of time to recoup as you have to file the claim.

3. Provider contracts should be reviewed for mention of “offset” provisions allowing carriers to deduct from future reimbursement. If such a clause exists, it may be wise to have it eliminated during your contract negotiations.

4. If you are not a participating provider with the carrier requesting the refund, and your state law does not have specific guidance, you may contest the request because you may not be bound contractually to abide by the carrier’s claims and payment policy. This presumes that there is no allegation of fraud. A related issue would be whether you accepted assignment when you filed the claim. If you did not accept assignment, the carrier should deal directly with the patient, as the patient received payment from the carrier. You may also wish to inform the carrier of your own practice’s policy concerning refund requests. 5. If the request for the refund was made within the appropriate time frame, the request must be investigated and, if possible, appealed.
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6. It might be beneficial to review the patient’s policy, including the language for covered benefits and exclusions. The coverage of such procedures may be addressed in the patient’s policy. If covered, you may produce the patient’s policy as proof that the services are covered and, therefore, you are not obligated to refund the insurance carrier. 7. For high-cost procedures or services, make sure there is documentation that benefits were verified prior to surgery, either in writing or with name, date, and time of phone verification. If it is determined that the patient was not covered at the time of service, or that the procedure is excluded from the patient’s benefits, it is reasonable for the insurance carrier to recover payment from the provider and/or patient. 8. The request for a refund may be warranted if the carrier’s post-payment audit found the procedure to be not medically necessary or billed incorrectly. 9. If the procedure was medically necessary, a letter should be sent to the carrier disputing the refund, including supporting documentation such as operative reports, physician chart notes, radiology reports, etc. that support the claim. The practitioner also has the right to question the plan’s clinical criteria used to determine medical necessity. Keep in mind that medical necessity issues are different for the provider and insurance carrier. 10. If audited due to a high volume or frequency of services, or inappropriate or repeated use of procedure or services, complete and accurate documentation is the best defense. Incomplete documentation will not provide the support required to defend a retrospective audit.

11. HIPAA Privacy Rules require physicians to release only the “minimum necessary” when requested. If a carrier's request for information exceeds the minimum necessary standard, the physician may inform the carrier of his or her position. 12. Other factors prompting the refund request might be in question, such as the carrier issues concerning the plan’s credentialing or re-credentialing process; or if the request is tied to a problem identified by the government (i.e. the OIG Work Plan, improper or duplicative
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billing; or inappropriate use of modifiers). It is wise to create a mechanism within the practice to capture insurance carrier trends, or to track utilization review decisions through claim denials. 13. It cannot be stressed enough that an insurance carrier’s request for a refund should not be ignored. While there are many states that have enacted legislation limiting the time in which carriers can pursue refunds, such legislation may also place time limits for you to respond, as well as allow interest to be charged. It is imperative to familiarize yourself with your state’s Insurance Codes. Contact your State Department of Insurance for additional information. 14. If a dispute cannot be resolved satisfactorily through the plan’s internal and external review processes, further appeals through an arbitrator or the court may be required. 15. On occasion, insurance carriers may refuse to withdraw their demand for repayment or refuse to settle the case on terms agreeable to the provider. The dispute may then go to arbitration if the provider agreement includes an arbitration clause. Otherwise, litigation may be initiated. The arbitration process is much like a trial. Both sides are represented by counsel and the case is heard by one to three arbitrators, who make the ruling.

Responding to a CERT, RAC, or Government Audit

Tips

1. Send in as much documentation as you have, keeping photocopies for yourself. a. b. Practices often forget to include information pertinent to a medical record Don’t just send a copy of the progress note for that day, forgetting that there was a flow sheet updated too, with a change of medication, or a review of systems update c. d. Perhaps the medical necessity for that test was documented in a prior note? Do this even if the auditor doesn’t ask for the information

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2. Never, ever change any charts or records you submit. a. b. Auditors can spot an altered chart in a heartbeat If you feel handwritten notes may be illegible, have a transcript typed, but make it exact c. d. e. Spelling mistakes [and other errors] have to stay When presenting typed/transcribed copies, include the original note, as well Make sure the typed note is signed

3. Don’t dally in sending records to the auditor. a. b. Typically you have a relatively short time frame of 30 days What if the auditor wants records that are harder to collect, such as hospital-based records? c. If you have to collect this kind of documentation, start working the day you get the audit letter

d.

If the auditor wants office-based records, and your records are well organized, collect, copy, and mail the files as soon as you have a chance to review them against what was billed

4.

Try to figure out what the auditor’s concern. a. b. c. d. Do the files requested share a date of service, a type of service, a diagnosis? An example of a common audit target is excessive billing of higher-level E/M codes This information could help you mount a more targeted and effective response A professional coder could also help spot these patterns

5. Write a very thorough cover letter to accompany the files you send. a. b. Describe your practice, your practitioners, and their credentials Put each patient in full context. For each file, describe the condition the patient presented with that day, the ongoing care the patient was receiving, what procedures or services were performed, why, what the outcome was, and how the treatment or
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diagnostic testing was useful. If necessary, include patient information from previous visits c. Include expert opinions in an addendum, and reference them. These sources can include other physicians, professional coders, position papers from national, state, and local associations, and journal articles. d. But make sure your sources are uniformly supportive of your position: Don’t give the auditor any extra ammunition

6. Send all documents certified mail/receipt required. a. b. c. d. e. Send a cover letter explaining any unusual circumstances Attach patient information in the order of the listing received Don’t forget any addendums Keep an exact copy for your files Contact the auditor who signed the Probe Review letter for any clarification

Refunding Overpayments

If identified overpayments must be refunded, the provider is expected to issue a refund check to Medicare. Medicare will issue a refund request letter giving the provider 30 days to make repayment. After 30 days, interest begins to accrue and an offset is initiated. If the provider cannot send in the full amount, the provider can contact CMS to determine if a schedule of repayments will be allowed. CMS may approve a payment schedule for cases in excess of $1,000.

Problems based on audit findings might have minor or major repercussions depending on the scope of the audit and the errors found. Minor problems might require returning the overpayment and educating the provider on improvement, with further audit analysis at a future date. Moderate problems might additionally require a pre-payment review of all coding and documentation prior to payment of future claims (100 percent carrier review). Major problems might lead to performing a statistically-valid random sample possibly to include more than fifty
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medical records, exclusion from the Medicare or Medicaid programs(s), a Corporate Integrity agreement (CIA), or referral to the fraud department or the Office of Inspector General for investigation.

Minor Problem

• • •

Education of provider on appropriate billing procedure Collection of overpayments Further analysis at later date Education of provider on appropriate billing procedure Collection of overpayments Initiation of pre-payment review until corrected Education of provider on appropriate billing procedure Collection of overpayments Initiation of high level of pre-payment review and/or Statistically valid random sample Payment suspension Referral to Fraud Department

Moderate Problem

• • •

Major Problem

• • • • • •

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PREVENTION
How do you take a proactive approach and give your practice a “shot” of prevention? A comprehensive Compliance Plan should be the foundation of every medical practice.

Another proactive step is to perform compliance audits and continue to monitor problem areas so there are no surprises when an insurance carrier audits your claims. Not only should you audit the documentation, but the claims data as well, ensuring that claims are submitted correctly with the correct dates of service, correct practitioner, appropriate modifiers, and correct procedures and diagnosis codes to support medical necessity. Education should be a staple in your medical practice following each and every internal audit.

If an audit reveals a repeated pattern of documentation, coding, and/or billing errors, it is important to identify the errors promptly and to provide a mechanism for correction based on errors found. If documentation or coding errors are discovered, education is an excellent tool to assist in the compliance process.

Prevention Tips 1. Develop a correction plan when problems are identified. 2. Hold regular education and information meetings for both clinical and administrative staff to keep everyone updated on new regulations, new carrier guidance, new coding rules, etc. so that everyone is fully informed. 3. Continue to monitor specific areas or compliance issues on an ongoing basis. 4. Keep track of audits. To support the medical practice’s efforts to report procedures and services correctly, follow up with meetings with provider and staff to discuss compliance. 5. Never stop improving the claims submission and audit processes in the medical practice. Review the processes each year and make improvements when necessary. 6. If your practice employs an auditor, consider—at least once per year —hiring an outside coding reviewer to validate the medical practice’s progress. 7. Remain on the alert and the defensive. Enforce disciplinary standards within the medical
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practice. 8. Compare the CMS frequency data when reviewing E/M services based on specialty: http://www.cms.hhs.gov/MedicareFeeforSvcPartsAB/04_MedicareUtilizationforPartB.as p#TopOfPage
 

Have that Fifteen Minute Conversation with your Physician

Completing a coding audit accomplishes very little unless a serious effort is undertaken to fix the problems that are identified. Establishing an on-going reporting and feedback system to the provider is important. If you don’t communicate audit results with identified solutions for fixing the problem, the provider will not know errors exist. Keep your providers up-todate on all coding, reimbursement, and policy changes. Keep in mind that the physician did not go to medical school to learn how to code and file insurance claims. In fact, most physicians received minimal or no training related to coding or billing in medical school.

Correcting any systematic under coding uncovered in an audit will enable you to collect the revenue to which you are entitled. Addressing documentation deficiencies will minimize the likelihood that you will have to pay money back to Medicare or another payer if audited. Continuous education of practitioners and staff is vital to maintaining the “health” of the practice. Reinforce the importance of correct coding. Encourage as essential clear, accurate, and detailed documentation for every patient encounter.

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CONCLUSION
It is critical for any provider of service to be aware that any audit by an insurance carrier is fraught with pitfalls, and can have serious repercussions not only in relation to his or her status with the insurance carrier, but concerning the practitioner’s medical license, possible civil liability exposure, and/or breach of confidentiality. For this reason, any inquiry by an insurance carrier, request for overpayment, and/or audit request should be treated very seriously.

Web Sites of Interest

Office of the Inspector General: http://www.oig.hhs.gov Centers for Medicare and Medicaid Services (CMS): http://ww.cms.hhs.gov Recovery Audit Contractors: http://www.cms.hhs.gov/RAC CERT Web site: www.cert.org Comprehensive Error Rate Testing: http: www.cms.hhs.gov/CERT

Sources:

OIG Workplan 2009 CMS RAC Demonstration Project CMS Comprehensive Error Rate Testing Program The Medicare Recovery Contractor Audit Program American Medical Association Medical Record Chart Auditor, 2007, American Medical Association Various insurance carrier audit plans

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APPENDIX A
Recovery Audit Contractor (RAC) Comparison between Demonstration and Permanent RACs
RAC Medical Director Certified Coding Experts Minimum Review Threshold Independent Validation Process RAC payback contingency fee if claim overturned on Appeal Vulnerability Reporting Standardized letters to providers

Demonstration RACs No Required
Optional $10.00 aggregate claims Optional Only if claim is overturned on first level of Appeal Annually Standard Manual Letters

Permanent RACs Mandatory
Mandatory $10.00 minimum claims Mandatory Any level of Appeal

Monthly Unique letters created for the RAC program with AHA/AMA guidance 3 years

Claims Review look back period (claim payment date—date of Medical record request Maximum claim review period Allowed to review current fiscal year claims Limit on number of requested medical record Timeframe for paying photocopying for requested records MSP included Quality Assurance SAS-70 review Remote Call Monitoring Provider Web Portal for communication Other Contractor Performance Audits/Evaluations
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4 years

4 years No Optional—each RAC sets own limit None

10/1/2007 Yes Mandatory, CMS established nationwide limits Within 45 days of receipt of medical record No Yes Yes Yes Yes

Yes No Yes No No

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APPENDIX B – FORMS AND SLIDES

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DEPARTMENT OF HEALTH AND HUMAN SERVICES CENTERS FOR MEDICARE & MEDICAID SERVICES

MEDICARE REDETERMINATION REQUEST FORM
1. Beneficiary’s Name:_____________________________________________________________________ 2. Medicare Number: ______________________________________________________________________ 3. Description of Item or Service in Question: __________________________________________________ 4. Date the Service or Item was Received: _____________________________________________________ 5. I do not agree with the determination of my claim. MY REASONS ARE: _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________
6. Date of the initial determination notice ______________________________________________________
(If you received your initial determination notice more than 120 days ago, include your reason for not making this request earlier.)

_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 7. Additional Information Medicare Should Consider: ____________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 8. Requester’s Name:______________________________________________________________________ 9. Requester’s Relationship to the Beneficiary: _________________________________________________ 10. Requester’s Address: ____________________________________________________________________ _____________________________________________________________________________________ 11. Requester’s Telephone Number: ___________________________________________________________ 12. Requester’s Signature: ___________________________________________________________________ 13. Date Signed: __________________________________________________________________________ 14. ❏ I have evidence to submit. (Attach such evidence to this form.) ❏ I do not have evidence to submit.

NOTICE: Anyone who misrepresents or falsifies essential information requested by this form may upon conviction be subject to fine or imprisonment under Federal Law.
Form CMS-20027 (05/05) EF 05/2005

DEPARTMENT OF HEALTH AND HUMAN SERVICES CENTERS FOR MEDICARE & MEDICAID SERVICES

MEDICARE RECONSIDERATION REQUEST FORM
1. Beneficiary’s Name:_____________________________________________________________________ 2. Medicare Number: ______________________________________________________________________ 3. Description of Item or Service in Question: __________________________________________________ 4. Date the Service or Item was Received: _____________________________________________________ 5. I do not agree with the determination of my claim. MY REASONS ARE: _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________
6. Date of the redetermination notice__________________________________________________________
(If you received your redetermination more than 180 days ago, include your reason for not making this request earlier.)

_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 7. Additional Information Medicare Should Consider: ____________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 8. Requester’s Name:______________________________________________________________________ 9. Requester’s Relationship to the Beneficiary: _________________________________________________ 10. Requester’s Address: ____________________________________________________________________ _____________________________________________________________________________________ 11. Requester’s Telephone Number: ___________________________________________________________ 12. Requester’s Signature: ___________________________________________________________________ 13. Date Signed: __________________________________________________________________________ 14. ❏ I have evidence to submit. (Attach such evidence to this form.) ❏ I do not have evidence to submit.

15. Name of the Medicare Contractor that Made the Redetermination:________________________________ NOTICE: Anyone who misrepresents or falsifies essential information requested by this form may upon conviction be subject to fine or imprisonment under Federal Law.
Form CMS-20033 (05/05) EF (05/2005)

DEPARTMENT OF HEALTH AND HUMAN SERVICES OFFICE OF MEDICARE HEARINGS AND APPEALS

REQUEST FOR MEDICARE HEARING BY AN ADMINISTRATIVE LAW JUDGE J Part A Effective July 1, 2005. For use by party to a reconsideration determination issued by a Qualified Independent Contractor (QIC) J Part B (Amount in controversy must be $100 or more.)
Send copies of this completed form to: Original — Office of Medicare Hearings and Appeals Field Office specified in the QIC Reconsideration Notice Copy — Appellant Copy — All other parties Failure to send a copy of this completed request to the other parties to the appeal will delay the start date of your appeal. Did you send all required copies? J Yes J No Appellant
(The party appealing the reconsideration determination)

Beneficiary Address City

(Leave blank if same as the appellant.)

Provider or Supplier Address

(Leave blank if same as the appellant.)

State E-mail Address

Zip Code

City Area Code/Telephone Number

State E-mail Address

Zip Code

Area Code/Telephone Number

Health Insurance (Medicare) Claim Number QIC that made the reconsideration determination

Document control number assigned by the QIC Dates of Service From

To

I DISAGREE WITH THE DETERMINATION MADE ON MY APPEAL BECAUSE: ____________________________________________________________________________________________________________________ ____________________________________________________________________________________________________________________ You have a right to be represented at the hearing. If you are not represented but would like to be, your Office of Medicare Hearings and Appeals Field Office will give you a list of legal referral and service organizations. (If you are represented and have not already done so, complete form CMS-1696.) Check Only One Statement:

J J

I wish to have a hearing. I do not wish to have a hearing and I request that a decision be made on the basis of the evidence in my case. (Complete form HHS-723, “Waiver of Right to an
ALJ Hearing.”)

Check Only One Statement:

J I have additional evidence to submit. J I have no additional evidence to submit.

If you have additional evidence to submit, please attach the evidence or attach a statement explaining what you intend to submit and when you intend to submit it. If you are a provider, supplier, or beneficiary represented by a provider or supplier, the evidence must be accompanied by a good cause statement explaining why the evidence is being submitted for the first time at the ALJ level.

The appellant should complete No. 1 and the representative, if any, should complete No. 2. If a representative is not present to sign, print his or her name in No. 2. Where applicable, check to indicate if appellant will accompany the representative at the hearing. J Yes J No 1. (Appellant’s Signature) Address City Area Code/Telephone Number State E-mail Address Zip Code Date 2. (Representative’s Signature/Name) Address City Area Code/Telephone Number State E-mail Address Date

J Attorney J Non-Attorney
Zip Code

Answer the following questions that apply: A) Does request involve multiple claims? (If yes, a list of all the claims must be attached.) B) Does request involve multiple beneficiaries? (If yes, a list of beneficiaries, their HICNs and the dates of service.) C) Did the beneficiary assign his or her appeal rights to you as the provider/supplier?
(If yes, you must complete and attach form CMS-20031. Failure to do so will prevent approval of the assignment.)

J Yes J No J Yes J No J Yes J No

Must be completed by the provider/supplier if representing the beneficiary: I waive my rights to charge and collect a fee for representing ________________________________________________before the Office of (Beneficiary name) Medicare Hearings and Appeals. Signature of provider/supplier representing beneficiary Date

CMS-20034 A/B U3 (08/05) EF 08/2005

ATTACH A COPY OF THE RECONSIDERATION DETERMINATION (IF AVAILABLE) TO THIS COPY.

Must be completed by the provider/supplier if representing the beneficiary, they furnished the item(s) or services(s) at issue, and the appeal involves a question of liability under section 1879(a)(2) of the Social Security Act: I waive my right to collect payment from the beneficiary for the furnished items or services at issue involving 1879(a)(2) of the Social Security Act. Signature of provider/supplier representing beneficiary Date

TO BE COMPLETED BY THE OFFICE OF MEDICARE HEARINGS AND APPEALS
Is this request filed timely?

J Yes J No

If no, attach appellant’s explanation for delay. If there is no explanation, send a Notice of Late Filing of Request for ALJ Hearing to the appellant and representative, if applicable, to request such an explanation. Request received on Assigned on Special response case? Field Office Assigned by Employee Assigned to

J Yes J No

If yes, explain why and state the targeted adjudication deadline. _______________________________________________________________________________________________________________

___________________________________________________________________________________
Interpreter/translator needed (including sign language)
If yes, type needed:

J Yes J No

_______________________________________________________________________________________________________________

___________________________________________________________________________________
If appellant not represented, has a list of legal referral and service organizations been provided.

J Yes J No

PRIVACY ACT STATEMENT
The legal authority for the collection of information on this form is authorized by the Social Security Act (section 1155 of Title XI and sections 1852(g)(5), 1860D-4(h)(1), 1869(b)(1), and 1876 of Title XVIII). The information provided will be used to further document your appeal. Submission of the information requested on this form is voluntary, but failure to provide all or any part of the requested information may affect the determination of your appeal. Information you furnish on this form may be disclosed by the Office of Medicare Hearings and Appeals to another person or governmental agency only with respect to the Medicare Program and to comply with Federal laws requiring the disclosure of information or the exchange of information between the Department of Health and Human Services and other agencies.
CMS-20034 A/B U3 (08/05) EF 08/2005

4/22/2009

Prepare for Recovery Audits Protect Your Practice

Add Presenter Name Here

AGENDA

9:00 – 10: 45 am

Lecture

10:45 – 11: 00 am

Break

11:00 – 12:00 pm

Lecture

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4/22/2009

INTRODUCTION
 

Internal billing audits are vital to the health of the medical practice Auditing physician charges and billing practices
 

Burdensome Ultimately improve claims management processes, cash flow, and compliance with insurance carriers and applicable laws and regulations An annual audit allows the medical practice to identify specific coding issues that may occur or reoccur in similar claims submissions

3

Internal Audits
 

If you identify any aberrant coding patterns

A more frequent audit might be beneficial

Careful pre submission monitoring and review of similar pre-submission claims may safeguard against errors that could result in either claim denial or audit recovery from an insurance carrier, whether from:
 

A commercial payer Third-party payer

Government carrier

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4/22/2009

Internal Audits

 

An internal audit gives the physician and medical practice staff the opportunity to identify incorrect coding and billing patterns and overutilization of procedures and services before an outside auditor recovers payments or assesses fines and penalties An Internal Billing Audit can help insure appropriate payment and compliance with applicable laws and carrier regulations Auditing physician services and billing practices is a difficult task, but will typically improve:
    

Coding, g, Documentation Cash flow Claims management Compliance with applicable laws and insurance carrier regulations

5

Analysis of Physician Billing

Providers of healthcare services should be cognizant of:  Coding and billing requirements for health care services rendered

To ensure that documentation satisfies level and scope of services provided

Insurance companies recoup millions of dollars in refunds from providers unable to justify care Insurer’s fundamental existence and financial success requires:  Detailed analysis of provider’s practice patterns using information management systems

 

To identify over-utilization of services Extensive data banks provide frequency reports for a CPT code and compares based on percentage of services bill d b d t f i billed  By same specialty  Similar patient population

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4/22/2009

Data Mining

Insurance carrier generates profiles

Gathers data for utilization
  

How often a procedure is performed Where the procedure is performed What CPT code is reported

Individual physician’s profile is compared to other providers When a provider orders laboratory tests What test are ordered What procedure and diagnosis codes are reported p g p Diagnosis code reporting frequency and medical necessity

Insurance carrier maintains data banks for comparison:
   

Insurance carrier generates provider profiles and compares information across specialty areas

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Audit or Investigation

When data mining has been completed and coding pattern of a provider or group of providers has been identified
 

An audit or investigation might be implemented Request for repayment based on claims d t R tf tb d l i data

Request for repayment of previously paid claims without a review of the medical record(s) is called a Payback
 

Request can be in the form of a written request for repayment Insurance carrier takes the money back by deducting future payments without requesting the return of money Insurance carrier will downcode a level of service, such as an evaluation and management service (E/M), to a lower level

Another problem that can occur based on data mining

Reducing expected reimbursement

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4/22/2009

Audit or Investigation

“I was paid for the service so the coding/billing must be correct

This is not always the case

Insurance carriers pay claims frequently that either should have been d i d or denied b suspended for further investigation

Especially today, with our downturned economy, insurance carriers are looking for ways to recoup dollars spent on health care.

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WHAT TRIGGERS AN AUDIT?

A retrospective audit
Cost containment mechanism that health plans use to determine whether overpayment on claims have been made to a particular physician, practitioner, or hospital In today’s regulatory environment, it is not if, but when your practice will receive a letter from the insurance carrier, either asking for medical records, or a planned visit to your practice

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4/22/2009

What Triggers an Audit
  

Examples of “Red Flags” Reporting the same level of service for an evaluation and management service Reporting high levels of E/M service outside the “bell curve”
 

Many insurance carriers are concerned with the constant use of level four and five visits because reimbursement is higher for these services Performance of diagnostic procedures in the medical office as “routine”

The cardiologist orders a stress test on every new patient, the pattern might draw attention to the insurance carrier who will investigate for medical necessity

Billing under one provider’s NPI while waiting for another provider to be credentialed

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What Auditors Look For
 

Inconsistent coding among partners within a group. Coding high levels of evaluation and management services for a new patient, or reporting a consultation for every new patient Downcoding evaluation and management services

     

Upcoding evaluation and management services Unbundling procedures and services Improper use of modifiers Inadequate documentation Submitting “unspecified diagnoses” consistently Patient and/or provider complaints

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4/22/2009

What Auditors Look For

Cases that are most often prosecuted involve suspected fraud for such activities as:
         

Billing for goods and services not rendered Billing for h t Billi f phantom patients ti t Upcoding or billing for more time than the duration of the actual service Charging Medicare patients more than non-Medicare patients for the same services Paying kickbacks in exchange for referrals Misrepresenting non-covered services as covered Billing for medically unnecessary tests Misrepresenting the quality of care provided Double billing Billing incident to services when the physician is not present

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Prosecuted Fraud Cases

A surgeon who took advice from a list-serve was convicted of Medicare fraud and was sentenced to twenty years in prison for unbundling surgical procedures

The surgeon assumed all advice on a list-serv from a certified list serv coder/consultant was correct. The coder/consultant was not even investigated

In Florida, a doctor was sentenced to 78 months in prison and ordered to pay $504,000 in restitution and forfeit an additional $705,000 after a jury found her guilty on all counts of an 89-count indictment, including 44 charges of health care fraud

The physician, who practiced dermatology, billed Medicare as if she performed highly complex surgical closure procedures when she actually only performed simple surgical stitches, or no procedure at all

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4/22/2009

Government Scrutiny

The government might enter into an agreement with the practitioner to pay fines and penalties, as well as to recover the overpayment from the provider

The government typically will offer the practitioner or medical group a “Corporate Integrity Agreement” (CIA) in which the practitioner or medical group is under federal government scrutiny for several years, in which a yearly audit is conducted by an uninterested third party approved by the government Another type of agreement might be a CCA or a Certificate of Compliance Agreement

If the practitioner or group has an error rate equal to or greater than 5% as a result of the audit, other penalties might apply

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Government Scrutiny

The factors that can be considered by OIG officials when deciding whether to issue a CCA or a CIA might include:
       

an assessment of whether the provider itself disclosed its alleged violations the amount of monetary damage inflicted upon federal health care programs whether success or liability is involved whether the organization is still an active participant in government health care programs, or is still engaged in the same line of business whether the alleged misconduct could, in fact, be repeated how far in the past the incident(s) may have occurred whether an acceptable compliance program is in place, and the willingness of a provider to certify its compliance, annually, to the OIG Any other pertinent circumstances

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4/22/2009

Audit Actions

Audits of billing practices result from the following four actions:
1. 1

2.

Random sampling: Many insurance carriers randomly audit approximately 10% of its providers on an ongoing basis Focused Medical Review: An insurance carrier chooses specific CPT codes to review in post payment audits
 

Statistics are run to determine a median number for each of these codes A provider who submits those codes in a volume greater than the mean may be audited

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Audit Actions

Audits of billing practices result from the following four actions (continued)
3. 3

4.

Complaints by staff: The False Claims Act encourages "whistleblowers" to turn in employers suspected of submitting false claims through rewards of 15% to 30% of the total amount recovered by the government Patient complaints: Medicare is required by law to investigate all complaints brought by Medicare beneficiaries

Many insurance carriers respond to patient complaints in the same manner

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4/22/2009

The Insurance Audit

An audit is:

Examination of medical records to:
   

Determine what procedure or service is performed If documentation is compliant Claim is correctly coded All charges captured

 

Many other performance components may be measured Insurance carriers conduct audits:
 

Validate that the service reported on the claim form is correctly reported Medical necessity is supported in the documentation

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The Insurance Audit

Insurance carrier will:

Contact provider in writing requesting records or site visit If participating physician must comply with audit pursuant to provider agreement Even if not part of network or participating, may be subject to claim review

Based on Federal and State Laws

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4/22/2009

The Insurance Audit

Sometimes a carrier will send the provider a letter several months before auditing making the provider aware that he/she is an “outlier” outlier

Warning to a provider to begin an internal review of his/her coding practices and documentation to ensure he/she can withstand carrier scrutiny If errors are found this gives the provider time to:
   

Make changes to documentation patterns Change coding patterns Self-disclose coding or billing errors Refund any overpayments to the insurance company

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Responding to the Audit Request
 

Should be well thought out, planned, and implemented Response depends on three factors
1. 1 2. 3.

Type of audit Scope of audit Duration of the audit

Some requests for an audit will be in the form of a letter requesting specific medical records and/or documentation for specific dates of service

You should also include any supporting documentation, such documentation as lab reports, radiology reports, etc., if it will help support the service provided

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Responding to the Audit Request

Many insurance auditors will make a site visit to the medical practice
  

The insurance carrier will request specific records typically by q p yp y y patient name and identification number They will request a quiet place to work, and access to the medical records Before you allow anyone access to your medical records; check their identification and authorization to the medical records An audit investigation might include your practice s sign in practice’s sign-in sheet, superbills or charge tickets, daily appointment schedules, or other supporting evidence the carrier requests

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True Story

An insurance company performed an analysis of a large group practice in a metropolitan area
  

They extrapolated data for a three-year period The carrier requested appointment records for the three-year period and did not request medical records The carrier analyzed the data (which took a year) and, based on the fact that some patients did not have appointments, the insurance carrier requested $3.2 million to be refunded This group of physicians manages many trauma cases and p performs p procedures referred from the ER
 

Of course they would not make appointments Many of the cases were inpatient hospital admissions and subsequent visits—would you expect the patient to make an appointment?

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4/22/2009

RECOVERY AUDITS

The purpose of an audit is to recover payments made to a practitioner, and to uncover:
  

Inappropriate billing Inappropriate Coding Lack of medical necessity Commercial/third party payer Medicare and Medicaid Comprehensive Error Rate Testing (CERT) Recovery Audit Contractors (RACs)

Many types of recovery audits exist:
   

25

Retrospective Audit

These notices should include the reason for the suspected overpayment(s) such as:
    

Compliance with coding requirements for evaluation and management services Surgical procedures and modifiers Documentation requirements Medical necessity supported by the diagnosis code If the insurance carrier disputes medical necessity or eligibility for reimbursement of procedures or services

The insurance carrier might request additional information, such as medical record documentation, to assist in making a determination

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4/22/2009

Focused Review

Focused medical review is an in-depth look at a specific area of the practitioner s practitioner’s coding or billing practices.

Typically this type of review requires the insurance carrier to use national statistics to identify a medical practice with high numbers of expensive procedures

It is vital that the  practitioner bill evaluation  and management services  based on the medical  complexity of the patient,  and report each service case  by case, based on  documentation and medical  necessity for the service  provided

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Government Audits

Medicare Fee for Service (FFS)
  

Number of payment systems Network of contractors Process 1.2 billion claims per year with over 1 million providers affected Process claims Make payments to health care providers in accordance to Medicare regulations Educate providers how to submit accurately claims that meet medical necessity guidelines Many times they pay claims without scrutinizing medical records

Medicare Contractors
   

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Government Audits

Centers for Medicare and Medicaid Services (CMS)

Conducts frequent audits

Ensure compliance with  Coding guidelines  Local carrier determinations (LCDs)  National carrier determinations  Coverage issues  Coding and billing patterns (utilization) Most common audits C Comprehensive E h i Error R t T ti Rate Testing  Recovery Audit Contractors  Audits based on utilization (Quality Improvement Organization (QIO)

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Comprehensive Error Rate Testing (CERT)

Primary goal of CMS—Pay it RIGHT!
 

Pay the right amount to the right provider for covered and app op a e y coded p ocedu es a d se ces appropriately-coded procedures and services Budget constraints limit the claim reviews contractor conducts

As part of its Improper Payments Information Act (IPIA) compliance efforts, and to help all Medicare FFS Contractors better focus review and education

CMS has established the Comprehensi e Error Rate Comprehensive Testing (CERT) program and Hospital Payment Monitoring Program (HPMP) to sample and review randomly claims submitted to Medicare

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4/22/2009

CERT Program
Comprehensive Error Rate Testing

Produces national, contractor-specific, and benefit category-specific paid claim error rates

Independent reviewers periodically review a random sample of claims I d d i i di ll i d l f l i identified as soon as they are accepted into the claims processing system Claims are followed through to their final disposition.

Paid claims are reviewed by the independent reviewers

Denied claims validated to ensure that the decision was appropriate

Project results in
   

National paid claims error rate Claims processing error rate Provider compliance rate Paid claims benefit specific error rate

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CERT Program

2008, CERT program utilized following methodology:

CERT randomly selecting sample of 129,875 claims submitted to Carriers/DMERCs/FIs during reporting period
  

 

HPMP randomly selecting sample of 39,841 acute care inpatient hospital discharges Requested medical records from the health care providers that submitted claims to be included in the sample Where medical records were submitted by provider, reviewing the claims in the sample and the associated medical records to see if the claims complied with Medicare coverage, coding, and billing rules, and, if not, assigning errors to the claims not Where medical records were not submitted by the provider, classifying the case as a “no documentation” claim and counting it as an error Sending providers overpayment letters/notices or making adjustments for claims that were overpaid or underpaid

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4/22/2009

Latest Data 2008 CERT Error Rate

2008 Error Rate
Overpayments Type of Contractor Carrier DMERC FI QIOs Total Dollars Paid $74.9B $9.9B $89.4B $102B Payment $3.2B $0.9B $1.2B $4B Rate 4.2% 8.9% 1.3% 4.0% Underpayments Payment $0.2B $0B $0.1B $0.5B Rate 0.3% 0.1% 0.2% 0.5% (Overpayments + Underpayments) Improper Payments $3.4B $0.9B $1.3B $4.6B Error Rates 4.5% 9.0% 1.5% 4.5%

All Medicare FFS

$276.2B

$9.3B

3.4%

$0.9B

0.3%

$10.2B

3.7%

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CERT Program

Purpose of error rate findings

Determine underlying reasons for claim errors and to adjust the CMS action plans to improve compliance in:
   

Coding Documentation Provider billing practices Payment

Tracking and reporting identifies trends and helps to implement corrective action for all Medicare FFS contractors

Assists with adjustment of contractors error rate reduction plans

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National Error Rate by Year
Year Total Dollars Paid Overpayments Payment Rate Underpayments Payment Rate Overpayments + Underpayments Improper Payments Rate

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 May 2008

$168.1 B $177.9 B $177.0 B $168.9 B $174.6 B $191.3 B $212.8 B $199.1 B $213.5 $213 5 B $234.1 B $246.8 B $276.2 B $276.2 B

$23.5B $20.6B $13.8B $14.0B $14.1B $14.4B $15.2B $20.5B $20.8B $20 8B $11.2 B $9.8 B $9.8 B $9.3 B

14.0% 11.6% 7.8% 8.3% 8.1% 7.5% 7.1% 10.3% 9.7% 9 7% 4.8% 4.0% 3.6% 3.4%

$0.3 B $0.3 B $1.2 B $0.5 B $2.3 B $2.4 B $1.9 B $0.9 B $0.9 $0 9 B $0.9 B $1.0 B $1.0 B $0.9 B

0.2% 0.2% 0.6% 0.3% 1.3% 1.3% 0.9% 0.5% 0.4% 0 4% 0.4% 0.4% 0.4% 0.3%

$23.8 B $20.9 B $14.9 B $14.5 B $16.4 B $16.8 B $17.1 B $12.7 B $21.7 $21 7 B $12.1 B $10.8 B $10.8 B $10.2 B

14.2% 11.8% 8.4% 8.6% 9.4% 8.8% 8.0% 6.4% 10.1% 10 1% 5.2% 4.4% 3.9% 3.7%

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CERT Example
 “A Carrier paid a physician $198.73 for an inpatient

consult, Current Procedural Terminology (CPT) 99255”

This Evaluation and Management service requires 3 of 3 key g q y components: a comprehensive history, a comprehensive examination and high complexity medical decision making.

 

The medical reviewer determined that the documentation supported the comprehensive history, a detailed examination and moderate complexity medical decision making The Th reviewer determined that the documentation i d t i d th t th d t ti supported the lower level code of 99253. This resulted in the claim recalculated amount of $100.24 and a $98.49 overpayment to the provider

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4/22/2009

THE RACs ARE BACK!!!

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Background RAC Legislation

Medicare Modernization Act
  

Three-year demonstration project Recover overpayments and identify underpayments Payment made on a contingency fee basis

Three states selected based on highest per capita Medicare utilization:
  

California Florida New York

+

South Carolina Massachusetts

Tax Relief and Health Care Act of 2006

Expanded to all states by 2010

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4/22/2009

Concerns from Office of Management and Budget (OMB)

10.8 billion in improper payments were made in 2007
 

Government taking a proactive approach to safeguard Medicare program CERT program produced error rates and estimates of improper payments to evaluate CMS contractors and program performance CMS uses error rate data to identify existing problems and target improvement efforts

Error Rate Reduction Plan (ERRP)  Identifies strategies to clarify CMS policies and implement new initiatives for reducing improper payments

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Medicare is Among the Top Three Federal Programs with Improper Payments

According to a January 2008 report by the GAO, Medicare is one of the top three federal programs with improper payments

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4/22/2009

Where did RACs find Overpayments?
Most overpayments were collected from inpatient hospital services for medical necessity and coding

Outpatient Hosp/IRF/SNF 14%

Incorrectly Coded 35%

Other 17% No/Insufficient Documentation 8%

DME 1% Physician/ Ambulance/ Lab/Other 1.5% Inpatient Hospital 84% Medically Unnecessary 40%

95% or more from Hospitals
SOURCE: RAC Data Warehouse, CMS presentation on 5/13/08

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Improper Payments Corrected by the RAC Demonstration—Cumulative through 3/27/08
RAC Overpayments Underpayments Collected Repaid
$266.1 $396.1 $317.8 $980.0 $1.3 $11.4 $12.7 $992.7 $4.3 $20.8 $12.7 $37.8 $0.0 $0.0 $0.0 $37.8

Total Improper Payments Corrected
$270.4 $416.9 $330.5 $1,017.8 $1.3 $11.4 $12.7 $ 1,030.5

Connolly HDI PRG Claim RAC Subtotal HMS DCS MSP RAC Subtotal Grand Total

Source: For Claim RACs, RAC invoice files and RAC Data Warehouse. For MSP RACs, Treasury Deposit Slips.

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4/22/2009

Selecting Claims

RACs choose issues to review based on data mining techniques, OIG & GAO reports, CERT reports, and the experience and knowledge of staff Two types of review  Automated (no medical record)  Complex (medical records) New Issues for review will be posted to RACs Web site RACs will be able to look back three years from the date the claim was paid

 

Could not review before 10/1/07

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Type of RAC Audits

Automated review – when the RAC is able to make an over/under payment determination without evaluating the medical record

Excessive unit audits – the RAC searches f claims for two or C for f more identical surgical procedures for the same beneficiary on the same day at the same hospital Incorrect discharge status code – the RAC reviews the full claims series for a given time and discovers the hospital had coded the beneficiary as going home; however, a second claims from another provider indicated the beneficiary was in fact transferred from the first hospital Duplicate services p

Complex review – when the RAC makes an over/under payment determination after evaluating the medical record

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4/22/2009

What RACs May Not Review:

Services provided under a program other than Medicare FFS (i.e., Medicare Advantage) Incorrect levels of evaluation and management services—however, RACs could review E/M services for duplicate payments, violation of global surgery rules, type of service, etc. Hospice and home health services Payments made to providers under a CMS demonstration Claims previously reviewed by another Medicare contractor Claims involving a potential fraud investigation Prepayment Review

    
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Question
“Will the Recovery Audit Contractors (RAC) review evaluation and management (E&M) services on p y physician claims under Part B?”
Answer:
Yes, the review of all evaluation and management (E & M) services will be allowed under the RAC program. The review of duplicate claims or E & M services that should be included in a global surgery were available for review during the RAC demonstration and will continue to be available for review. The review of the level of the visit of some E & M services was not included in the RAC demonstration. CMS will work closely with the y American Medical Association and the physician community prior to any reviews being completed regarding the level of the visit and will provide notice to the physician community before the RACs are allowed to begin reviews of evaluation and management (E & M) services and the level of the visit.

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4/22/2009

Overpayments Collected by Type of Error and Provider Type
 
Overpayments Collected By Error Type (NET OF APPEALS) – FY 2007 Inpatient Hospital and SNF Incorrectly Coded Med. Unnecessary No/Insufficient Doc Other Total Outpatient Hospital $ 123.8 m $ 106.5 m $ 29.6 m $ 44.8 m $ 304.7 m Physician Ambulance Lab, Other $ 4.8 m $ 0.2 m $ 0.2 m $ 7.1 m $ 12.3 m $ 2.2 m < $ 0.1 m < $ 0.1 m $ 1.2 m $ 3.5 m Durable Medical Equipment $ 4.7 m $ 0.0 m < $ 0.1 m $ 0.5 m $ 5.3 m Total Overpayments Collected $ 143.2 m $ 111.5 m $ 30.3 m $ 59.0 m $ 344.0 m

$ 7.6 m $ 4.8 m $ 0.4 m $ 5.4 m $ 18.2 m

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Improper Payments

Improper payments included:

312 million claims
 

Prepayment Post payment determination

   

Appeal rights through Medicare Appeals process 33.3% claims appealed overturned 96% overpayments collected 4% underpayments repaid

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4/22/2009

Improper Payments
  

RACs are able to review claims up to three years past the date of the initial payment RAC contractors responsible for independent audits RACs compensated on a contingency fee basis
 

Determined by the principal collection amount or amount paid back to the provider What happens if a provider appeals and wins?

Under the demonstration project, RACs were entitled to keep contingency fees if a denial was upheld at first stage of appeal, regardless of whether the provider won subsequent appeals Permanent Program-RACs return contingency fee

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RAC Errors by Provider Type

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4/22/2009

Identified Errors by Type

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Stop Work Order Lifted
 

CMS is continuing with permanent RAC program as of February 4, 2009 The national permanent RACs are:

  

Diversified Collection Services, Inc. of Livermore, California, in Region A, initially working in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island and New York CGI Technologies and Solutions, Inc. of Fairfax, Virginia, in Region B, initially working in Michigan, Indiana and Minnesota Connolly Consulting Associates, Inc. of Wilton, Connecticut, in Region C, initially working in South Carolina, Florida, Colorado and New Mexico Health Data Insights, Inc. of Las Vegas, Nevada, in Region D, initially working in Montana, Wyoming, North Dakota, South Dakota, Utah and Arizona

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4/22/2009

RACs are Permanent Implementation in stages over several months  Full implementation January 1, 2010  Will affect all providers nationally

  

Detect Collect Protect the Medicare Trust Fund

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RAC Schedule

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4/22/2009

Preparing for A RAC Audit
 

Be prepared:

If audited by RAC be prepared to appeal if claim can be defended Provider has right to discuss finding with RAC representatives Appeal RAC findings

If a dispute:
 

  

Obtain guidance from an attorney experienced in health care law prior to appeal Assign a point person to manage the appeals process and RAC request for records There are restrictions on sample size based on size of practice

55

Medical Record Limits
 

Number of medical records selected for RAC audit might depend on size of the medical practice or organization Under RAC permanent program there is a limit of medical records that may be requested based on:
Type Size of practice or facility. Record requests for physicians are:  Solo Practitioner: 10 medical records per 45 days  Partnership of 2-5 individuals: 20 medical records per 45 days p p y  Group of 6-15 individuals: 30 medical records per 45 days  Large Group (16+ individuals): 50 medical records per 45 days
 

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4/22/2009

Appealing Unfavorable Results

Medicare Appeals Process
    

Redetermination from Intermediary/carrier Reconsideration from Qualified Independent Contractor Administrative Law Judge appeal Medicare Department Appeals Board Federal District Court Appeal

57

Medicare Appeals Process

First Level: Redeterminations
  

Provider has 120 days from date of original claim determination to file an appeal Review is conducted by Medicare contractor within 60 days of receipt of request New requirements for improved notice or redeterminations
 

Includes specific reasons for the decision and p Summary of relevant clinical or scientific evidence used in making the decision

Minimum monetary threshold not required

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4/22/2009

Medicare Appeals Process

Second Level: Reconsiderations
   

Conducted by a Qualified Independent Contractor (QIC) Must be filed within 180 calendar days of receiving notice of redetermination decision QIC has 60 days to respond Must submit full presentation of evidence with rational for disagreement of first level redetermination
  

Cannot submit this information later All supporting evidence should be produced Evidence not submitted at this level might be excluded at subsequent levels

Minimum monetary threshold not required

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Medicare Appeals Process

Third Level: Administrative Law Judge Review

If at least $120.00 remains in controversy

Request can be made within 60 days of receipt of QIC reconsideration

Has, in the past, been handled through hearings at more than 140 Social Security offices around the country To compensate for the limited number of sites, the majority of hearings will be held with video conference video-conference equipment or by telephone

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Medicare Appeals Process

Fourth Level: Departmental Appeals Board Review
 

 

A dissatisfied party has  60 days to request a review of an ALJ decision The Th MAC (M di (Medicare A Appeals C l Council) review must b il) i t be completed  Within 90 days of receipt of a request, with some exceptions MAC is supposed to  Conduct the review, with only evidence in the record considered unless a new issue is raised on appeal The parties have no right to a hearing at the MAC level  May request an oral argument Generally, a MAC decision is  Prerequisite for proceeding with an appeal in federal court

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Medicare Appeals Process

Fifth Level: Federal District Court

If the provider or the patient is not satisfied with the council s council’s decision

Request for a hearing before a federal district court can be requested 60 days $1,220.00 (as of Jan. 1, 2009)

  

Request must be within

Amount of the appealed claim must exceed

Must hi M t hire an attorney t represent provider tt to t id

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Responding to A Commercial, Managed Care or Third Party Payer Audit

Tip #1

Review the provider contracts to determine how to respond to the refund request

Provider contracts should outline claim and utilization review process

Tip #2

If contract does not outline time frame for refund requests
 

Renegotiate contract to include an amendment setting a time limit insurance carrier h to request a refund i i has f d One "rule of thumb" for negotiation is that the carrier should have the same amount of time to recoup as you have to file the claim

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Responding to A Commercial, Managed Care or Third Party Payer Audit

Tip #3

Provider contracts should be reviewed for mention of "offset" provisions that allow carriers to deduct from future reimbursement

If such a clause exists, it may be wise to have it eliminated during your contract negotiations

Tip #4

If you are not a participating provider with the carrier requesting the refund and your state law does not h ti th f d d t t l d t have specific guidance

you may contest the request because you may not be contractually bound to abide by the carrier's claims and payment policy
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Responding to A Commercial, Managed Care or Third-Party Payer Audit

Tip #5  If the request for the refund was made within the appropriate time frame

The request must be investigated and if possible appealed.

Tip #6

Beneficial to review the patient’s policy and review the language for covered benefits and exclusions

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Responding to A Commercial, Managed Care or Third Party Payer Audit

Tip #7

For high cost procedures or services

Make sure there is documentation that benefits were verified prior to surgery, either in writing or with name, date, and time of phone verification If patient was not covered at the time of service, or the procedure is excluded from the patient's benefits, it is reasonable for the insurance carrier to recover payment from the provider and/or patient.

Tip #8

The request for a refund may be warranted if the carrier's post-payment audit found the procedure to be not medically necessary or billed incorrectly
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4/22/2009

Responding to A Commercial, Managed Care or Third Party Payer Audit

Tip #9

If procedure was medically necessary
 

A letter, including supporting documentation, should be sent to the carrier disputing the refund Practitioner has the right to question the plan’s clinical criteria used to determine medical necessity

Tip #10

If audited due to high volume or frequency of services or inappropriate or repeated use of procedure or service i i t t d f d i

Complete and accurate documentation is the best defense  Incomplete documentation will not provide the support required to defend a retrospective audit
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Responding to A Commercial, Managed Care or Third Party Payer Audit

Tip #11
 

HIPAA Privacy Rule requires physicians to only release "minimum necessary" when requested y q If carriers request for information exceeds the minimum necessary standard  The physician may inform the carrier of his or her position Other factors prompting the refund request might be issue  Carrier issues concerning the plan's credentialing/re-credentialing process  Request is tied to a problem identified by the government (i.e. the OIG (i e Work Plan, improper or duplicative billing; or inappropriate use of modifiers).  It is wise to create a mechanism within the practice to capture insurance carrier trends, or to track utilization review decisions through claim denials. 68

Tip #12

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4/22/2009

Responding to A Commercial, Managed Care or Third Party Payer Audit

Tip #13

Insurance carrier’s request for a refund should not be ignored

Although many states have enacted legislation limiting the time in which carriers can pursue refunds, such legislation may also place time limits for you to respond, as well as allow interest to be charged  It is imperative to familiarize yourself with your State’s Insurance Codes

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Responding to A Commercial, Managed Care or Third Party Payer Audit

Tip #14

If dispute cannot be resolved satisfactorily through the plan’s internal and external review processes

Further appeals through an arbitrator or the court may be required

Tip #15

Insurance carriers may refuse to withdraw their demand for repayment or refuse to settle the case on terms agreeable to th t the provider id

Dispute may go to arbitration if the provider agreement includes an arbitration clause in participation agreement  Otherwise litigation may be initiated
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4/22/2009

Responding to a CERT or RAC Audit

Whether RAC or CERT Audit:
    

Review the request and check the date you must respond If unable to respond by date requested, ask for an extension Inform the practitioner whose records are requested: he/she should be kept informed Know what records you will need to send along with supporting data Understand when to seek assistance from:  Practitioner  C Consultant lt t  Attorney  Other source

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Responding to a CERT or RAC Audit

TIP 1: Send in as much documentation as you have, keeping photocopies for yourself
 

 

Practices often forget to include information p g pertinent to a medical record Don’t just send a copy of the progress note for that day, forgetting that there was a flow sheet updated too, with a change of medication, or a review of systems update Perhaps the medical necessity for that test was documented in a prior note Do this even if the auditor doesn’t ask for the information

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Responding to a CERT or RAC Audit

TIP 2: Never, never, ever change any charts or records you submit
  

Auditors can spot an altered chart in a heartbeat p If you feel handwritten notes may be illegible, have a transcript typed, but make it exact Spelling mistakes [and other errors] have to stay

 

Send in both the handwritten note and typed dictation Make sure the typed note is signed

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Responding to a CERT or RAC Audit

TIP 3: Don't dally in sending back the records to the auditor
   

Typically you have a relatively short time frame of 30 days What if the auditor wants records that are harder to collect, such as hospital-based records? If you have to collect this kind of documentation, start working the day you get the audit letter Otherwise: If the auditor wants office-based records— Oh i h di ffi b d d and your records are well organized—collect, copy, and mail the files as soon as you have a chance to review them against what was billed

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Responding to a CERT or RAC Audit

TIP 4: Try to figure out what the auditor may be concerned about

Do the files requested share a date of service, a type of service, a diagnosis?

An example of a common audit target is excessive billing of higher-level E/M codes

 

This information could help you mount a more targeted and effective response A professional coder could also help spot these patterns

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Responding to a CERT or RAC Audit

TIP 5: Write a very thorough cover letter to accompany the files you send
 

Describe your practice, your practitioners, and their credentials Put each patient in full context. For each file, describe the condition the patient presented with that day, the ongoing care the patient was receiving, what procedures or services were performed, why, what the outcome was, and how the treatment or diagnostic testing was useful. If necessary, include patient information from previous visits Include expert opinions in an addendum and reference them. These sources can include other physicians, professional coders, position papers from national, state, and local associations, and journal articles. But make sure your sources are uniformly supportive of your position. Don't give the auditor any extra ammunition

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Responding to a CERT or RAC Audit
  

Tip #6 Send all documents certified mail (receipt required) Cover letter

Explain any unusual circumstances

Attach patient information in the order of the listing received

Don’t forget any addendums or additional documentation that will support the service reported

 

Keep an exact copy for your files! Contact the auditor who signed the audit letter if you have any questions or concerns

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Detecting Overpayments
   

Identified by physicians or beneficiaries Identified by review or hearing process Identified as a result of an investigation of customer complaints or random sample of billing practices Identified by federal agencies conducting audits

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Refunding Overpayments
 

If identified overpayments are required to be refunded

The provider is expected to issue a refund check to Medicare p p

If identified by Medicare, the provider receives a refund request letter
 

Provider has 30 days to refund After 30 days interest begins accruing and offset is initiated

 

Scheduling of repayments in excess of $1,000 may be requested Must send overpayment even during the appeals process

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Progressive Corrective Action
Corrective action based on results any CMS audit Minor Problem •Education of provider on appropriate billing procedure •Collection of overpayments •Further analysis at later date •Education of provider on appropriate billing procedure •Collection of overpayments •Initiation of pre-payment review until corrected •Education of provider on appropriate billing procedure •Collection of overpayments •Initiation of high level of pre-payment review and/or •Statistically valid random sample •Payment suspension •Referral to Fraud Department

Moderate Problem

Major Problem

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Prevention

How do you take a proactive approach and give your practice a “shot” of prevention?
 

A comprehensive Compliance Plan should be the foundation of every medical practice Perform compliance audits and continue to monitor problem areas so there are no surprises when any insurance carrier audits your claims

Not only should you audit claims data  Ensuring claims are submitted correctly with the correct dates of service
  

Correct practitioner Appropriate modifiers Correct procedures and diagnosis codes to support medical necessity

Education should be a staple in your medical practice following each and every internal audit

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Prevention Tips
1. 2.

3.

4.

Develop a correction plan when problems are identified. Hold regular education and information meetings for both clinical and administrative staff to keep everyone updated on new regulations, new carrier guidance, new coding rules, etc. so that everyone is fully informed Continue to monitor specific areas or compliance issues on an ongoing basis Keep track of audits: Conduct follow up meetings with provider and staff for compliance to support the medical practice’s efforts to report procedures and services correctly

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Prevention Tips-Continued
5.

6.

7.

Never stop improving the claims submission and audit processes in the medical practice. Review the processes each year and make improvements when necessary Consider at least once per year even if you have an auditor employed by the practice, hire an external coding auditor to audit the medical records to validate the medical practice’s improvement progress Remain on the alert and the defensive: Enforce disciplinary standards within the medical practice

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The Right 15 minute Conversation with your Provider

Have that Fifteen Minute Conversation with your Physician

Completing a coding audit accomplishes very little unless a serious effort is undertaken to fix the problems that are identified
 

Establishing an on-going reporting and feedback system to the provider is important If you don’t communicate audit results with identified solutions for fixing the problem, the provider will not know errors exist problem

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The Right 15 minute Conversation with your Provider

Keep in mind that the physician did not go to medical school to learn how to code and file insurance claims  In fact, most physicians received minimal or no training related to coding or billing in medical school

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CONCLUSION

It is critical for any provider of service to be aware that any audit by an insurance carrier is fraught with pitfalls, and can have serious repercussions not only in relation to his/her status with the insurance carrier, carrier but concerning the practitioners medical license possible civil license, liability exposure, and/or breach of confidentiality

Any inquiry by an insurance carrier, request for overpayment, and/or audit request should be treated very seriously
Continuous education of practitioners and staff is vital to maintaining the “health” of the practice. Reinforce the importance of correct coding. Consistently providing clear, accurate, and detailed documentation for every patient encounter is essential

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Questions and Discussion

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Websites to Watch
    

Office of the Inspector General: http://www.oig.hhs.gov Centers for Medicare and Medicaid Services (CMS): http://ww.cms.hhs.gov Recovery Audit Contractors: http://www.cms.hhs.gov/RAC CERT website: www.cert.org Comprehensive Error Rate Testing: http: www.cms.hhs.gov/CERT

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