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Medicare Recovery Audit Contractors RACs


... amount for the incorrectly coded procedure and the correctly coded procedure. Colonoscopy ... Beneficiaries never need more than one colonoscopy per day. ... – PowerPoint PPT presentation

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Title: Medicare Recovery Audit Contractors RACs

Medicare Recovery Audit Contractors (RACs)
  • Preparing for RAC Audits

Presentation Outline
  • I. Background
  • A. What are the RACs?
  • B. When are the RACs coming to Georgia?
  • C. RAC Focus Areas
  • II. Case Studies
  • III. How to Prepare for RACs
  • IV. GHA Initiatives to Assist Member Hospitals
    with RACs

What are RACs?
  • Medicare Modernization Act of 2003 created a
    3-year demonstration project in NY, FL, CA
  • Recover Medicare overpayments and identify
    underpaymentspayment mistakes
  • RACs are paid on a contingency fee basis
  • During FY 2007, RACs identified and corrected
    371 Million dollars of Medicare improper
    payements in the demonstration states
  • Over 96 were overpayments

Why Congress Believes RACs are Necessary
  • The Improper Medicare FFS Payments Report for
    November 2007 estimates that 3.9 of the Medicare
    dollars paid did not comply with one or more
    Medicare coverage, coding, billing, or payment
  • This equates to 10.8 billion in Medicare FFS
    overpayments and underpayments annually.

Overpayments by Error Type in Demonstration
  • 42 Incorrectly coded
  • 32 Medically unnecessary service or setting
  • 9 No/Insufficient Documentation
  • 17 Other

Source CMS RAC Status Document FY 2007,
February 2008
Average Overpayment Amounts FY 2007
Source CMS RAC Status Document FY 2007,
February 2008
Permanent RAC Program
  • CMS will announce the 4 permanent regional RACs
    by July 31, 2008
  • RACS can review claims for
  • Inpatient hospital
  • Outpatient hospital
  • Skilled nursing facilities
  • Physician, ambulance, and lab services
  • Durable medical equipment

(No Transcript)
Permanent RAC Program
  • RACs cannot look for any improper payments on
    claims paid before October 1, 2007
  • RACs can review claims during the current fiscal
  • Each RAC must use certified coders
  • RACs must pay back contingency fee if their
    decision is reversed on any level appeal

Types of RAC Reviews
  • Automated Review
  • Proprietary software algorithms used to identify
    clear errors that resulted in improper payments
  • Complex Review
  • Medical records requested to further review the
  • RACs must use Medicare coverage, coding or
    billing policies in effect at the time when the
    claim was adjudicated

RAC Focus Areas in Demonstration States
  • Excisional Debridement
  • Back Pain
  • Outpatient vs. Inpatient Surgeries
  • Transfer Patients
  • Inpatient Rehab, especially knee and hip
  • Joint replacement patients and patients in
    inpatient rehabilitation facilities that should
    have been treated in a lower intensity setting
    such as a SNF
  • Wrong diagnosis or principal procedure codes

Outpatient Hospital Areas of RAC Focus
  • Colonoscopy
  • Speech Language Pathology Services
  • Infusion Services
  • Neulasta (boosts white blood cell counts to
    reduce chance of infection in patients undergoing

Short Stay Claims
  • Validate whether the admissions met Medicares
    medical necessity criteria
  • One-day stays by chest pain patients were
    targeted by RACs in demonstration states
  • Many three-day stays were denied because they
    were inappropriately extended in order to qualify
    for Medicare Part A coverage of post-acute
    skilled nursing care

Some Case Examples from the Demonstration States
  • (Note These slides are optional depending on
    how the CEO wants to present this information to
    the board members)

Excisional Debridements
  • Hospital coder assigned a procedure code of 86.22
    (excisional debridement of wound, infection, or
  • In the medical record, the physician writes
    debridement was performed

Excisional Debridements
  • Coding Clinic 1991 Q3 states unless the
    attending physician documents in the medical
    record that an excisional debridement was
    performed (definite cutting away of tissue, not
    the minor scissors removal of loose fragments),
    debridement of the skin that does not meet the
    criteria noted above or is described in the
    medical record as debridement and no other
    information is available should be coded as 82.26
    (ligation of dermal appendage).

Excisional Debridements
  • The RAC determines that the claim was incorrectly
    coded and issues repayment request letter for the
    difference between the payment amount for the
    incorrectly coded procedure and the payment
    amount for the correctly coded procedure.

Wrong Principal Diagnosis
  • Principal diagnosis on claim did not match the
    principal diagnosis in the medical record
  • Example Respiratory failure (code 518.81) was
    listed as the principal diagnosis but the medical
    record indicates that sepis (code 038-038.9) was
    the principal diagnosis

Wrong Principal Diagnosis
  • The RAC issued overpayment request letter for the
    difference between the amount for the incorrectly
    coded services and the amount for the correctly
    coded services
  • Most common DRGs with this problem
  • DRG 475 Respiratory System Diagnoses
  • DRG 468 Extensive OR Procedure Unrelated to
    Principal Diagnosis

Wrong Diagnosis Code
  • Hospital reported a principal diagnosis of 03.89
  • Medical record shows diagnosis of urosepsis, not
    septicemia or sepsis Blood cultures were
  • Did not meet the coding guidelines for
    septicemia. Urinary tract infection causes the
    claim to group to a lower payment DRG

Wrong Diagnosis Code
  • RAC issued a repayment request letter for the
    difference between the payment amount for the
    incorrectly coded procedure and the correctly
    coded procedure

  • The hospital billed for multiple colonoscopies
    for the same beneficiary the same day
  • Beneficiaries never need more than one
    colonoscopy per day. The excessive services are
    not medically necessary.
  • The RAC issued overpayment request letters for
    the difference between the billed number of
    services and 1.

Outpatient Hospital Speech Therapy
  • The outpatient hospital billed for each 15
    minutes of speech 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 excessive services billed
    are medically unnecessary
  • RAC issued overpayment request letters

Coping with the RACs
  • Comply with RAC medical record requests. If you
    dont submit them on time, the RAC automatically
    classifies the claim as an overpayment and makes
    a recovery.
  • Develop an internal tracking system for medical
    records requested for review by the RAC

Review Your PEPPER Reports
  • Program for Evaluating Payment Patterns Report
  • Prepared by gmcf
  • Identifies claims patterns that are outliers
    relative to other hospitals in the state
  • Top 20 list of DRGs that are prone to certain
    billing areas
  • Other problem areas which vary by state

Hospital Next Steps
  • Look at potential areas of risk
  • Establish single point of contact for RAC
  • Establish RAC committeeinclude key hospital
    stakeholders (finance, UR, Case Management,
    compliance, legal, medical records, etc.)
  • Review records before sending to RAC
  • Support your claim
  • Understand the parameters
  • For Providers
  • For the RAC

Hospital Next Steps
  • Plan to participate in the AHAs RACTrac to
    report your hospitals experience with the RAC
  • Data will provide both the AHA and GHA the data
    they need to advocate on behalf of the hospitals
    and to identify trends in reasons for denials
  • Implement a system for charging RACs for copying
    costs of medical records (.12/page)

GHA Next Steps
  • Establish RAC Task Force
  • Establish relationship with RAConce RAC is
    announced for our region
  • Facilitate information exchange between CMS, RAC,
    and hospitals
  • Monitor RAC activities with Georgia providers

GHA RAC Task Force
  • A multi-disciplinary cross-section of GHA members
    including CEOs, CFOs, legal counsel, compliance
    officers, case/utilization managers, medical
    records, and others
  • Task Force will provide guidance and feedback to
    GHA as we develop strategies and tools to assist
    members in dealing with RACs

Questions or Comments?
  • Feel Free to Contact GHA Staff for assistance
  • Robert E., (770) 249-4505
  • Liz Schoen,, (770) 249-4564
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