Prepare to reduce risk, consequences of RAC audit
Demonstration project expands to hospice
With more than $370 million in overpayments identified in fiscal year 2007 by auditors in the Recovery Audit Contractors (RAC) demonstration project, the Centers for Medicare & Medicaid Services (CMS) has determined the project a success and is making plans to expand the program beyond the three states in the demonstration project.
Hospice and home health managers have not had to worry about a RAC audit during the three-year demonstration project because the two types of organizations were excluded to simplify the administrative process for the project. This will change, however, as the program expands, says Peter Ashkenaz, CMS spokesman.
"We expect the RAC program to include home health and hospice organizations as it expands," he says. Although home health won't likely be included in the first part of the program expansion, it will be added as the four regional RACs are named and get their programs up and running, he says.
Expansion of the RAC program from the demonstration states of California, Texas, and Florida to all states will begin in late spring as the regional contractors are named, says Ashkenaz. The program will expand gradually until 2010 when the program is fully implemented, he says.
No one realized how intrusive this comprehensive oversight would be for providers, says Michael Manthei, Esq., partner with Holland & Knight, a Boston-based law firm. Organizations that have undergone RAC audits have had to re-task administrative staff, approve overtime, or hire part-time staff to help gather files and information for the initial audit or for the appeals, he explains.
"CMS plans to ease some of the administrative burden as it makes the program permanent, but ... agencies should build contingencies into their budgets to address potential expenses of RAC," suggests Manthei. "Make sure you are able to respond to an auditor's demands and handle appeals in a timely manner, and that may mean expense for additional staff."
The program will affect all suppliers and providers because CMS is driven by fiscal concerns, and leaving any group out of the program potentially could leave unrecovered funds, he says.
Contractors paid a percentage of funds
One of health care providers' main concerns about the RAC program is the method that is used to determine payment to the RAC firms, says Robert W. Markette Jr., partner, Gilliland and Markette, an Indianapolis-based law firm.
"Contractors are paid a percentage of the funds they recover," he explains. This means that auditors are likely to apply narrow interpretations of standards and requirements to claims in order to find reasons to improve the amount of funds recovered, he says. An auditor is looking for problems as opposed to just verifying accuracy of claims, he says. "If there are two possible interpretations of a standard with one interpretation leading to recovered funds and the other interpretation not leading to recovered funds, the auditor is more likely to choose the first interpretation," he explains.
Although there is an appeals process in place, the burden of proving the legitimacy of the initial claim falls to the agency, points out Markette. There is a narrow time frame for appeals, so be sure that someone in the agency is responsible for overseeing the process, he suggests. If you decide not to appeal the decision, you can negotiate a repayment plan, but act quickly, he warns.
"If you do not negotiate a repayment plan, CMS will deduct what is owed from future reimbursements," he explains. "Many ... agencies cannot survive if 100% of their Medicare payments are held for any length of time."
There are certain trends identified in the demonstration project that can help agencies avoid negative RAC findings, says Manthei:
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Make sure coding is accurate.
"The biggest problem in the claims that RAC auditors found was upcoding," says Manthei. "Make sure that your coding staff is well trained, and send them to continuing education courses to stay on top of changes in codes." Also, make sure your coding policies and procedures are clear and consistent, and review them regularly to ensure that they reflect changes, he adds.
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Document medical necessity.
Areas that have gotten RAC attention include physician orders for hospice care and medical necessity for a wide range of services including home health, says Beth Kresse, RHIA, CCS, manager of coding, quality review, and education for Care Communications, a Chicago-based health information management and revenue enhancement consulting company. "They are looking for physician orders and a justified diagnosis that meets medical necessity for the services," she adds.
Even if you have physician orders that indicate medical necessity for hospice care, if you have a patient who requires care for a longer period than is normal for the original diagnosis or for your region, be sure to document carefully, experts suggest.
Manthei says, "Documentation is critical for all claims, but especially if your physician orders something that makes the claim an outlier." In these cases, you should include as much documentation as possible to support the reasons for the physician order, even more than might normally be included, he adds.
You can't assume that a physician's order automatically will be considered proof of medical necessity, he adds.
Also, make sure your physicians' orders are in the appropriate charts, suggests Markette. "I've had cases of clients who were audited, and the physicians' orders were not in the files," he says. Even if your agency has paperwork that travels through different offices or departments, make sure that someone is verifying that all documents are in the files when claims are made, he says.
Also, be sure that you have a system to track the location of documentation so that you can find it quickly, he adds. "An auditor that can't find a physician's order in one file will assume that this is a mistake you make across the board and will include more claims in the audit," he says.
Another way to reduce your risk of a RAC audit is to carefully monitor or audit your own claims, says Markette. "An internal audit should be conducted on at least a quarterly basis," he says.
Examine clinical documentation, make sure signatures are present, make sure that medical necessity and verification of homebound status are clearly documented, and double-check coding, he recommends.
"If you find mistakes that are being made, you can take steps to correct the mistakes and prevent future mistakes through staff education," he says. "Self-audits can be time-consuming and add to staff expense, but the investment in self-audits is less than the bill CMS might hand an agency after a RAC audit."
Need More Information?
For more information about recovery audits, contact:
- Beth Kresse, RHIA, CCS, Manager of Coding, Quality Review, and Education, Care Communications, Chicago. E-mail: [email protected].
- Michael R. Manthei, Esq, Partner, Holland & Knight, 10 St. James Avenue, 11th Floor, Boston, MA 02116. Phone: (617) 523-2700. Fax: (617) 523-6850. E-mail: [email protected].
- Robert W. Markette Jr., Partner, Gilliland & Markette, 3905 Vincennes Road, Suite 204 Indianapolis, IN 46268. Phone: (317) 704-2400 or (800) 894-1243. Fax: (317) 704-2410. E-mail: [email protected].
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