Aggressive Audits are Here to Stay: Radiology Practices Must Proactively Prepare for New Enforcement Environment
Aggressive Audits Are Here to Stay:Radiology Practices Must ProactivelyPrepare for New Enforcement EnvironmentA major government push to uncover most improper Medicare payments are to identify waste, errors and abuse,reimbursement errors, fraud, waste due to errors, omissions or negligence uncovered improper payments of moreand abuse across the Medicare and and are not the result of fraud and than $1 billion during a three-year pilotMedicaid programs continues to abuse.2 For example, CMS indicates that program.4 The initiative was launchedgain momentum. New audit initiatives inpatient hospital providers made up nationally in 2009 with four contractors:aimed at reducing improper provider about 85% of RAC-collectedpayments totaling about $24 billion overpayments in 2007. Approximately – Diversified Collection Services,annually are being rolled out nationwide.1 42% of overpayments were coded http://www.dcsrac.com (Region A: incorrectly; 32% were deemed medically Maine, N.H., Vt., Mass., R.I., Conn.To meet this more rigorous enforcement unnecessary or an incorrect service; 9% N.Y., N.J., Md., Del., Pa.)climate, physician groups should begin had insufficient documentation; and – GCI, http://racb.cgi.com/Default.aspxtaking steps today to fully understand 17% were listed as other (see Figure1).3 (Region B: Ky., Ohio, Mich., Ind.,the range of emerging federal and state Ill., Wis., Minn.)programs. Procedures and safeguards Physicians, therefore, should not bemust be created to identify compliance overly concerned that improper – Connolly Consulting, http://www.risk and limit practice exposure. Finally, payments will automatically result in connollyhealthcare.com/RAC/practices should establish internal civil sanctions or criminal prosecution. pages/cms_RAC_Program.aspxsystems to respond promptly and Nevertheless, the rapid expansion of (Region C: Ala., Ark., Colo., Fla.,appropriately if they’re contacted by federal and state healthcare enforcement Ga., La., Miss., N.C., N.M., Okla.,auditing agencies. programs means that many, if not most, S.C., Tenn., Texas, Va., W.Va.) practices can expect to face some formBy taking a proactive stance, practices of reimbursement scrutiny in the – HealthDataInsights, https://can reduce the likelihood of costly and months and years ahead. racinfo.healthdatainsights.com/disruptive compliance problems. They home.aspx (Region D: Mo., Kan.,can also enjoy the peace of mind that Multiple Initiatives La., Neb., S.D., N.D., Wyo., Mont.,comes with a rigorous and well-conceived Among the most visible and far-reaching Idaho, Utah, Ariz., Nev., Calif.,approach to compliance. of the CMS programs is the Medicare Ore., Wash., Alaska, Hawaii) Recovery Audit Contractors ProgramThe Centers for Medicare and Medicaid (RAC), www.cms.hhs.gov/RAC/. RAC, All of the contractors have now publishedServices (CMS) has acknowledged that which relies on third-party contractors their initial targeted measures but continue
2 to add new areas. Their Web sites should no means the only initiative under way. consistent with Medicare and be regularly monitored as new measures Other major audit programs include: Medicaid coverage and coding will continue to be added. policy. ZPICs perform data analysis – Error Rate Reduction Plan (ERRP): aimed at identifying potential Under the RAC program, analysis is ERRP detection and prevention problem areas, investigate potential conducted and corrective plans are components include review of fraud and develop fraud cases for developed to help prevent future medical records prior to payment civil and criminal referral.7,8 payment errors. The tools used to help by Medicare intermediaries.5 http://www.cms.hhs.gov/manuals/ prevent improper Medicare claims include: http://www.cms.hhs.gov/manuals/ downloads/pim83c04.pdf downloads/pim83c12.pdf#10 – Data analysis – Medicaid Integrity Program – Comprehensive Error Rate (MIP): The Deficit Reduction Act – Provider education Testing (CERT): CERT relies on (DRA) provides for CMS’ first-ever periodic review of sample claims national strategy to detect fraud – Automated prepayment review to extrapolate the total number of and abuse in the joint state and (auto-deny edits) improperly coded claims. Like many federal Medicaid program. A of the CMS initiatives, CERT relies companion program, known as – Pre-payment review (medical record on an independent contractor.6 Medicaid Integrity Contractors review before a claim is paid) http://www.cms.hhs.gov/CERT/ (MIC), relies on external contractors to perform audits, conduct data – Post-payment review (medical – Zone Program Integrity mining and develop reporting tools record review after a claim is paid) Contractors (ZPICs): CMS is across Medicaid.9 replacing its Program Safeguard http://www.cms.hhs.gov/ While the RAC program is currently Contractors with seven regional DeficitReductionAct/02_CMIP.asp the primary enforcement focus for ZPICs. The ZPICs help ensure that http://www.cms.hhs.gov/Provider many provider organizations, it is by payments are appropriate and Audits/Downloads/mipprovider auditfactsheet.pdf Figure 1. 2007 RAC Overpayments – Payment Error Rate Measurement (PERM): This initiative, which also relies on independent contractors, was implemented to measure improper payment in the Medicaid program and the State Children’s Health Insurance Program (SCHIP).10 http://www.cms.hhs.gov/perm/ At the state level, emerging enforcement trends include the creation of independent Medicaid inspectors general, enactment or enforcement of state false claims acts, and new penal statutes. Taken together, the various state and federal programs represent the most comprehensive governmental fraud, waste and abuse efforts to date. The creation of independent auditors and increased staffing levels to support the new efforts demonstrate that enforcement is a top priority at CMS. As a result, experts say, providers Source: CMS RAC Status Document, FY 2007, Status on the Use of Recovery Audit Contractors (RACs) must become even more vigilant and in the Medicare Program, February 2008, 13-14. proactive in their compliance efforts.
3“In the long run, compliance is a lot less Leoce identified a number of lessonsexpensive than attempting to prove your learned that are applicable to hospitalsinnocence after an enforcement action and physicians and are relevant for any Enforcement Audit Focus-has been launched,” said Joe Lineberry, enforcement program:compliance officer, McKesson Revenue OIG, RACsManagement Solutions. “For physicians, – Communication is vital: Develophospitals and other providers, it is critical a team approach throughout - Payments forthat coders be fully informed about the revenue cycle management. diagnostic X-rays inlatest changes or directives. Ignorance is Individuals from patient financialno defense.” services, case management and hospital emergency health information management departments (volume)Preparing for the Inevitable must be actively engaged in theKey steps for preparing to meet process of chart reviews and should - Place of service errorscompliance investigations and inquiries be ready to submit appeals withininclude establishing internal protocols to specific time frames. (facility vs. nonfacility)better identify and monitor areas thatmay be subject to review. In addition, – Identify your problem areas: In - Evaluation andrigorous compliance programs for many cases, you won’t know what management servicesdocumentation and coding should be area the RAC is data mining for during global surgeryimplemented. Practices should also errors. Look for request patterns. Isensure that all services provided are the auditor reviewing coding errors, periodscompliant with Stark regulations and medical necessity or some otherother rules. issue? Stay informed by contacting - Areas with a high providers and hospital associations density of IndependentEnforcement information, articles and willing to share their experiences.documents – such as the annual Office of Diagnostic TestingInspector General Work Plan – should be – Stay consistent with your action Facilities (IDTFs)continually monitored. Any audit request plan: Establish a well-defined (utilization, volume,letters should be tracked to glean process for conducting primary and ordering)additional, unpublished information. secondary medical necessity reviewsRAC and other enforcement program at all points of entry. DocumentWeb sites should be monitored to identify outcomes in an action plan and - Enrollment standardsnew areas of focus and to determine re-educate to ensure compliance. for IDTFs (technologists,which areas may affect the physician equipment, supervision)practice. Groups should investigate – Use technology: Technology isand confirm the scope of any audit, your greatest asset in a RAC audit.including how many codes are affected, The electronic health record can - Physician reassignmentthe dollar value and what percent has assist in expediting accessibility, but of benefits (fraudulentbeen found to be overpaid in order it must be supplemented with a use of NPIs)to determine the total potential risk. universal tracking method.11Finally, groups should be preparedto work with payors to resolve issues Timely Response Is Critical - Payment for servicesand be ready to promptly repay any Because many of the federal and ordered or referred byconfirmed Medicare overpayments. state investigative programs, including excluded providers RAC, rely on independent contractorsLynn Leoce, corporate director of Case who are compensated based on theManagement for Adventist Health System, funds they recover, the new wave of - Duplicate paymentssaid that the key to success in overcoming inquiries are likely to be aggressive and for global/TC billing ina RACs audit is “developing an internal sustained. Moreover, given the diversity hospital; picked up byprogram that [can] meet the demands of investigative programs, initial queries RAC Region Dof the audits while also identifying may be difficult to recognize due toand eliminating problem areas a lack of familiarity with the program - HealthDataInsightsidentified during chart audits, including and/or its contractor.record-keeping and billing.” Adventist’s - Expect additionaltwo Florida divisions, with a total of It is therefore vital that providers doing contractors as well17 hospitals, experienced RAC audits as business with government payorspart of the RAC demonstration project. develop plans to respond promptly and
4 appropriately when initially contacted for information is escalated into a By repeatedly reinforcing to employees by an enforcement entity. First, they full-blown audit, investigation or the importance of timely responses, need to be sure the contractor for their unannounced site visit. providers can meet the required time area has the correct contact person and frames for responding to auditor appropriate address on file. Additional Promptly funneling all investigative inquiries while expediting the investigative strategies can include staff training and requests to a centralized authority encounter and minimizing its disruption the creation of procedures to ensure within the organization – be it the legal to ongoing operations. that all regulatory queries and or compliance departments, or both – communications – whether they arrive can also serve to mitigate potential Appealing RAC Results via the postal service, e-mail or telephone – problems at the outset of an inquiry. If an alleged payment violation identified are immediately routed to the appropriate For example, investigators may have in a RAC audit can’t be confirmed, or compliance group or individual. In addition, questions about a specific action or the alleged overpayment is incorrect or timely responses must be generated in charge that, upon the surface, appears unfounded, providers should consider accordance with previously determined suspicious. However, informed managers appealing. It is important to remember internal policies and guidelines. or decision-makers within the organization that a claim denial or a finding of may be able to provide a ready and overpayment resulting from a RAC audit Sending the Wrong Signal reasonable explanation for the apparent can be appealed through the standard Failing to respond to investigative anomaly, thus satisfying investigators Medicare appeals process.12 inquiries due to uncertainty or and quelling further inquiry. confusion about who should answer According to CMS, of the 525,133 and in what fashion could have Devising a System overpayment claims, 22.5% were undesirable consequences. Tight Mechanisms for ensuring a timely appealed with 34% ruling in the deadlines could easily be missed. response to investigative inquiries provider’s favor and, of those, 7.6% were Alternatively, investigators might obviously will vary depending on the overturned (see Figure 2). Importantly, a get the impression that the provider size and complexity of the provider provider win at any level in the appeals organization simply isn’t taking the organization. In all cases, employees process reduces the RAC contractor query seriously. It may also conclude should be trained to forward external contingency payment to zero.13 that a nonresponse is evidence investigative communications immediately of a poorly run organization or, to the appropriate internal individual or For example, Adventist Florida hospitals even worse, an attempt to stall the department, regardless of the method, (excluding the Orlando facility and its probe. The net result may be that origin or content of the query. campuses) appealed 43% of the 4,954 what began as a routine request Source: RAC invoice files, RAC Data Warehouse, and data reported by the Administrative Qualified Independant Contractor (AdQIC) and Medicare claims processing contractors.
5overpayments identified by the RAC 6. Centers for Medicare and Medicaid Services,during the demonstration project and What Can You Do? Comprehensive Error Rate Testing, Overview, http://www.cms.hhs.gov/CERT/.have been successful in overturning 24%of the appeals as of October 31, 2008. - Assess current risk 7. Michael Apolskis, “CMS Selects Zone ProgramAppeals are still in process for 19% Integrity Contractors,” Blog, October 5, 2008,of the RAC-identified overpayments.14 http://medicareupdate.typepad.com/Therefore, a rigorous appeals stance is - Create and implement medicare_update/2008/10/the-centers-f-1.html.a vital tool for defending against and procedures and 8. R - Zone Program Integrity Contractor (ZPIC,deterring ongoing audits of any type. safeguards Solicitation Number: RFP-CMS-2007-0027, https://www.fbo.gov/index?tab=core&s=oppAn Ounce of Prevention ortunity&mode=form&id=fe7dfb031088cc14fPerhaps the most important step physicians - Ensure all services 5502d0e88903c8b.can take in reducing the risk of an audit provided are compliant 9. Centers for Medicare & Medicaid Servicesis to reduce or remove the incentive for Center for Medicaid & State Operationsa contractor to pursue the practice in and documented in the Medicaid Integrity Group, “Comprehensivethe first place. That means eliminating patient’s record Medicaid Integrity Plan of the Medicaidoverpayments and noncompliance. By Integrity Program FY 2006 – 2010,” July 2006, http://www.cms.hhs.gov/DeficitReductionAct/establishing an effective, proactive plan Downloads/CMIP%20Initial%20July%202006.pdf.that identifies and resolves issues before - Continually monitorthe auditor shows up, groups can enforcement 10. Payment Error Rate Measurement-Overview,mitigate potential risk. http://www.cms.hhs.gov/PERM/. informationFinally, it is worth remembering that 11. Lynn Leoce, “Teamwork and Technology: Keys to Surviving the RAC Audit,” Performanceaudits can affect not only organizations - Investigate and confirm Strategies 2, no. 6 (February 2008).but also individual employees. Lewis the scope of any auditMorris, chief counsel to the Inspector 12. Andrew B. Wachler and Jessica L. Gustafson,General stated, “The Office of Inspector “Recovery Audit Contractors and MedicareGeneral strongly believes that, in addition - Resolve confirmed Audits: Successful Strategies for Defending Audits,” RBMA Bulletin (September-to holding corporations accountable issues before the October 2008).for healthcare fraud, individuals whocaused the fraud should also be held auditor shows up 13. Ibid.accountable. Healthcare executivesand compliance officers have a vital 14. Leoce, “Teamwork and Technology.”responsibility to ensure the compliance 1. The Medicare Recovery Audit Contractorof the organizations that they serve.”15 Program: An Evaluation of the 3-Year 15. Office of Inspector General, “OIG Enters Demonstration, Report, Centers for Medicare into Civil Monetary Penalties Settlement and Medicaid Services, U.S. Department of with Former Hospital Executive Director,”In summary, the permanent RAC Health and Human Services, June 2008, page 6, Press release, Office of Inspector General,program will focus annually on new http://www.cms.hhs.gov/RAC/Downloads/ Department of Health and Human Services,areas where there is a high potential RAC_Demonstration_Evaluation_Report.pdf. October 5, 2009.for claim or medical necessity errors.Focus on the previous areas will not go 2. Centers for Medicare and Medicaid Services, “Overview of Medical Review (MR) andaway, and their continued monitoring Benefit Integrity (BI) Programs,” Medicarewill remain important. However, more Program Integrity Manual, Chapter 1, page 6.areas will be added and will require thesame evaluation of audit risk. The need 3. Centers for Medicare and Medicaid Services,for performance analytics, evidence-based “CMS RAC Status Document, FY 2007: Status on the Use of Recovery Audit Contractorsclinical documentation, effective utilization (RACs) In the Medicare Program,” Februarymanagement activities, medical records 2008, pages 13-14.supporting claim submissions andefficient tracking of the denial and 4. The Medicare Recovery Audit Contractor Program.appeal process will be ongoing. Scrutinywill only continue to increase as the 5. Centers for Medicare and Medicaid Services, “The Comprehensive Error Rate Testinggovernment and payors look for ways Program,” Medicare Program Integrityto take cost out of the healthcare Manual, Chapter 12 and Section 12.3.9,system. With any audit, the goal will http://www.cms.hhs.gov/manuals/downloads/be to proactively improve processes to pim83c12.pdf.avoid potential future take-backs.