Each regional recovery audit contractor (RAC) differs in its approach when it comes to dealing with providers.
Connolly Healthcare, the RAC for Region C, is fairly transparent when it comes to its interactions. Still, there are a number of things to keep in mind throughout the RAC process, according to Elizabeth Lamkin, president of Dalzell Consulting Group, Inc., in Hilton Head Island, SC.
The following five tips could help providers deal more effectively with Connolly throughout the RAC process:
1. Use the discussion period. The discussion period is a valuable resource for providers looking to avoid the appeals process, and is a low–risk move. The form to open a discussion period isn’t easy to find on the Connolly website, but it is relatively easy to find on the other four RAC sites. “Providers looking to open a discussion period should contact their RAC,” says Lamkin. “In addition, they should also go take a look at the other sites to educate themselves about what is made available to other regions.”
2. Pay close attention to record submission rules. Providers also need to be careful when it comes to the rules on submitting records to Connolly. They are very specific, and if you compare Connolly to the other sites, you will see that there are more fields that need to be filled out, according to Lamkin. While this may seem like more work, precise and complete identification may be to the provider’s benefit down the road, instead of relying on fewer identifiers.
3. Clean up your records. There are detailed rules on the other RAC sites regarding the submission of paper records, such as no paperclips, no staples, etc; while Connolly doesn’t really have those rules. “It might be a good idea for providers to take these suggestions into consideration, since the cleaner the records are, the better,” she says.
4. Designate a point process and test the process. According to Connolly, once records are received, they will send a fax or email to the provider’s medical record contact person, so it’s very important to be clear about who your facility’s point person is, according to Lamkin. “I would suggest that any Region C provider go and download the provider contact form on the Connolly web site and make sure you’ve got it as the right person,” she says. “From there, send an internal test letter to that person to make sure that they receive it, and document how long it takes to arrive.”
5. Don’t let the technical issues bog you down. Before any of the larger RAC issues can affect your facility, don’t let any clerical, front–end issues shoot you in the foot. “As always, if you keep things clean in the front end, it should help the overall process,” she says. “This is certainly a continuing theme, but these things can still lead to big problems for providers.”
Elizabeth Lamkin will be speaking on a Region C RAC Audio conference this September with HCPro. For more information on this audio, stay tuned to HCMarketplace.
It pays to appeal. A recently released CMS report indicates that providers have been winning more appeals since the last update.
The June 14 report updates information from its January 2009 report, which included data through of March 27, 2008. The new report, titled "The Medicare RAC Program: Update to the evaluation of the three-year demonstration," contains statistics through March 9, 2010, and reveals that the number of appeals claims dropped significantly from the 118,051 reported in January, to the 76,073 in the new data. This came as a result of claims no longer being counted individually at each level of appeal, but rather being counted only once if appealed to any level.
Additionally, CMS removed claims from the appealed category if the denial was reversed by the claims contractor when additional documentation was submitted by the provider. However, since the claims contractor decides the first level of RAC appeals, it is unclear why these are not considered appeals, according to Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc. Hoy says each one of these claims would have been considered an overturned determination and would have shown that providers were even more successful than they were in appealing denials.
"It would be interesting to see how much higher the overturned percentage would be if these cases were included," she says. "Already, the stats show RACs were overturned in about two-thirds of appealed cases."
In addition, CMS increased the number of overall RAC determinations by 73,000 claims. The effect of including more claims in the determinations number caused the overall percentage of overturned cases to appear lower than it otherwise would have been, according to Hoy.
"The new report shows a much lower number of appealed claims from 22.5% to 12.5%," she says. "By excluding claims that were overturned by the contractor, this number shows a more favorable picture of the overall accuracy of the RAC than previous reports demonstrated."
The updated statistics indicate that providers are winning a higher percentage of appeals than had been suggested by previous reports (all RACs had a 64.4% favorable result for providers in the new report compared to 34% in the prior) according to Michael Taylor, MD, senior medical director, government appeals and regulatory affairs at Executive Health Resources in Newtown Square, PA.
"Judging by the dramatically increased percentage of decisions in favor of the provider, I would infer that appellants are experiencing a much higher level of success at the more advanced levels of appeal, such as hearings before the administrative law judges (ALJs)," Taylor said.
Taylor continued, "Of the thousands of medical necessity overpayment determinations we've helped hospitals appeal from the RAC demonstration, we've seen greatest overturn success at the ALJ level of appeal. However, many hospitals appealing denials on their own will often become discouraged after failing to overturn an appeal during the first two levels, and will abandon the appeals process prior to the ALJ level."
In light of these numbers indicating high rates of success, providers should be more proactive in their appeals going forward, Taylor continued.
"These new numbers suggest that providers should feel confident in using the Medicare appeals process to reverse RAC medical necessity determinations when the provider believes that the RAC's decision is not consistent with the regulatory authority or with CMS guidance," explained Taylor. "These numbers support our experience that providers often receive a more thorough and well-reasoned review at the higher levels of the Medicare appeals process."
DRG (diagnosis-related groups) validation issues have been the main target of RACs (recovery audit coordinators) nationwide in recent months. When unclear documentation results in improperly assigned DRGs, it puts facilities at risk for RAC denials. However, an effective clinical documentation improvement (CDI) program aims to minimize these financial risks by producing the most accurate and comprehensive medical records possible—records that fully support the condition of the patient and the services rendered.
A CDI specialist is trained to identify terms and phrases that a physician uses that may lead to the assignment of imprecise or non-specific codes, according to Lynne Spryszak, RN, CCDS, CPC-A, CDI Education Director for HCPro, Inc.
"The CDI specialist serves as a translator between the physicians and their clinical language, and the coders and ICD-9 coding language, which are not always synonymous," says Spryszak.
For example, a physician might use the term "respiratory insufficiency" while talking about someone who is on a mechanical ventilator. In his mind, he is thinking of a patient who has respiratory failure and needs medical support, but in the coding world, the term "respiratory insufficiency" has its own unique ICD-9 code, which, when measured on a severity of illness and risk of mortality scale, is comparatively low, according to Spryszak.
CDI involvement in RACs
The CDI program's connection to the RAC process runs deep. When the documentation in the record does not match the services administered, the provider may see a RAC denial that could have been prevented with a sound CDI program. Spryszak offers the diagnosis of urosepsis as an example.
"While going through medical school students learn that urosepsis is an overwhelming infection that started in the patient's urinary system, which indicates a very sick patient," says Spryszak. "However, in the coding world, the term urosepsis equates to a simple urinary tract infection."
Enter the RAC, who, when reviewing a case which grouped to MS-DRG 872—Septicemia or Severe Sepsis without Mechanical Ventilation 96+ Hours without MCC—notices that the patient had a short stay and received only one antibiotic. When reviewing from a retrospective audit point of view, this would be a likely indication that the resources given to the patient were typical of treating a urinary tract infection, as opposed to the higher severity sepsis case which coincidentally carries a higher paying reimbursement. A RAC would evaluate this and likely perceive it as an invalid DRG assignment and thus deny it, according to Spryszak.
"A good quality documentation improvement program that focuses on not only supporting the DRG assignment but also focuses on clarifying all conditions that are imprecise will better support the record from a compliance standpoint," she says. "If you have a complete, precise medical record, it should be able to stand up to audit."
An Added Bonus: The Physician Query
One additional issue that has remained central to CDI programs since their inception is the physician query. A physician query process involves asking a physician for additional clarification on a patient's diagnosis. However, throughout the years the opinion has been held that too many physician queries involve "leading questions" which may sway the physician's decision one way or the other, according to Spryszak. The definition of "leading" has been the subject of much dispute.
As a result, the American Health Information Management Association (AHIMA) published Guidance for Clinical Documentation Programs to help outline what would constitute a "leading query" versus a compliant query.
Spryszak refers back to the example of sepsis vs. urosepsis to provide an example of the physician query's impact on both the CDI program and facilities' vulnerability to RACS.
"If a higher than normal percentage of patients in a facility are being coded to sepsis instead of just a urinary tract infection, it may be because the processes involved," she says. "A review of these cases may show that the final DRG assignments were the result of asking leading questions."
When it comes to RAC audits and denials, every part of the process matters; but when you have a thorough, compliance-based CDI program in place, it puts a facility in that much better of a position to defend against them.
In the increasingly stressful realm of RAC coordination the last thing providers need is additional complications to add to the workload. Unfortunately for them, the latest wave of RAC obstacles brings just that.
A number of providers across different RAC regions have been sending records to their RACs via verifiable means (i.e., FedEx), and having their RACs come back and deny receipt of the records, despite the signatures on file.
"Currently we are working with DCS (Region A RAC) to determine the whereabouts of 36 out of 161 recently sent," says an anonymous provider from a large hospital in Boston. "Shortly after, PRG-Schultz came back and informed me that only 9 of the 36 records were actually missing. It makes me wonder what they are doing."
In this case, this provider is working with DCS / PRG to try to come to some type of resolution. The [provider's] HIM department is reproducing the nine records to send again, and a one-week extension was granted to the hospital to get the records back; but unfortunately this may turn into a finger pointing game, says the provider.
"This puts undue strain on an already extremely busy department," she says. "The thing that makes no sense is that they have some records (from the same box), but not all of them."
Regrettably for providers nationwide, this isn't just a DCS issue. Karen Sagen, revenue audit coordinator for Bellin Health Systems, Green Bay, WI, has sent records which have been signed for, but CGI has been unable to locate them. Sagen, who is currently waiting for CGI to return correspondence, says that providers need to keep these process issues in the forefront.
"When having these issues, notifying the Regional CMS RAC liaison, the regional RAC audit director, and your regional Hospital Association is key to getting these issues corrected over the long term," says Sagen.
In the case of at least one provider, Sagen was right. Joni Baker, RHIA, CCS, external audit coordinator for Spectrum Health System in Grand Rapids, MI, had two records requested for one patient, both of which were for the same issue. While it may have looked like the same record —an outpatient chemotherapy record —it was not.
Baker returned correspondence by highlighting the two different dates of service on the record that had been requested, and even submitted a cover letter indicating why it may have looked like one record when it was in fact two.
"Upon checking the Web site for receipt of records, only one remained marked received, so I continued to call and e-mail, even copying Scott Wakefield (Region B CMS liaison)," she says. "Finally, after weeks of phone tag, I got to talk to a live person and I re-stated everything in my cover letter, and one week later I received a call back, stating that they received the chart and they would close the issue."
Interestingly enough, the review results letter arrived just one week after the call and closing of the issue.
The three-day rule is the subject of a provision in the American Jobs and Closing Tax Loopholes Act, a proposed amendment to the American Workers, State, and Business Relief Act, before the House of Representatives.
This provision not only aims to stop RAC related re-openings and recoupments related to the three-day rule, but also would prevent hospitals from requesting payment for outpatient services they previously bundled in error and are not rebilled at the time of enactment of the provision.
"RACs have identified and targeted claims with certain outpatient services hospitals have billed as part of the inpatient claim (ER services, outpatient surgeries) that may have changed the DRG." says Kimberly Anderwood Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc. "The proposed provision would not allow RAC reopenings or adjustments related to any outpatient services that were already submitted on Part A claims prior to enactment of the provision."
This also prevents hospitals from rebilling services they bundled in error, Hoy says, significantly prejudicing hospitals who have incorrectly been applying the rule.
The three-day rule has been a provider conundrum for years. In the early 1990s, the OIG began implementing the first corporate integrity agreements in the hospital industry. These agreements are essentially an agreement with the government that a given facility will have a compliance plan in place meeting government standards. One of the first big compliance issues resulting in corporate integrity agreements was the three-day rule, according to Hoy.
"The issues at that time were primarily related to whose services were being bundled and whether hospitals that owned other small hospitals were not bundling services from their smaller hospitals," says Hoy. "But this lead to an overall fear of incorrectly applying the three-day rule, and this overcautious application actually lead to the non-compliance we are seeing targeted today."
The other and more current reason why the three-day rule has become a big issue is that CMS looks at inpatient and outpatient services like there is a big bright dividing line when a doctor writes an inpatient order, even though hospitals look at the services as all part of one encounter, according to Hoy.
"From their [CMS] perspective, the services are all outpatient before the order and all inpatient services after," she says. "But hospitals have been just bundling all of this into one big stay, thus creating the confusion."
For further clarification, providers should read the rule carefully in the Medicare Claims Processing Manual and make sure that their policies are in compliance with CMS. But in light of this proposed amendment, hospitals also need to keep a close eye on any further developments with the rule, particularly if it is passed, since CMS may provide redefinition of what is "related" and "unrelated."
With the growing number of CMS-approved RAC issues and the impending medical necessity audits on the horizon, the need for RAC tracking software rises daily for providers nationwide.
The software can help lift some of the burden off providers by assisting with a number of steps in the process, including notifying team members automatically of new RAC requests; sending alerts to team members when deadlines are approaching; as well as trending the audits to identify potential problem areas.
Many providers, such as Karen Sagen, revenue audit coordinator for Bellin Health Systems, Green Bay, WI, have had software implemented for more than a year.
Bellin selected Advisory Board's Revenue Integrity Compass, which was initially chosen as a RAC tracking mechanism, but quickly became a tool to be utilized to identify root cause and aid in preventative measures. "Bellin has been actively using the highly developed tools to do preemptive audits," says Sagen. "We've currently identified about $250,000 in underpayments in addition some expected overpayments, which leads our organization to believe they have made a good investment in this tool."
While some providers use the software as a preventive measure, others are using it primarily to track and trend RAC requests. For example, Lori Miller, RHIA, health information manager and privacy officer for Grand Lake Health Systems in St. Marys, Ohio, says it's a great organizational tool.
"Our RAC tracking software definitely makes the [RAC record request] process more efficient, as I'm able to trend a lot easier and submit to AHA a lot easier, since they want all hospitals to submit so they can trend as well," she says.
Now with the impending medical necessity audits, Miller says the software will provide a significant boost to her organization's internal process.
"Medical necessity is beyond me, so that is when I'll certainly start to use a lot of the reminders within the system," she says. "I'll be able to say, 'Okay, I've sent this denial along to someone in another department,' and then they've got 10 days to respond, so the software will remind them of these deadlines and help me to avoid having to do the chasing."
Ultimately the decision of which product to use should come down to exactly how you intend to use it. Grand Lake uses MediReg's ComplyTrack, which is a compliance tracking product they were already using, but are now taking advantage of the RAC tracking functionality.
For Kathleen Hall, CISA, audit and compliance services for Central Georgia Health Systems/Medical Center of Central Georgia, Revenue Integrity Compass was new technology. She says it allows them to be both reactive in their workflow and proactive in data mining their own claims, and would recommend the use of tracking software to anyone.
"Due to the sophistication of the RACs, the ability for providers to analyze their own data is a must," says Hall.
In addition to analyzing their own data, the Medical Center of Central Georgia is also able to interact with other Revenue Integrity Compass users to identify certain areas that RACs are targeting, which in turn helps the facility recognize these areas and make adjustments.
"The ability to openly interact with other users allows everyone to get first-hand accounts of what other providers are seeing and prepare for it before the RACs target you."
For example, the software has helped to examine claims data for medically unlikely edits to see what additional claims are being targeted by the RACs. This data then helps providers make informed decisions, as well as taking practical steps to create system edits and process changes that would mitigate any additional exposure on these areas of concern, according to Hall.
As MIC audits begin to hit home with providers, the initial doubts and concerns that came earlier in the year have yet to subside. In fact, to borrow a line from The Carpenters, you may say "we've only just begun."
Unlike RACs, which had a demonstration period and received more sustained publicity, MICs have proceeded largely under the radar of many organizations. As a result, providers may be surprised and unprepared for the MIC audits. And even if they are prepared, the requests can be difficult to process.
"To start, we got requests from the MICs that had missing information," says Keisha Patterson, RAC coordinator at Saint Joseph's Hospital of Atlanta. "And these requests were on paper spreadsheets, so I had to request that the MIC send a workable electronic file."
After receiving the electronic information two days later, Patterson began matching patient account numbers to the requests with missing information.
"I had to go into our system manually and cross-match, have HIM get the medical records, pull UBs and remits—some of which were in print form and had to be removed from boxes—and so on, all while adhering to this 15-day limit for a response."
There was also confusion about the dollar amounts of some requests, which may leave providers wondering why so much time and energy is focused on so little.
"Some of the accounts the MIC was requesting were for about $2 because some of the accounts were Medicaid secondary and Medicare primary," says Patterson. "More than 50% of the accounts requested were Medicaid secondary, so half of these requests were for co-insurance payments."
However, it is not always the fault of the contractor. MICs, RACs, and other auditors obtain their information from a huge data warehouse via CMS, so the mistake may not be their own. Contractors are, in fact, there to help and to avoid provider abrasion, according to Patterson, who worked for a RAC for three years during the demonstration period. So keep in mind that the MIC is not out to get you, and that communication is important to ensuring the best possible process for your facility.
The first thing a provider should do during this process is to notify the MIC of who the primary contact at the facility is—and confirm it, says Patterson.
"We notified our MIC that I was the primary contact, and the requests were still sent to the CFO because that's where cost report-related information is sent," she explains. "If you only have 15 days to respond (opposed to the 120 days MICs are given to review the records) and it ends up in another office and not attended to right away, could you imagine seven days getting knocked off of 15?"
You may also consider asking for an extension. A MIC will not be proactive and ask whether you need one but, if you reach out, extensions are permissible, according to Patterson.
"Some people are scared to talk to contractors. They just think they have to send the records in x amount of time, but they are flexible," says Patterson, whose own MIC audits are currently in the 120-day review period. "You just have to reach out and tell them what you need done."
There has been much speculation as to when providers would see the first wave of medical necessity reviews by Medicare Recovery Audit Contractors (RAC); but the May 5 nationwide RAC 101 call helped to dispel a bit of that uncertainty.
In the second nationwide RAC 101 conference call for DMEPOS (Durable Medical Equipment, Prosthetics, Orthotics, and Supplies), CMS addressed the imminent arrival of medical necessity reviews for the permanent RAC program, stating that providers might see medical necessity reviews "within the next month or so," according to Scott Wakefield, project officer, CMS. He added that, "We don't have a specific time frame for it but it will begin soon."
When the permanent RAC program was implemented, RACs began looking at automated reviews and eventually moved into complex review for coding errors and DRG validation. Currently the DRG validation issues that are being reviewed specifically exclude medical necessity. Thus far, a reason for the exclusion of medical necessity reviews is unclear, but one reason could be the complexities of clearly defining what "medical necessity" actually is, suggests Debbie Mackaman, RHIA, CHCO, regulatory specialist for HCPro, Inc.
"RACs wouldn't want to make these types of determinations only to have providers challenge them through appeals and win, so the guidelines for determining medical necessity have to be clear or the documentation would have to be very poor," says Mackaman. "For example, with outpatient services such as observation, the documentation would have to show that some or all of the observation time was for patient or facility convenience."
A facility's preparation against impending medical necessity reviews should begin the same way providers prepare against currently reviewed issues, which is ensuring proper documentation with a sound team in place, according to Elizabeth Lamkin, MHA, an associate at Axcel Healthcare Group in Tampa, FL.
"If you don't have documentation to justify what you did, you can't fix it now," says Lamkin. "As you look at vulnerabilities, you begin to shift the workload to the front to ensure it's right on the front end."
Beyond astute documentation and front-end preparation, providers need to be both prepared and educated when the demand letters come in. CMS states that the decision to admit as an inpatient is a "complex medical judgment" made by the patient's physician based on the severity of the signs and symptoms, probability of an adverse outcome, and need and availability of diagnostic studies.
Once demand letters come in, the immediate response from providers may be to challenge the RAC's determination of "not medically necessary" if the documentation can support this complex judgment, according to Mackaman. It may be prudent to get the admitting physician involved in the appeal process to clarify the decision, she says.
Through clear documentation and conscientious internal processes, a facility puts itself in a better place to appeal medical necessity RAC issues. Most providers have already audited their documentation in preparation for RACs and the myriad of other reviewers, so they already know where their "weak spots" are, but a lack of follow up could lead to problems, according to Mackaman.
"If providers took action to enhance documentation problem areas, they should be okay going forward for medical necessity reviews," says Mackaman. "However, if the providers only conducted an audit but did not follow up on their findings, they could find themselves in a disadvantaged position when the RACs begin these reviews."
In the first of four scheduled nationwide RAC calls, CMS began the first portion with a basic summary of the RAC operational process. CMS representatives began this portion describing how the success of the demonstration led to the implementation of the permanent program, and eventually led into up-to-date concerns such as additional documentation limits, the N432 code, and RAC impacts on critical access hospitals.
Donna Wilson, RHIA, CCS, senior director, Compliance Concepts, has been involved in RACs on every level — having had firsthand experience in the demonstration project up until her most recent previous role as Revenue Integrity Manager in charge of RAC coordination at a large acute care facility. According to Wilson, the best part of these RAC calls are the question and answer periods.
"I believe many providers will choose to opt out due to the title of RAC 101," says Wilson. "However, I suggest that they take the time to listen to the next call; they may learn quite a bit from the great questions."
Many of the questions included in the question and answer period revolved around the N432 code. The N432 code is a RAC denial code that appears on the remittance advice, which is a notice of payments and adjustments sent to providers, billers and suppliers.
After a claim has been received and processed, a Medicare contractor produces the RA, which may serve as a companion to a claim payment (or payments) or as an explanation when there is no payment. During the question and answer period, it was determined that this code should match the date on the demand letter.
In addition, a CMS representative clarified that in the current statement of work there is no timeframe between the discussion period and the issuance of the demand letter, as CMS states that the RAC discussion period begins with the time that either the demand letter (automated reviews) or review results letter (complex reviews) is received through the time recoupment occurs.
For many providers the RAC overview ultimately wasn’t necessary; but the question and answer portion certainly helped address some confusion as well as alert CMS to areas of potential concern in the future.
"Keep in mind CMS continues to stress that the open door forums are not official guidance, but listening in for the questions can be priceless for a provider," says Wilson.
A recent transmittal released by CMS implemented a number of changes to the Medicare Financial Management Manual that will ultimately enhance the structure of the Recovery Audit Contractor national program.
The transmittal, Change Request 6871, is dated April 23, 2010 with an effective date of May 24, 2010. Changes include Chapter 4 Sections 100.5 and 100.9.2. (You can read the transmittal at www.cms.gov.)
Chapter 4 Section 100.5: Adjusting the Claim
The transmittal discusses updated language in chapter four of the manual, including the implementation of an N432 code with the remittance advice (RA) to denote its relationship to a RAC audit. An RA is a notice of payments and adjustments sent to providers, billers, and suppliers.
After a claim has been received and processed, a Medicare contractor produces the RA, which may serve as a companion to a claim payment (or payments) or as an explanation when there is no payment. The updated manual states that, "When possible, the remittance advice shall contain an N432 code to let the provider know that the adjustment is the result of a RAC audit."
The N432 code was believed to have been superseded in some of the systems by code N469, which is the Section 935 limitation on recoupment code, according to CMS. Some hospitals have already received remittance advices with the N432 code on there, which is a good thing, says Donna Wilson, RHIA, CCS, senior director, Compliance Concepts, Inc., Wexford, PA.
"There was never a RAC specific denial code," says Wilson. "This code helps because it lets the provider know that they should be receiving a demand letter for a particular claim."
Chapter 4 Section 100.9.2: Tracking Appeals
The second action item within the transmittal states that "affiliated contractors (ACs) and Medicare Administrative Contractors (MACs) shall submit monthly RAC appeal reports to the appropriate CMS RAC and MAC Project Officers."
There has yet to be an announcement about public disclosure of these reports, but still, these results should help to identify RAC patterns, which should lead to improvements in the overall scheme of the program, according to Wilson.
"During the demonstration project we did receive RAC evaluation reports, so I’m hoping that these will show up in a similar format," says Wilson. "But whether or not these results are made public, it will help the RACs improve upon their internal processes, which in turn should benefit providers."
The monthly RAC appeal report field requirements include:
Claim number
Claim line number
Provider number
A/R number
Receipt Date of Appeal
Level of Appeal
Appeal Decision
Appeal Decision Date
Adjustment Date
Dollar amount of reversal
Reason for reversal
"From a tracking standpoint, it might nice for these Monthly RAC Appeal Reports to include the RAC reviewers’ initials," says Wilson. "By tracking each RAC reviewer, CMS and the RAC will be able to monitor their performance." Overall, this transmittal should lead to both short- and long-term advances in the permanent RAC program.