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• Preparing for MIC Audits: An Operational Guide
– Thursday, Aug 13
– 2:00 – 3:00pm EDT
• WEB DEMO:
Compliance 360 Claims Auditor for RAC Audits
– Tuesday, Sept 1
– 2:00 – 3:00pm EDT
AR Systems, Inc
Training Library Presents
RAC ATTACK – A Guide to Successful Appeals
“To Appeal or not to Appeal”
I t t Day Egusquiza, P
D E i Pres
AR Systems, Inc
RAC –The Recovery Audit Contractor:
What’s a provider to do?
Where are we today? – powerful transmittals
Walking thru the process - defense and validation audits
Impact to departments –from letter to recoupment
How will the recoupments work – automated vs complex
Rebuttals with the RAC – prevent the denial
Tracking and trending
5 levels of appeal – decision points
Balancing moving forward as well as looking back
RAC –The Recovery Audit Contractor:
In the beginning……back in 2003
Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA), Section 306, directs the Secretary of the U.S.
Department of Health and Human Services (HHS) to demonstrate
the use of RACs under the Medicare Integrity Program in:
1) identifying underpayments and overpayments;
2) recouping overpayments under the Medicare program
(for services for which payment is made under Part A or Part B of
Title XVIII of the Social Security Act).
From MLN Matters Numbers SE0469 & SE0565 & SE0617
Purpose of RAC
The RAC program’s mission is to reduce Medicare
improper payments thru the efficient detection and
collection of overpayments, the identification of
underpayments and the implementation of actions that
will prevent further improper payments.
The identification f d
Th id tifi ti of underpayments and overpayments
t d t
and the recoupment of overpayments will occur for
claims paid under the Medicare program for services
which payment is made under part A or B of Title XVIII of
the Social Security Act.
Scope of Work/Statement of Work for the RAC
mber%2dcms040001cgs1/listing.htmd or CMS’s website
Section 302 of the Tax Relief & Health Care Act
of 2006 requires the Secretary of the Dept of
H&HS to utilize RACs under the Medicare
Integrity Program to identify underpayments and
overpayments and recoup overpayments under
the Medicare program for part A & B.
Although there was considerable discussion and
delay, the permanent RACs are slated to be
completely implemented by 2010.
(watch for more once live)
DRG re-coded to higher DRG
Transfer disposition on UB; however pt did
not return to skilled SNF days.
Missed charges when charges were
Mi d h h h
already present. If no charges were billed,
lost charges are not subject to
RACs are now compensated for
Permanent RACs announced 10-6-08
A/Northeast Diversified Collection Services, Inc of Livermore, CA
Contingency fee: 12.45% Ebony.email@example.com
B/Upper midwest CGI Technologies and Solutions, Inc of Fairfax, VA
Contingency fee: 12.50%
12 50% Scott.firstname.lastname@example.org
Scott wakefield@cms hhs gov
C/Lower western Connolly Consulting Associates, Inc of Wilton, CT
Contingency fee: 9% Amy.Reese@cms.hhs.gov
D/Northwest HealthDataInsights, Inc of Las Vegas, NV
Contingency fee: 9.45% Kathleen.Wallace@cms.hhs.gov
Rollout periods: Yellow states Summer 2009
Green states Summer 2009
Blue states Fall 2009
All states live no later than Jan , 2010 …
PS Don’t forget the Medicaid Integrity Program/MIP with 4 contractors…
MAC J6 & J8
Updated RAC Info
May 28, 2009
New demand letter sample provided.
Use discussion period with the RAC from
Results letter thru the 41st day of recoupment.
CMS anticipates the revised timeline:
RAC automated reviews – late June/July
RAC medical necessity complex reviews- early 2010
Other complex reviews – DRG and other coding
reviews – Fall 2009
Govt accting office/GOA is expected to complete its
analysis of RAC program in 11-09.
Email Updates 6-16-09
Cmdr Casey, RN,BSN, MPH
Deputy Director, Division Recovery Operations
Pt impact: Provider agreements demand that
the pt be refunded for any recouped Medicare
Record request: As of today, CMS is not moving
q y g
to the per tax ID. It will remain per NPI #.
Timely rebill: There is no ability to rebill as an
outpt medically necessary surgeries that are
denied as incorrect setting (Demonstration only)-
RAC/MAC Implementation Coordination
7. Implementation of the Permanent RAC Program (*)
CMS will gradually implement the RAC permanent program nationwide. Due to the
importance of protecting the Medicare Trust Funds, Congress included Section 302 in
TRHCA, which requires the Secretary to implement the RAC program throughout the country
by no later than January 1, 2010 (see Appendix B). CMS is undertaking a number of
initiatives to gradually implement the RAC permanent program.
CMS has also developed an effective strategy to ensure that the RAC permanent program
will not interfere with the transition from the old Medicare claims processing contractors to
the new Medicare claims processing contractors, called Medicare Administrative Contractors
(MACs). This strategy will allow the new MACs to focus on claims processing activities
before working with the RACs.
Generally, the RAC blackout period will be:
a. 3 months before a MAC begins processing claims for a given State
b. 3 months after a MAC begins processing claims for a given State.
Impacted states: South Carolina/yellow but same MAC as FI, so no delay;
New England/yellow but new MAC so delayed; Full blackout: Indiana, Michigan, Minnesota
(*) THE MEDICARE RECOVERY AUDIT CONTRACTOR (RAC) PROGRAM: An Evaluation of the
RAC/MAC Implementation Coordination
When your state goes live- live-
Outreach Education ( www/rac monitor.com 3--09)
Hospital association, RAC and CMS rep
will do state-specific education prior to
implementation. (RAC’s are forbidden by CMS to provide
education directly to providers)
Outline of issues:
No set dates yet; but likely that activity will begin in May 2009
Results will drive implementation dates
Create an ‘established black and white issues to begin with’.
Fuzzy on initial recoupments would be automated vs complex as
“New Issue” must be reviewed by CMS before the RAC can act.
Hot Spots for Audit that may result in
(Idea: Work toward preventing the
need for the appeal process)
When RAC identifies a potential vulnerability, they send
a sample of claims to be validated prior to moving
forward. The RAC validation process ensures the there
is a potential for an overpayment.
RAC identifies ‘issue’; sends to CMS central office for
review; to PRS auditor for 2nd opinion if needed
Also use Validation to ‘check’ on RAC accuracy.
NEW Validation Contractor: Provider Resources, Inc
of Erie, PA. (10-10-08 )
CMS sends a random sample of the RAC reviewed
claims to the CMS &/or RAC Validation contractor each
month w/an accuracy rate calculated.
RAC HealthDataInsights licenses
Milliman Care guidelines
“HDI has signed a 5 year license with Milliman Care
Guidelines. HCI will use the care guidelines content and
software to review Medicare claims.
HDI will use the annually updated evidence based care
id li d t
The Care Guidelines promote healthcare quality by
providing clinical guidelines based on the best available
CMS does not mandate or endorse any specific
guidelines or criteria for utilization review.”
Feb 25, 2009 “Evidence-based care guidelines will be used to combat waste in Medicare program.”
Medicare’s Inpt definition
Medicare benefit policy manual chpt 1 10
An inpatient is a person who has been admitted to a hospital for bed
occupancy for purposes of receiving inpatient hospital services. Generally, a
patient is considered an inpatient if formally admitted as inpatient with the
expectation that he or she will remain at least overnight and occupy a bed
even though it later develops that the patient can be discharged or
transferred to another hospital and not actually use a hospital bed
“However, the decision to admit a patient is a complex medical judgment
which can be made only after the physician has considered a number of
factors, including the patient's medical history and current medical needs,
the types of facilities available to inpatients and to outpatients, the hospital's
by-laws and admissions policies, and the relative appropriateness of
treatment in each setting. Factors to be considered when making the
decision to admit include such things as:
– The severity of the signs and symptoms exhibited by the patient;
– The medical predictability of something adverse happening to the
21 patient…” RAC2009
Catch 22…inpt medically
Look beyond meeting Interqual or Milliman criteria…
they are simply a great resource.
Physician – clearly outlines the severity of the
pt’s condition that requires the inpt stay.
q p y
Nursing – clearly documents the intensity of the
ongoing pt care
H&P and discharge summaries are not usually
required for less than 48 hr stays; however, they
are critical to help clarify the scope and course
of treatment the physician was thinking,
22 assessing and treating.
More RAC announcements
Each RAC will have their own
website/CMS will approve soon.
Clinical Screening Tools
R i A/DCS – Milli
Care G id li
Region B/CGI – InterQual Clinical Decision
Region C/Connolly – Milliman Care
Region D/HDI – Will use both Interqual &
23 Milliman RAC2009
High areas of Focus-Inpt
Top 10 diagnosis – 1 day stays vs
sort by physician, by observation vs just an
outpt in a bed!
PEPPER-1 & 3 day stays
Top DRGs from the 3
Short stays – less than 24
demonstration states hrs billed as a inpt.
Outlier inpt Inpt Rehab vs outpt rehab
3 day SNF qualifying MS-
MS-DRG = %MCC, %CC
Transfers that were Charge Master/Charge
billed as ‘discharges” Capture rules
More data mining
1 day stay high MSDRG551/552: Medical
vulnerabilities: PCI, pacemaker, syncope
MSDRG 829: Other
Create a report, from 10-07
metabolic OR Proc w/cc forward,
forward for all 1 day stays or zero
MSDRG373: major /short stays.
gastrointestinal disorder w/o Sort by physician, by payer (only
cc/mcc pull Medicare if appropriate
MSDRG313: chest pain sample size)
MSDRG 371: Major List all diagnosis & DRG
gastrointestinal disorder Couple with the PEPPER report.
w/mcc Look for patterns
Random auditing of high risk
More: 3 day SNF qualifying
Q: 3 day SNF deemed not medically necessary.
A: If the 3 day qualifying stay is determined to be medically unnecessary,
then there is no SNF Medicare benefit. A Medicare claims processing
contractor(FI/MAC) that denies the inpt hospital stay is not precluded from
also denying the SNF stay. At this time, if a RAC determines that a
reasonable and necessary 3 day stay did not exist prior to admission to the
P t A SNF stay, the RAC will d
t th ill deny th inpt admission and will i f
the i t d i i d ill inform th
FI/MAC that the subsequent SNF admission should also be denied. The
FI/MAC will then deny the SNF stay. (Cdr Casey, 2-14-09 reply)
“Retroing” orders to ‘admit from the beginning’ – started as OBS, then became
Inpt but not for 3 days.
Critical access hospitals have swing beds billed as SNF. Referring to
ER doc does not have admitting privileges. How is status determined for
Data Mining-Transfers & 3 day
3 day SNF qualifying Transfer vs discharge
stay: Identify list of discharges that
must be changed to transfer if
Discharge disposition 61 the pt is admitting to a SNF or
or 03 home health within 3 days post
Identify patterns with a discharge.
focus on: Internal process:
Inpt bills must hold for 3 days
Working with case mgt/UR,
Gastroenteritis identify ‘at risk’ patients upon
Chest pain discharge
Either call the pt (or the SNF/HH)
Fever on the 3rd day, prior to bill drop, to
Altered mental status determine final status.
High Vulnerability DRGs from
DRG MS-DRG Description
076 166, 167, 169 Other Resp System OR procedures w/CC
082 180, 181, 182 Respiratory Neoplasms
124 286, 287 Circulatory Disorder Except AMI, w/Card Cath &
143 313 Chest pain
148 329, 330,331 Major small & large bowel procedures w/cc
217 463, 463, 465 Wound debridement & skin grafts
243 551, 552 Medical back problems
263 573, 574, 575 Skin graft with debridement
397 813 Coagulation disorders
415 853, 854, 855 OR procedure for injection & parasite diseases
416 870, 871, 782 Septicemia
468 981, 982, 983 Extensive OR procedure unrelated to principal dx
475 207, 208 Respiratory System Dx w/ventilator support
477 987,988, 989 Non-extensive OR procedure unrelated to principal
More at risk areas
UR /case mgt aware of a discharge status but
not communicated to the individual
responsible for inputting discharge
p p g g
EX) 250 transfer DRGs that require 3 day post
discharge monitoring –if pt goes to SNF or HH
–must revise DD from ‘home’ to ‘transfer’
Who is the owner of DD, exactly?
Known ‘at risk’ areas
Charge master –
J codes with incorrect multipliers;
Reimbursement rules not known with charge
capture; (Ex: 92507/1 unit; Observation –
routine recovery prior to OBS)
59 modifier being applied when CPT codes
reject without the medical record or
knowledge of the CCI edit failures
CPT codes mismatched with Revenue Codes
And then there was OBS----Broken
Billing ‘hrs in a bed’ Outpt service vs OBS
vs medically bed.
necessary hrs. Drug administration
Routine Recovery y handoffs from ER –
must occur for 4-64- too many initial hrs.
hrs. Then evaluate UR is only working
OBS due to M-F, 8 hr days.
unplanned outcome Weekends? After
or exacerbation of a Hrs?
OBS audit ideas
ER to OBS – look for medical necessity as they leave
ER w/action oriented orders
OR to OBS – procedure with 4-6 hrs routine recovery
unplanned outcome/excerbation of a condition? place
an obs bed. Look at late case=risk
Direct to OBS – look at active physician orders when
the pt is placed in a bed vs ‘see them I make rounds.”
PS Don’t forget to look for lost charges too
Partners in reducing risk – Providers
At risk areas:
Physicians billing inpt visit with facility billing OBS
Physician’s documentation inadequate to support ‘severity of
y q pp y
illness’ = inpt
Physician’s share the same Tax ID # = higher risk to facility.
Physician’s E&M bell curve
Physician unclear on dx to support admit as inpt
Physician unaware of pt status: OBS, Inpt, Outpt in a bed and
order accordingly with support documentation to support medical
necessity in a bed. ….more …… 3 day SNF
High areas of Focus-Outpt
Modifiers – 59 CDM vs Outlier outpt claims &/or
E&M leveling – auditable MUE – override issue
criteria and bell curve analysis Self adm meds – 637,
Drug administration start & 259. (Collecting from pt?)
t ti 73/74 discontinued
E&M in hospital surgeries (same day)
based/provider based J dosage multiplier
clinics – earning an E&M when
done with a procedure, modifier 25 975xx/wound/facility vs
36430/blood transfusion & 11000-
ST/9250x (1 unit) only
Hospital based physicians Charge Master/Charge
34 capture rules
How will the RACs know what to
Claims history with MAC/FI
Known vulnerabilities identified by the OIG or GAO
Patterns identified outside the proprietary software
of the RAC
Identified patterns thru other auditing entities,
FI/MAC, QIO, PEPPER report, CERT
NOTE: Claims already in review, excluded data
base. Can review current fiscal year.
New List of issues compiled by CMS
Once the RAC is rolling
Historical findings will be posted in the
individual RAC websites
CMS will have findings on their website
N issues will b posted on th i di id l
ill be t d the individual
RAC websites as well as CMS website.
Accuracy rates will be published for the
RACs by 2010
Patterns should be closely evaluated with
corrective action completed internally
Audience Polling Question #1
Which of your departments has
primary responsibility for
managing RAC audits?
(please select only one answer)
Transmittal 152, June 12, 2009 CR 6384
Medicare Financial Management Chapter 4, Debt Collection
Use of the RAC data warehouse for tracking appeals.
Potential Fraud referrals – to CMS RAC Project Officer who will
forward to the CMS Division of Benefit Integrity Management
Dissemination of information between the RAC and MAC
More powerful transmittals
Transmittal 47, Interpretive Guidelines for
Hospitals June 5, 2009
“All entries in the medical record must be complete. Defined by:
sufficient info to identify the pt; support the dx/condition; justify the
care, treatment, and services; document the course and results of
care, treatment and services and promote continuity of care among
“All entries must be dated, timed and authenticated, in written or
electronic format, by the person responsible for providing or
evaluating the service provided.”
“All entries must be legible. Orders, progress notes, nursing
notes, or other entries …..
More Transmittal 47
“Timing establishes when an order was given, when an activity happened or
when an activity is to take place. Timing and dating establishes a baseline
for future actions or assessments and establishes a timeline of events. (71
“Where an electronic medical record is used, the hospital must demonstrate
how it prevents alterations of record entries after they have been
“When a practitioner is using a pre-printed order set, the ordering
practitioner may be in compliance with the requirement to date, time, and
authenticate an order is the practitioner accomplishes the following:
Last page: sign, date, and time the last page of the orders, with the last page
also identifying the total number of pages. (more)
A system of ‘auto authentication’ in which a physician authenticates an entry that
he or she cannot review, e.g. because it has not yet been transcribed, or the
electronic entry cannot be displayed, not meeting standard. There must be a
method of determining that the practitioner did, in fact, authenticate the entry….
Medical Record Limits
Inpt hospital, IRF, SNF, Physicians
10% of aver monthly Medicare Solo: 10 per 45 days
claims (max of 200 ) per 45 2-5: 20 per 45 days
6-15: 30 per 45 days
Other Part A billers (outpt
hospital, HH) Large grp 16+: 50 per 45
1% of aver monthly Medicare days
services (max of 200) per 45 Other Part B (DME,
PENDING FINAL: Move from 200
per NPI # to 200 per TAX ID # 1% of aver monthly
Medicare Services per 45
Office of Financial Mgt, 10-08 Update
Summary: Review & Collection Process
1 Automated Review
Review RAC makes a
Issue claim The Collection Process
Posted to determination 3 4
RAC’s Day 1
website RAC issues
Remittance Day 41
(includes $$$ Carrier/FI/
and appeal MAC
From Cmdr Casey, RN, CMS
N432: rights) recoups
Complex Review 10
based on a
7 • Recoupment
6 9 Recovery ACCRUE
Audit” AFTER 30 will NOT
New RAC 8 RAC clinician RAC issues
DAYS FROM occur if:
Complex issues reviews Review Results
Provider DETERMINAT provider
Review Medical medical Letter
submits ION has paid in
Issue Record records; to provider
medical full; or
Posted to Request (does NOT
records makes a claim provider
RAC’s Letter include $$$ or
Website to provider determination appeal rights) filed an
• Provider has 45 + 10 • RAC has 60
calendar days to calendar days If no
respond from receipt of findings
medical record to STOP
• Providers may
request an extension send the Review
43 Results Letter
• Claim is denied if no
RAC Project Plan
Example of how the RACs must communicate with CMS
Project plans shall be for the base year with new issues
being added as they are identified.
Detailed quarterly projection by ‘vulnerability’ issue (e.g
excisional debridement) including: a) incorrect procedure
code and correct procedure code; b) type of review
(automated, complex, extrapolation); c) type of
vulnerability (medical necessity, incorrect coding…)
Provider outreach educational plan to all stakeholders
RACs will not conduct E&M physician claims nor review
Hospice or Home Health claims (until 3-08 or later)
How to conduct a Validation
Immediately pre-audit any request for records or
Automated recoupment notice. Involve all clinical areas
impacted; physician if necessary.
Identify any weaknesses and immediately begin an
Involve compliance, create a recorded history of all
Anticipate at risk from the validation audit.
Build internal flags on all accts where medical record
Wait to see if any further action. A Review Results letter
should be sent within 60 calendar days.
Inpt vs Outpt Validation
Inpt: paid per DRG or per diem/critical
access. Audit against this payment
method. Look at outliers as higher
risk better payment.
Outpt: paid per line item/APC or a % of
billed charges/Critical Access
The validation audit: record against
itemized against UB = Outpt.
RAC Process (per HDI outreach )
Automated RAC makes a
RAC decides CMS New Issue Approval Process
whether medical New Issues posted to HDI
records are required provider website once CMS-approved
to make (may request records for new
determinations issue process – not posted to web site)
RAC issues Review
RAC has up to provider
Complex RAC Provider has 45
to 60 days to RAC makes (does NOT
requests days plus 10
YES medical calendar days mail
review a claim communicate
Review medical determination improper amount or
records time to submit.
records appeal rights
adjusts & issues
RAC sends RAC issues Demand On Day 41,
claim info to Letter which includes Carrier/FI/MAC recoups
Advice (RA) to
amount and appeal by offset.
Complex Review Discussion Period
Provider can pay by check by day 30 or request
Provider early recoupment from MAC to avoid interest.
MAC Provider can appeal by day 120. Appeal by day
48 30 will hold recoupment although interest is
charged unless outcome is provider favor. 48
Automated vs Complex
Automated = Ex) units, discharge
disposition/transfer DRG, outpt claims = fail the
‘reasonableness’ test or other edits= letter
issued of take back. Medical records can be
submitted to clarify/15 days or appeal.
Complex = Ex) medical necessity, 1 day stays,
obs, incorrect coding,3 day qualifying stay,
correct setting = letter requesting records.
Determination made upon receipt of records.
RAC FAQ #7723
Under what circumstances can a RAC make a
overpayment or underpayment determination
without a medical record?
A: RACS may use automated review (where NO medical record is
involved in the review) ONLY in situations where there is certainty
that the claim contains an overpayment. Automated reviews must:
A) Have a clear policy that serves as the basis for the overpayment
(clear policy mandates a statute, regulation, NCD, coverage
provision in an interpretive manual, or LCD that specifies the
circumstances under which a service will ALWAYS be considered
B) Be based on a medically unbelievable service or
C) Occur when no timely response is received in response to a
medical record request.
More on automated requests
Q: Is there any limit on the # of the
recoupments that can occur with
A: There is no limitation on the number of
automated recoupments. However, RAC
are required to develop processes to
minimize provider burden to the greatest
extend possible. (RAC SOW pg 6, Cdr Casey 2-14-
Automated Recoupments = no
request for records occurs
835/remittance must be watched closely
RAC adjustment code will be used for a)
overpayments b) underpayments c) interest
applied, d) interest paid. No separate codes
at this time.
Since no records are requested, the Demand
Letter will be the first notice of a potential
What will the pt impact be?
If the inpt is denied, the pt (and Medigap supplements)
will be informed they don’t owe the inpt deductible.
Refund to pt and/or supplement or auto recoupment.
If the facility determines they would like to do a corrected
claim submission once a decision is made not to appeal
– the pt will receive notice they owe a new outpt
If the outpt claim is denied payment, the pt will be
informed they don’t owe the outpt portion.
HINT: Develop scripts for the PFS staff to explain.
NOTE –all activity/recoupments can go back 3 years
beginning with 10-1-07 PD dates.
Sample letter communication
As part of ABC hospital’s commitment to compliance, we are
continuously auditing to ensure accuracy and adherence to the
On (date), Medicare and ABC hospital had a dispute regarding your
(type of service) Medicare has determined to taken back the
payment and therefore, we will be refunding your payment of $ (or
indicate if the supplemental insurance will be refunded.)
If you have any questions, please call our Medicare specialist,
Susan Jones, at 1 -800-happy hospital. We apologize for any
confusion this may have caused.
Thank you for allowing ABC hospital to serve your health care
Safety Nets for Pt Impact
Immediately upon receipt of the
Automated recoupment Or Complex
request notice – stop statements within the
main IT system
Ensure there is an unique flag created to
allow tracking and trending the status of
any activity within the main IT system.
This does not preclude a separate system.
Business Office/PFS If inpt denial, monitor for
Create flag for each acct medigap supplemental
impacted by RAC letter If inpt denial, monitor and
execute supplemental refund
Special Adj codes for interest
recoupment or payment If an outpt denial/OBS, monitor
for ancillary CPTs that are
Flag if acct is involved in a
takeback. Appeal filed?
Prepare letter to send to pt if
Create tracking tool for acct to
denials as there will be an
watch for take back. Special
impact to the pt. Defuse!
adjustment code for tracking
and trending. Prepare scripts for the BO to
explain EOBs received from
If inpt denial, rebill part B outpt Medicare.
ancillary only. New Co- Co- Closely coordinate with RAC
insurance due from pt. specialist.
Requests for medical Part of RAC Attack team
records. Expand UR coverage to
Ensure FULL record is 24/7 thru quasi-UR.
identified /found Identify ‘at risk’ d/c that
Validation audit may result in transfer/72
coordinated prior to hrs
submission Identify 3 day qualifying
Coordinate w/RAC at risk and coordinate
Specialist to ensure ‘skilled’ dialogue
returned within 45 days Continue training lrdship
Step1:The Request for Records letter used
on Complex/Medical Necessity Reviews
Immediately flag the account within the main IT system.
Stop monthly statements, create an internal flag for
reports, tracking and trending, pending recoupments.
Create the 45 day threshold for monitoring
Pull together th appropriate audit team to pre-audit all
P ll t th the i t dit t t pre- dit ll
requests prior to returning. VALIDATION PROCESS
Assess potential risk
Determine go forward plan as well as look back plan
Determine if additional independent work should be done, rebill a
corrected billing, conduct internal training to prevent any further
risk. Cost and impact of any rebills should be known.
Watch for the Review Results within 60 days of receipt of
58 records. RAC2009
Huge Risk with Medical Records
Why I hate electronic medical records?
Little tongue in cheek, but common issues
found when performing audits:
EMR has the ancillary information but nursing is online in a
Only certain departments are live on the EMR. Others are still
hardcopy and/or are delayed in implementation.
Even the EMR departments are still doing hardcopy
documentation. Being scanned in later?
HYBIRD record – run for cover!!
As requests are received, ensure the ENTIRE medical record is
pre-audited prior to submission with action items identified.
More on medical record risk
Hybird record = part of the pt history is electronic, part is
Did every department go live with the EMR on the same
Risk with lost revenue as well as documentation
Handoffs become a problem – drug administration,
recovery, ER to another pt status.
Electronic Audit Sample Nightmare-multiple systems.
Ibex (ER System only)
Quadramed CPR (once they are moved from ER to a floor)
Siemens Imaging system (for those records that are still
handwritten and not documented in a system)
Step 2: Results of Review Letter
Letter is received that indicates the results
of all requests for records.
Letter does not indicate amt of
recoupment – just the results and the
expectation of the demand letter.
Demand letter is from CMS that funds are
There is a 15-41 day rebuttal period to
‘chat’ with the RAC…
The 15-41 days are included in the 30
days to file the 1st level of appeal or
recoupment will occur on the 41st day.
Medical unnecessary service= excessive
units = 2 36430/blood transfusion. Can
only have 1 per day
Medically unnecessary setting = had as an
inpt, should have been an outpt.
Update on N432-RAC
Queried Cdr Casey if there were different codes to
separate different activity that could be represented by N
Reply: There is one code for both underpayments and
overpayments. (? Interest) 2-14-09
PS: N102 or 56900 is used to recoup when no records
were sent. (SOW pg 20) 20)
What to do if the inpt is denied?
RAC FAQ #9462
11-6-08 communication with Commander Casey, RN-CMS RN-
Q: If the inpt stay is denied, can the facility bill the outpt
ancillary services as an outpt claim?
A: Providers can rebill the claims as an outpt as long as
timely filing requirement are still met The timely filing
requirements were waived during the demonstration
program. However, CMS has no authority to waive the
timely filing requirements in the national program.
Timely filing: Transmittal 1818, 8-29-2003
New claims: Services dated Jan thru Sept = Dec 31st of the following
calendar year. Services dated Oct –Dec = Dec 31st two years later.
RAC FAQ # 9462
If I receive a demand letter from RAC because an inpt
did not meet inpt criteria, can I rebill all the services as
Providers can re-bill for inpt Part B services, also known
as ancillary services but only for the services on the list
in the benefit policy manual. That list can be found in Ch
6, Section 10:
billing for any service will only be allowed if all claim processing
rules and claim timeliness rules are met. There are no exceptions to
the rules in the national program. The time limit for re-billing is 15-
27 months from the date of service. Timely can be found in Claims’
Processing Manual, Chapter 1, Section 70.
Can the False Claims Act
If the RACs find ‘reckless disregard for the
law’, referrals can be made to the
appropriate agency –starting with the FI.
The FI can investigate further and refer for
And the story continues.
NO HEAD IN THE SAND!!
Audience Polling Question #2
What are your greatest
challenges to managing
(please check all that apply)
CMS Claim’s Review Entities
Roles of Various Medicare Improper Payment Reviews
Timothy Hill, CFO , Dir of Office on Financial Mgt
Entity Type of How selected Volume of Purpose of
claims claims review
QIO Inpt hospital All claims where Very small To prevent improper
hospital submits an payment thru
adj claim for a higher upcoding.
DRG. To resolve disputes
Expedited coverage between bene and
review requested by hospital
CERT All Randomly Small To measure improper
MAC All Targeted Depends on # of To prevent future
claims with improper improper payments
RAC All Targeted Depends on the # of To detect and correct
claims with improper past improper
PSC All Targeted Depends on the # of To identify potential
potential fraud claims fraud
OIG All Targeted Depends on the # of To identify Fraud
potential fraud claims
Q: Will the Recovery Audit Contractors
(RAC) appeal process mirror the regular
Medicare appeal process?
A: The Medicare appeals process will remain th same f
A Th M di l ill i the for
physicians under Part B and Part A non-inpatient
claims. The only difference under Part A is for the
inpatient hospital claims under the Prospective Payment
System (PPS). In the current appeals process, the first
level appeal will go to the Quality Improvement
Organization (QIO); however, the RAC appeals will go
to the Fiscal Intermediary that processed the claim.
Who are the Original Medicare
Qualified Independent Contractors/QIC?
Part A East: Maximus, Inc
Part A West: Maximus, Inc (as of 12-08)
Part B North: First Coast Services, Inc
Part B South: Q2 Administrators, LLC
DME: Rivertrust Solutions, Inc
New Appeal Transmittal
Transmittal 1762, CR 6377 July 2, 2009
Glossary of terms
All appeals are on behalf of the beneficiary. “A provider or supplier
may represent that beneficiary on the beneficiary s behalf No fee
beneficiary’s behalf. fee.
CMS can assign liability to the pt if they ‘should have known’ non-
“When an appellant requests a reconsideration with a QIC (level 2),
the contractor (MAC/FI) must prepare and forward the case file to
the QIC. “
Letter format for appeals
Elements of each level of appeal
Now you have the RAC letter..
Review results of the initial validation review.
Involve physician if necessary to assist in developing an
If no appeal is appropriate, flag the account for
recoupment and monitor
Prepare a letter to send to the pt; watch for Medigap
recoupment &/or refunds
Determine rebilling potential for lesser services.
Determine the value of using the informal 15-41 day
Timeline for Appeal Process
Type of appeal Provider timeline Determination by Decision
within… Timeline within.
Redetermination 120 days from initial FI, Carrier or MAC 60 days of receipt
Reconsideration 180 days from the QIC 60 days of receipt
Hearing by the ALJ
g y 60 days from the
y ALJ 90 days of receipt
Balance at least
Board of Medicare 60 days from the Board of appeals 90 days of receipt
Appeals Council ALJ’s decision
Judicial Review in 60 days from the US Court Normal legal/court
US district court Council’s decision; process
at least $1180
Transmittal 141, CR 6183
Section 935/Medicare Modernization Act, 2003
“Limitation on Recoupment”
Overpayments that are subject to
limitations on recoupment – appeals will
suspend the recoupment.
Post-pay denials of claim under Part A and Part B
MSP duplicate payment
Both have demand letters
Medicare will resume overpayment recoveries WITH INTEREST if
the Medicare overpayment decision is upheld in the appeals
www.cms.hhs.gov/transmittals/downloads/R141FM.pdf. MN 6183
is also available at this website. 9-12-08
NEW Transmittal 141, CR 6183, 9-12-08
“Limitation on Recoupment (935) “
If the facility decides to appeal a RAC
determination-understand the process:
If an appeal is filed within 30 days, the MAC/FI will not take back the funds.
(Take back is immediate and will occur within 41 days of notice if no appeal.)
However, while the facility is going thru the numerous Medicare steps of appeal,
, y g g p pp ,
interest will accrue on the amount that is being disputed.
If the overpayment dispute is overturned at any level of the appeal process, the
interest will be removed.
If the overpayment dispute is not overturned, then the interest is left on the
The overpayment take back will include the interest.
There is an incentive to only appeal the determinations where there is a good
reason to believe it will be overturned. “Punished’ for appealing all.
When Can Recoupments Occur
Options: If level 2/reconsideration
If no formal (1st
level) is upheld, recoupment will
appeal is filed within 30 occur prior to ALJ
days of the recoupment decision.
notice the recoupment If a date for appeal is
will occur on the 41st day. missed, recoupment
1st level = 120 days to process begins.
file. But if not done in 30 Interest will either be
days, eligible for charged against or added
recoupment. to the acct – depending..
Impact of Transmittal 141
Without filing an appeal With a timely appeal
1) Recoupment in 41 days 1) Timely = 120 days/redetermination
Recoupment will occur on the 41st day,
but the appeal can still be filed
2) Timely = 30 days/redetermination
from de a d letter will stop t e
o demand ette the
recoupment from occurring on the 41st
3) Timely for level 2 = 180 days
4) Timely for level 2 to stop
recoupment = 60 days from level
What about that Interest?
Penalty-If an appeal Recoupment occurs
is filed to stop the but money is returned
recoupment, interest after additional levels
accrues every 30 of appeal are
days until completed.
recoupment. If Interest is paid to the
overturned, no provider if
penalty will be recoupment is
assessed. overturned. Each 30
Average rate 11.00% day period. (CR 6183)
RAC Review Process
SEND RAC APPEAL LETTER VIA
CERTIFIED, REGISTERED PRIORITY MAIL
(3 BUSINESS DAY RECEIPT)
RAC PROCESS BEGINS AT FACILITY RAC ANSWER DUE BACK
Get in Mail by Jan 30th
Receive RAC Letter - Jan 4th FIRST DRAFT TO FACILITY
Request Medical Record RAC Apr 4-10th
Receive Copied Chart
from Medical Records
W/E W/E W/E W/E W/E MONTH W/E W/E W/E
W/E Jan W/E W/E Jan W/E W/E Feb Feb Feb OF APR APR APR
Dec 28th Jan 4th Jan 7th Jan 8th 11th Jan 14th Jan 21st 28th Feb 1st Feb 8th 15th 21st 28th MARCH 4th 11th 18th
RAC APPEAL DUE RAC APPEAL LETTER
RAC NOTIFICATION DUE 15 DAYS WITH IN 45 DAYS ANSWER DUE BACK
RAC LETTER SENT OUT TO FACILITY
FROM LETTER DATE
Feb 10th is RAC due date
Letter dated December 27th Jan 11th - Fax RAC Notification (45 days from Letter Date) Apr 4-10th - 60 days from
Appeal due within 45 days letter of Appeal "Appeal received by RAC"
Begin Chart Coding & Medical Necessity
Review; RAC REVIEWS APPEAL LETTER
AND SUPPORTING DOCUMENTS
Input From Utilization Nursing, Nurse Auditors,
Medical Records, HIM
Timeframe for Medicare Recoupment
Process after the first demand letter
Transmittal 141, CR 6183
Timeframe Medicare Contractor Provider
Day 1 Date of demand letter (date Provider receives notification by
demand letter mailed) first class mail of overpayment
Day 1-15-41 Day 15 deadline for rebuttal Provider must submit a
request. (w/RAC) No statement within 15 days from
recoupment occurs the date of the demand letter
Day 1-40 No recoupment occurs Provider can appeal and
potentially limit recoupment from
Day 41 Recoupment begins Provider can appeal and
potentially stop recoupment.
Send ALL medical records for Redetermination level of appeal
Entire medical record reviewed
Medicare Redetermination Notice (MRN)
Summary of the Facts:
- Specific claim information
Explanation of the Decision:
- Most important element of the MRN
- Provides the logic for CMS-FI decision.
What to Include in your Request for an Independent Appeal:
CMS-FI provides a list of documentation needed to make a decision
for next level of Appeal.
RAC Appeal Guidelines
May use CMS-20027 (Redetermination
Request Form) or
Send letter on provider letterhead
~ RAC determination letter
~ Detail page specific to claim
~ Any additional supporting information
Send to FI
3 Potential Outcomes with
Full reversal of the overpayment decision.(If
the recoupment had already occurred, verify no other
outstanding debt, then repay.)
Partial reversal = the debt is reduced below
th initial stated amt. FI/MAC will recalculate the
the i iti l t t d t ill l l t th
correct amt. Letter will indicate same. Recoupment of
remaining debt may start no earlier than 61 days from
the date of the revised overpayment determination.
Full Affirmation of the Overpayment decision.
CMS will issue 2nd or 3rd demand letter which will state
begin recoupment on 61st day unless QIC notice of
reconsideration appeal filed.
2007 History of
186 M claims Redeterminations
furnished by Dispositions:
hospitals, SNF, HH Part A: 45%
and other providers. unfavorable, 5%
14.5 M were denied partial, 50% favorable
FI/MAC did appx Part B: 37%
240,000 Part A unfavorable, 3%
redeterminations= partial, 60%
1.7% of these denials favorable.
resulted in an appeal. Not all were RAC/Unable to
Next steps for Recoupment
Timeframe Medicare Contractor Provider
Day 60 following revised Date reconsideration Provider must pay
notice of overpayment request is stamped in overpayment or must
following redetermination Mailroom or payment
Mailroom, have submitted request
received from the for 2nd level of appeal to
revised overpayment stop the recoupment
Day 61-75 Recoupment could begin Provider appeals or pays
on the 61st day
Day 76 Recoupment begins or Provider can still appeal.
resumes Recoupment stops on
date of receipt of appeal.
How to file a Reconsideration
Written appeal request If the form is not used,
sent to QIC within 180 a written request must
days of receipt of the
contain all the following:
redetermination. (To stop
Bene’s HIC #
Follow instructions on Specific service & items for which the
Medicare reconsideration is requested and
Redetermination Notice specific dates of service
Name and signature of party
Name of the contractor that made the
Use standard form CMS-
20033. Clearly state why you disagree with
Form is mailed with the
3 Potential Outcomes with
Full reversal – same as redeterminations
Partial reversal – this reduces the
overpayment. QIC issue a revised demand letter
or make appropriate p y
pp p payments if due of an
underpayment amt. Recoupment will begin on
the 30th day from the date of the notice of the
Affirmation – recoupment may resume on the
30th calendar after the date of the notice of the
2007 Reconsideration History
QIC (Qualified Reconsideration
Contractors) Part A: 79%
processed appox unfavorable, 3%
400,000 appeals in partial, 18%
DME is separate. Part B: 64%
Not all were unfavorable, 5%
RAC/unable to partial, 31%
And then there was
ALJ/Administrative Law Judge
Medicare contractors can initiate (or resume)
recoupment immediately upon receipt of the QIC’s
decision or dismissal notice regardless of subsequent
appeal to the ALJ (3rd level of appeal) and all further
If the ALJ level process reverses the Medicare
overpayment determination, Medicare will refund both
principal and interest collected + pay interest on any
recouped funds that may kept from ongoing Medicare
If other outstanding debts, interest is applied against
those first before payment to the provider is made.
Can add up same issue items and fill jointly.
Contingency Fee Rules
RAC must payback the contingency fee if
the claim was overturned at…
Demonstration RAC first level of appeal
Permanent RAC any level of appeal
RAC ATTACK Rollout
Create tracking and trending tool.
Track all requests – look for patterns as to why
the request was sent.
Track all recoupments with reasons. Implement
physician & nursing documentation training;
CDM changes; Dept head ed on charge
capture/billable services; coding ed,ed,
continued inhouse defense auditing.
Determine best practices for TNT..
Develop corrective action w/immediate
implementation. This is not optional!
Tools for Success
Look at a tracking tool
Continue to learn from other states as the roll
out to 2010 is completed.
Watch for ongoing education from CMS
Look for trends identified from auditing and data
Internally audit, train – audit, train some more
Explore creation of a RAC Specialist-the most
detailed person in the revenue cycle!
Audience Polling Question #3
Please describe your current
state of preparation for
managing RAC Audits.
(please select only one answer)
First Level of Appeal
WHO: Carried out by the FI
USING: Form CMS 20027
HOW: Send request to MAC/FI
TIME: 120 days from initial decision
~ No minimum amount in controversy
RESULTS: Review must be completed in 60 days
Attention: Part A Appeals
Check with your FI for correct address
Second Level of Appeal
WHO: Carried out by the QIC/qualified indpt
USING: Form CMS 20033
HOW: Request sent to QIC
TIME: 180 days from the date of
~ No minimum amount in controversy
Review must be completed in 60 days
Third Level of Appeal
WHO: Administrative Law Judge (ALJ)
HOW: File with the entity specified in QIC’s
(HHS OMHA field office)
TIME: 60 days from the date of QIC’s
~ Amount in controversy must be at least $120 as of
January 1, 2006
RESULTS: Review must be completed in 90 days
Fourth Level of Appeal
WHO: Medicare Appeals Council
(Also referred to as Departmental
HOW: Carried out by an independent
agency within DHHS
TIME: 60 days from ALJ decision
~ Amount in controversy – carried in from ALJ
RESULTS: 90 days to complete review
Fourth Level of Appeal
Medicare Appeals Council Address:
Departmental Appeals Board, MS 6127
330 Independence Avenue SW
Cohen Building, Room G‐644
Washington, DC 20201
Fifth Level of Appeal
WHAT: Federal Court Review
WHO: Carried out by The Federal District
TIME: 60 days from the Medicare Appeals
INCLUDE: ~ Amount in controversy - $1180
~ Date of request
Fifth Level of Appeal
Federal Court Review Address:
Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201
Revisions to appeals process
– CR 3530 –MM 3530
– CR 3939 –MM 3939
– CR 3970 –MM 3970
– CR 4147 –MM 4147
Requirements – PUB 100‐04, Chapter 29, Sections 310.1
Information on appeals process
– MNU 2006‐01, January 2006
References: Appeals information
Appeals: Administration Law Judge;
Departmental Appeals Board; U.S. District
Changes to chapter 29 – Appeals of claims
Appeals of RAC decisions
– MNU 2006‐02
Appeals of ALJ, Departmental Appeals Board,
and U.S. District Court Review
– CR 4152 Slide Material Culled from: 1) 06/2007 Medicare Appeals Process Provider Outreach & Education
111 2) CMS 03/07/2006_Appeals_Session_Materials
For Concerns about the RAC Demonstration
Contact the RAC Project Officer at CMS
Or on the web at
Frequently asked questions - RAC
AR Systems’ Contact Info
Day Egusquiza, President
AR Systems, Inc
Twin Falls, Id 83303
208 423 9036
Thanks for joining us!
Audience Polling Question #4
Would you like to learn how
Compliance 360 can help you take
control of RAC audits?
t l f dit ?