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CMS IDs Improper Payments, Top Regional RAC Issues

 |  By jcarroll@hcpro.com  
   July 27, 2011

The Centers for Medicare & Medicaid Services released a Recovery Audit Contractor update on July 15 that details the amount of overpayments and underpayments identified in the most recent quarter, as well as the total amount identified since the start of the national program.

In the Q3 FY 2011 update, CMS identified $233.4 million in overpayments and $55.9 million in underpayments with a total correction amount of $289.3 million – more than $100 million more than in the previous quarter.

The report shows that the figures identified by CMS continue to grow drastically; in the second quarter of fiscal year (FY) 2011, CMS identified $162 million in overpayments and $22.6 million in underpayments, with a total of $184.6 million in corrections.

While this brief CMS report is essentially self-explanatory, the figures within it are certainly telling, according to Kimberly Anderwood Hoy, JD, CPC,director of Medicare and compliance for HCPro, Inc.

"First quarter in FY2011 was more than all over FY2010 combined. You can really see the efforts being geared up when you look at this report, as each quarter goes up significantly more than the last."

In addition to the figures, the report also contains the top RAC issue per region for Q3 FY 2011. The issues are as follows:

Region A:  Renal and urinary tract disorders (medical necessity)

Region B: Extensive operating room procedure unrelated to principal diagnosis (DRG validation/incorrect coding)

Region C: Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) provided during an inpatient stay (Durable medical equipment)

Region D: Minor surgery and other treatment billed as inpatient (Medical necessity)

Some of these issues may not come as a surprise to many, but providers should take a closer look at some of the issues, says Donna Wilson RHIA, CCS, CCDS, senior director at Compliance Concepts, Inc., in Wexford, PA.

"After seeing the top issue in Region A, I reviewed the MS-DRG tables only to discover no MS-DRG entitled Renal and Urinary Tract Disorders.' However, I did find an MDC (Major Diagnostic Category) for 'Disease and Disorders of the Kidney and Urinary tract,'" she says. "Providers are left to wonder, what falls into this denial category: Simple urinary tract infections or simple urinary/renal procedures?"

"When it comes to the top issue in Region D," she continued, "regarding the medical necessity of minor surgical procedures, providers need to be cognizant of the correct patient status. Also, keep in mind the typical recovery period for these minor surgical procedures is usually 4-6 hours."

Region B switches gears from the other RAC contractors by finding success in denying the higher weighted MSDRGs 981-983. Coders should consider a second-level (prebill) review of any records grouped into MSDRG 981-983. Applying this best practice technique will ensure the claim is coded and/or sequenced correctly resulting in less denials, according to Wilson.

While none of the information in the report can be considered groundbreaking, it does serve as a  reminder to the provider community that not only are RACs not going away, but they are expanding, so providers need to remain diligent and keep open all lines of communication.

"RAC's are taking advantage of their ability to run automated reviews around the clock on much less cost than a complex review not yielding big dollars. Just because a hospital is not getting record requests, don't assume that you are not being audited and losing money," said Elizabeth Lamkin, a partner atPACE Healthcare Consulting.

"Only front-end compliance and documentation can prevent these takebacks," she continued.  "Each provider needs a coordinated and comprehensive approach to ensure that the financial and clinical departments are communicating to connect these dots. For instance, clinical department directors—especially in the outpatient department—should be informed on a regular basis if there are recoupments in their particular areas."

For more information on the RAC appeals process, click here.

James Carroll is associate editor for the HCPro Revenue Cycle Institute.

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