Preparation is the key to staying ahead of the curve during RAC reviews
CMs can have major role in assuring records are accurate, complete
The more your hospital does up front to prepare for Medicare's Recovery Audit Contractor (RAC) program, the more money it will save in the long run, experts say.
"The health care industry has a tendency to take a 'wait-and-see' approach, but everyone who has done this with the RAC wishes they had been more proactive," says Brian Flood, CHC, CIG, Esq., advisory managing director for KPMG LLP's health care practice in Austin, TX. "Hospitals have a tremendous incentive to get organized in advance of the RAC reviews rather than waiting to see what happens. Catching up is really expensive," he adds.
Case managers can help their hospitals stay ahead of the curve as the RAC is rolled out nationwide by making sure they have an effective admissions process that includes evaluation to determine the appropriate level of care (inpatient, outpatient, and observation status) and by making certain that admission orders clearly state the level of care the patient requires with the time and date recorded, says Deborah Hale, CCS, president of Administrative Consultant Services LLC, a health care consulting firm based in Shawnee, OK.
"Hospitals do much better during the RAC appeals process if the documentation is there in the beginning," she says.
Overpayments often for medically unnecessary stays
The three-year RAC demonstration project in California, Florida, and New York reported nearly $1 billion in overpayments to hospitals, the largest percentage (40%) of which involved medically unnecessary stays, Hale says.
Another 35% were due to incorrect coding, she adds.
The Centers for Medicare & Medicaid Services (CMS) has announced that RACs can extrapolate their findings during their audits and multiply the error rate for a particular class of services to include every case in the service, Flood points out.
For instance, if the RACs find an error rate of 30% in the sample of records for a certain DRG, they can assume that the same percentage of errors occurred in that DRG throughout the entire system and reclaim reimbursement for every claim issued under that DRG, whether they review it or not.
"This makes it more imperative than ever that hospitals have accurate records and get organized up front. Since the RACs get paid only when they find an error, they are motivated to closely scrutinize the records," Flood says.
Having complete and accurate medical records in the first place is the best way to come out ahead on a RAC review, and that's where case managers can play a valuable role, Hale adds.
"Managing the doors to the hospital is the least resource-intensive and most effective method for ensuring that patients are in the right level of care," Hale says.
CMS postponed the rollout of the RAC program early this year due to legal issues but started back up in March.
Hospitals in the first states targeted for the audit were scheduled to receive the first RAC requests in June. Hospitals and other Medicare providers in all 50 states will be subject to RAC reviews by 2010.
What to do when you get a request
When your hospital gets its first request for files from the RACs, Flood recommends reviewing the files and determining the common MS-DRGs.
"The RACs mine deep, not broad and, once they identify a set of MS-DRGs, they are likely to concentrate on those. The quicker you determine what they're looking for in your specific hospital, the quicker you can get on top of it," he says.
The RACs are going to look at the same codes they looked at in the demonstration project, Flood says.
"They have to get approval from CMS for any new proposed activity, and that won't go through the approval process until 2010," he says.
The RACs are looking for improper payments that are made as a result of medically unnecessary services; noncovered services; incorrectly coded services, including MS-DRG miscoding; and duplicate services, Hale points out.
"During the demonstration project, RACs spent a lot of time and effort looking at inpatient claims. Medically unnecessary admissions made up a major part of the overpayments," Hale says.
Focus on one-day stays
Much of the focus was on one-day stays simply because a one-day stay is at the highest risk of being medically unnecessary, Hale adds.
Create an action plan to assure that patients are assessed for medical necessity in a cost-efficient and time-efficient manner, Hale suggests.
"Even 24 hours after admission can be too late. The admission of patients who don't meet medical necessity criteria may not be denied by the case manager as an unnecessary admission. Screening criteria may be used only to approve an admission," Hale says.
When the admitting physician orders an inpatient admission but the case doesn't meet inpatient criteria, case managers must then implement the utilization review process to obtain a UR physician decision about the medical necessity of the admission, based on Medicare's instructions on inpatient admissions as published in the first chapter of the Medicare Benefits Manual, Hale says.
Educate physicians
Educating the physicians about the medical decision-making process for determining level of care is key, Hale says.
Physicians do not need to memorize admission criteria. Instead, consider having case managers located in the areas of the hospital where the biggest categories of admissions occur.
For instance, if your hospital performs a lot of cardiovascular procedures, you might consider having a case manager work with the cardiac catheterization lab to help determine if the patient should be admitted as an inpatient.
Same-day surgery is another area of the hospital where problems with admission status occur, she points out.
Conduct a study to determine where the majority of cases that don't meet medical necessity are admitted and give that area the most attention, Hale suggests.
For instance, if it's the emergency department, have case managers screen admissions from that department if you aren't already doing it, she adds.
Since case managers typically don't staff the hospital 24 hours a day, consider training the nursing staff to alert the case manager or utilization review nurse if it appears that the patient isn't being admitted to the right level of care.
Hale recommends analyzing hospital data to identify physician practice patterns, including physicians with the most patients admitted in an inappropriate level of care. Then institute a performance improvement project to identify strategies for improvement and take action.
"Hospitals need to stop fighting a constant battle over admissions and level of care. Case managers spend a lot of time trying to fix levels of care after the admission. If they can ensure that patients are admitted in the appropriate status in the first place, they can spend their time more effectively and efficiently on other issues," she says.
Case managers should make sure that they are part of their hospital's committee that is coordinating the RAC process, Flood says.
"Case managers are needed to make sure that all the documentation is in order to support the hospital's position during the appeals process. Hospitals are still going to be experiencing denials if they don't have accurate documentation and don't clearly explain the reason they are appealing the RAC determination," he says.
During the RAC demonstration project, there were many examples of instances where the RACs attempted to recoup payment in direct violation of the Medicare Benefits Policy Manual, Hale says.
"The No. 1 best-defense strategy when the RACs begin their reviews for case managers is to know the rules and be knowledgeable about what Medicare really says about Medical necessity," Hale says.
This means familiarizing yourself with Medicare policies and source documents, she adds.
"One of the biggest problems with accurate medical necessity documentation is that hospital staff aren't familiar with Medicare policies and the source documents. You can read through it all and have a good level of understanding in less than an hour," Hale says.
The RAC organizations are required by CMS to employ coders and a medical director, but it's unlikely that they will be reviewing every file, Flood points out.
It's essential to have a plan that provides for review of the cases of patients entitled to Medicare or Medicaid by the members of the medical staff who serve as a utilization review committee, Hale says.
"With the increasing scrutiny by the RACs and other auditors, the utilization review committee should play an important role in assuring that patients are admitted in the most appropriate level of care," Hale says.
The utilization review plan must outline the procedure the hospital has instituted for reviewing medical necessity of admissions to the hospital, duration of stay, and professional services the patient receives, including drugs and biologicals, she says.
"Medicare Conditions of Participation require that the committee must include two practitioners with no financial interest or responsibility for the care of the patient being treated," Hale explains.
If the committee determines that an admission is not medically necessary, the hospital, the patient, and the practitioners responsible for the patient's care must receive written notification within two days, Hale adds.
(For more information, contact Deborah Hale, President, Administrative Consultant Services LLC, e-mail: [email protected]; and Brian Flood, CHC, CIG, Esq., Managing Director, KPMG LLP, e-mail: [email protected].)
The more your hospital does up front to prepare for Medicare's Recovery Audit Contractor (RAC) program, the more money it will save in the long run, experts say.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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