Formal Debt Demand Letter AR Systems Inc Training by qzx16538

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									            AR Systems, Inc
        Training Library Presents
       Medicare Recovery Auditor Contractors –
      RAC ATTACK – To Appeal or not to Appeal-
      An operational guide to the appeal process

Instructor:                       Day Egusquiza, Pres
                                  AR Systems, Inc

                       RAC2008                          1
    RAC –The Recovery Audit Contractor:
               What‟s a provider to do?

 Where are we today?
 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

                            RAC2008                          2
    Temporary Postponement
 Due  to the dispute of the awarding of the
  permanent RACs by two contractors who
  were not chosen, the permanent rollout of
  the RACs has been delayed.
 Hearing on the 2 disputes by Feb.
  back is to 10-07 – already a year of activity

                     RAC2008                  3
                            ALERT ALERT
 Permanent                     RACs announced 10-6-08
   Regions:
        A/Northeast                 Diversified Collection Services, Inc of Livermore, CA
                                     Contingency fee: 12.45%
        B/Upper midwest             CGI Technologies and Solutions, Inc of Fairfax, VA
                                     Contingency fee: 12.50%
        C/Lower western             Connolly Consulting Associates, Inc of Wilton, CT
                                     Contingency fee: 9%  
        D/Northwest                 HealthDataInsights, Inc of Las Vegas, NV
                                     Contingency fee: 9.45%

     Rollout periods: Yellow states                                   Oct, 2008 –Jan, 2009
                      Green states                                    March, 2009
                      Blue states                                     Aug, 2009
                      All states live no later than Jan , 2010

                                                RAC2008                                           4
        CMS‟s Sept 9th report
  Timothy Hill, CFO and Dir Office of
            Financial Mgt
 Thru    6-30-08
       # of claims   Claims        Appealed     % of
       w/overpmnt    appealed to   claims       overpmnt
       collections   any level     w/decision   determinatn
                                   in provd’s   Overturned
                                   favor        On appeal
       525,133        19.6%        34.9%        6.8%

 Total   costs to run RAC:              91.3% RAC contingency fee,
 3.1% validation contractor, 5.6% claim‟s processing contractor

                              RAC2008                             5
       Improper Payments, 2007
 In2007, 3.9% error rate
 Updated: 3.6% $10.6 billion (11-08)
 Equaling $10.8 billion in improper
 Revised totals from 2007 Status report:
    46% inpt hospital
   33% physician/ambulance/lab/other

   12% outpt hospital/IRF/SNF/Hospice/HH

  (Timothy Hills, CMS, Sept 9, 2008)
                    RAC2008                 6
       CMS Claim‟s Review Entities
      Roles of Various Medicare Improper Payment Reviews
        Timothy Hill, CFO , Dir of Office on Financial Mgt
                              9-9-08 presentation
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
                                                       payments                 payments
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
                                    RAC2008                                                             7
RAC2008   8
 RAC –The Recovery Audit Contractor:
          In the beginning……back in 2003

                         Formal Definition:
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

                                 RAC2008                                9
      Statutory Requirements
 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.

                      RAC2008                   10
           Let‟s look back at the
           Demonstration RACs
 What     is RAC?
   A federal mandated directive to contract with an
    independent entity to review Part A & Part B claims and
    recoup funds. They can look back to 10-1-07 pd date
    for review.
   Interesting: The OIG has continually indicated
    that consultants should not be paid on a
    contingency fee; however, the RACs are paid a
    % of the recoveries.
 Who     changed the rules?
                            RAC2008                           11
              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 of underpayments and overpayments
    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.
   Statement of Work/Scope of Work (SOW) for the RAC
    mber%2dcms040001cgs1/listing.htmd or CMS‟s website

                            RAC2008                        12
     Underpayment examples
 DRG   recoded to higher DRG
 Transfer disposition on UB; however pt did
  not return to skilled SNF days.
 Missed charges when charges were
  already present. If no charges were billed,
  lost charges are not subject to
  underpayment determinations.
 RACs are now compensated for
                    RAC2008                 13
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.

                         RAC2008                     14
                 2007 Report Stats
Overpayments Analysis
   Incorrectly Coded                      No/Insufficient
(Discharge status included)                 documentation
     42%       $413 m                         9%     $30 m
     38%       (9-08 report)                   25%    (9-08 report)

   Medical Unnecessary                    Other
    service or setting
                                       (duplicate payments, wrong fee
(Excessive units, 1 day inpt vs           schedules)
    outpt setting included)
                                               16%    $59 m
      32%         $111 m
                                                 5%   (9-08 report)
       33%        (9-08 report)
                                  RAC2008                               15
              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)

                           RAC2008                         16
     Automated vs Complex
 Automated   = Ex) units, discharge
 disposition/transfer DRG = 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.

                     RAC2008                    17
        Some Examples -complex……..
Excisional Debridements (Complex Review, Incorrect Coding)
Claim Facts: The hospital coder assigned a procedure code of 86.22. In the medical record, the physician writes
    “debridement was performed.” Coding Clinic 1991Q3 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 should be coded to 86.26, non excisional debridement of
    skin… Any 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.”
    The RAC determines that claim was INCORRECTLY CODED and issues repayment request letter for the difference
    between the payment amount for the incorrectly correctly coded procedure and the payment amount for the correctly
    coded procedure.
Corrective Actions: Hospitals can be more careful when submitting claims for excisional debridement. Medicare claims
    processing contractors can remind hospitals about the importance of following the coding clinic guidelines when
    submitting claims for excisional debridement.

Inpatient Rehabilitation (Complex Review, Medically Unnecessary Setting)
Claim Facts: An Inpatient Rehabilitation Facility (IRF) submitted a claim for inpatient therapy following a single knee
     replacement Medical record indicated that although the beneficiary required therapy, the beneficiary‟s condition did
     not meet Medicare‟s medical necessity criteria for IRF care (HCFA Ruling 85-2 and Medicare Benefit Policy Manual
     Section 110). The entire claim was denied.
     The RAC determines that the service was MEDICALLY UNNECESSARY for the inpatient setting and issues
     repayment request letters for the entire claim.
Corrective Actions: Inpatient Rehabilitation Facilities can be more careful when admitting Medicare beneficiaries for
     inpatient therapy to make sure that the Medicare medical necessity criteria are met.
     Medicare claims processing contractors can remind hospitals about the medical necessity criteria in HCFA Ruling
     85-2 and the Medicare Benefit Policy Manual section 110.

Source of slide: CMS – Medicare RACs - FY 2007 Status Document

                                                                 RAC2008                                             18
                    Some Examples-both……..
Wrong Principal Diagnosis (Complex Review, Incorrect Coding)
Claim Facts: 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 sepsis
    (code 038-038.9) was the principal diagnosis. The RAC issued overpayment request letters 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:
o DRG 475 (respiratory system diagnoses)
o DRG 468 (extensive OR procedure unrelated to principal diagnosis)
Corrective Actions: Hospitals can be more careful when submitting claims for DRG 475 and 468 to ensure that they
    choose the correct diagnosis to list as principal. Medicare claims processing contractors can remind hospitals about
    the importance of listing the correct principal diagnosis on the claim, especially when billing for DRG 468 and 475.
    Providers and Medicare claims processing contractors can refer to the Federal Register: February 11, 1998 (Volume
    63, Number 28) for guidance on the proper coding of non-diagnostic preadmission services. Also refer also to the
    American Hospital Association‟s definitions of Principal diagnosis and Principal Procedure, found in the ICD-9-CM
    Official Guidelines for Coding and Reporting.

Outpatient Hospital Speech Therapy (Automated Review, Medically Unnecessary Services)
Claim Facts: The outpatient hospital billed for each 15 minutes of 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. The RAC issued overpayment request letters for the difference
    between the amount of the medically necessary number of services and the billed amount.
Corrective Actions: CMS Claims Processing Manual 100-4, Chapter 5, Section 20.2 clarifies billing for untimed codes.
    The section be found at: Hospitals can be more careful
    when submitting claims for therapy services. Medicare claims processing contractors can remind hospitals about the
    importance of listing the accurate number of “units of service” on a claim.

 Source of slide: CMS – Medicare RACs - FY 2007 Status Document

                                                                  RAC2008                                             19
              Validation 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
    potential that an improper payment exists.
   RAC identifies „issue‟; sends to CMS central office for
    review; to PRS auditor for 2nd opinion if needed
   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 Accuracy rates will be made available to the public
    in the fall of 2008.      RAC2008                        20
       Can the False Claims Act
 Ifthe 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
  further investigation.
 And the story continues.

                     RAC2008                 21
More CMS updates, July 14, 2008
   “New evidence as to the effectiveness of the RAC pilot program is
   successfully identifying improper payments.
 Began in FL, NY, CA/2005; in July 2007 expanded to MA, SC and AZ
 Strategy so the RACs won’t interfere with the transition from the FI to the
   new MAC so MACs can process claims before working with RACs.
 When a new RAC begins to issue its first overpayment notification letters, it
   will be ‘black and white’ billing issues – such as duplicate claims and wrong
   fee schedule amts. (Not medical necessity)
 RAC corrected over $1 billion of Medicare improper payments for 2005-07.
   Providers chose to appeal only 14% and of all the RAC overpayment
   determinations, only 4.6% were overturned on appeal. (many are still
 In FY 2006-08, over 84% of the hospitals in CA, FL and SC had their
   Medicare revenue impacted by less than 2.5%; NY and MA over 94% of the
   hospitals less than 2.5%”
(CMS news- New report shows CMS pilot program saving nearly $700 M)
                                    RAC2008                                   22
      Comparing the Demo &
        Permanent RAC
Demonstration RAC           Permanent RAC
 Ltd overview of              Present to Validation
  requests                      Contractor
 Ltd medical director         Medical Director
  involvement                   required
                               Correct licensure
 Ltd coder vs RN
                               Limited #/still to be
 Unlimited volume of
                                determined (has been)
                               Accuracy % known &
 Unknown „true‟ history        claim status =2010
                      RAC2008                      23
                Medical Record Limits
                      FY 2009
   Inpt hospital, IRF,                          Physicians
    SNF, Hospice                             Solo: 10 per 45 days
 10% of aver monthly                         2-5: 20 per 45 days
  Medicare claims (max of                    6-15: 30 per 45 days
  200 ) per 45 days                          Large grp 16+: 50 per 45
   Other Part A billers                       days
    (outpt hospital, HH)                         Other Part B (DME,
1% of aver monthly                                Lab)
  Medicare services (max                     1% of aver monthly
  of 200) per 45 days                          Medicare Services per 45
Office of Financial Mgt, 10-08 Update
Contact AHA for the full presentation          days.
                                        RAC2008                         24
       Preparation Process
         Step   1 – Defense Audits
 Identify known weaknesses/at risk prior to
             receipt of a RAC letter
 Identify action plan /move forward rapidly

         Step2 – Validation Audits
  Once RAC letters are received, begin
              validation audits
  Reply but still determine risks; prepare
                   RAC2008                    25
           Defense Audit –
       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
   3 day SNF qualifying        Rehab
                               MS-DRG = %MCC, %CC
   Transfers that were
                               Charge Master/Charge
    billed as „discharges”
                                capture rules

                         RAC2008                        26
       High areas of Focus-Outpt
 Modifiers – 59 CDM vs                   Outlier outpt claims &/or
  HIM                                      $50,000
 E&M leveling – auditable               MUE – override issue
  criteria and bell curve analysis       Self adm meds – 637,
 Drug administration start &              259. (Collecting from pt?)
  stop times                             73/74 discontinued
 E&M in hospital                          surgeries
  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 &
  ST/9250x (1 unit)                        only
                                         CDM /Charge capture
 Hospital based physicians
                                           rules                      27
        Let‟s go Data Mining
Vulnerability: 1 day          Vulnerability: Non-
  stays for chest pain          covered meds being
  high on the Pepper            billed as 250/covered
Action: Run report            Action: If bill type 131 &
  from 10-07, (exclude          762/OBS or 450/ER,
  OB and NB), sort by           run report of all
  dx, by physician.             637/Self adm drugs
  Identify high volume          from 10-07 forward.
  and do random audit

                         RAC2008                      28
                More data mining
1 day stay high                          MSDRG551/552: Medical
                                          Back pain
   MSDRG 829: Other                     Create a report, from 10-07
    endocrine, nutritional,               forward, for all 1 day stays or
    metabolic OR Proc w/cc                zero /short stays.
   MSDRG373: major                      Sort by physician, by payer
    gastrointestinal disorder w/o         (only pull Medicare if
    cc/mcc                                appropriate sample size)
   MSDRG313: chest pain                 List all diagnosis & DRG
   MSDRG 371: Major                     Couple with the PEPPER
    gastrointestinal disorder             report. Look for patterns
                                         Random auditing of high risk
                                RAC2008                                     29
    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
       Dehydration
                                              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.

       Respiratory
                                RAC2008                                            30
And then there was OBS----Broken
 Billing „hrs in a bed‟         Outpt service vs OBS
  vs medically                    bed.
  necessary hrs.                 Drug administration
 Routine Recovery                handoffs from ER –
  must occur for 4-6              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?
                                 Ancillary delays
                           RAC2008                    31
              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 in an obs bed. Look at late
 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
                        RAC2008                   32
            Impacted Departments
                                               If inpt denial, monitor for
   Business Office/PFS                        medigap supplemental.
    Create flag for each acct                  If inpt denial, monitor and
    impacted by RAC letter                     execute supplemental refund.
    Indicate automated vs complex              If an outpt denial/OBS, monitor
    request                                    for ancillary CPTs that are
    Flag if acct is involved in a              allowed.
    take back. Appeal filed?                   Prepare letter to send to pt if
    Create tracking tool for acct to           denials as there will be an impact
    watch for take back. Special               to the pt. Defuse!
    adjustment code for tracking               Prepare scripts for the BO to
    and trending.                              explain EOBs received from
    If inpt denial, rebill part B outpt        Medicare.
    ancillary only.                            Closely coordinate with RAC
                                     RAC2008                                33
          Impacted Departments
   HIM                                UR
    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
                              RAC2008                             34
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
      different system.
     Only certain departments are live on the EMR. Others are still
      hardcopy and/or are delayed in implementation. HYBIRD!
     Even the EMR departments are still doing hardcopy
      documentation. Being scanned in later?

  As requests are received, ensure the ENTIRE medical record is
    pre-audited prior to submission with action items identified.
                               RAC2008                                 35
RAC2008   36
                RAC FAQs
Q: Will the Recovery Audit Contractors
 (RAC) appeal process mirror the regular
 Medicare appeal process?
A: The Medicare appeals process will remain the same 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.
                         RAC2008                       37
     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
    improvement plan.
   Involve compliance, create a recorded history of all
    improvement done
   Anticipate at risk from the validation audit.
   Build internal flags on all accts where medical record
    requests occurred.
   Wait to see if any further action. A Review Results letter
    should be sent within 60 calendar days.
                             RAC2008                         38
    Summary: Review & Collection Process
1       Automated Review
   New                                2
 Review                                       RAC makes a
  Issue                                           claim                         The Collection Process
Posted to                                     determination                     3              4
  RAC‟s                                                                                            Day 1
 website                                                                                        RAC issues
                                                                                                   Demand        5
                                                                                                   Letter to
                                                                                Remittance                             Day 41
                                                                                Advice (RA)
                                                                                               (includes $$$         Carrier/FI/
                                                                                 to provider
                                                                                                 and appeal            MAC
                                                                                    N432:           rights)          recoups
                Complex Review                                10
                                                                                  based on a
                                                                                                BEGINS TO
                                                                                                                     by offset
            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
                                                                                                                 appeal BY
                                                                                                                 day 30
            • 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
                                            Results Letter
            • Claim is denied if no
              response                                          39
       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   60 days from the        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

                                           RAC2008                                     40
    Now you have the RAC letter..
   Review results of the initial validation review.
   Involve physician if necessary to assist in developing an
    appeal strategy.
   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 day

                            RAC2008                         41
    CDR Marie Casey, RN, BSN, MPH; Nursing
         consultant CMS updates 8-08

 Q: Clarify the days       Q: Do we have a
  within the appeal          standard for limit of
  process. Calendar or       records that can be
  work days?                 requested in a 45 day
 A: Calendar days           period?
 Q: QIO is no longer       A: CMS is in the
  processing Medical         process of developing
  necessity audits.          a national medical
  Pepper reports?            record request. ….
 Q: Different division
                             (Was released 10-08)

                      RAC2008                    42
       More Updates 9-06-08
      Commander Casey, CMS
Q: The RAC may find an           Q: If the hospital is
   overpayment if the              denied its full inpt
   medical record is not
                                   stay, are the
   returned within 45 days.
   (SOW) 45 days from              physician’s H&P and
   date of letter from the         visits also denied?
   RAC or date of receipt?         Same question as to
A: It is 45 days from the          the 3 day qualifying.
   date of sending the letter    A: It is possible the
   nor the receipt of the
                                   RAC may recoup part
                                   B that are also billed
                                   but it is not automatic.
                            RAC2008                       43
              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
    process. MN 6183
    is also available at this website. 9-12-08
                               RAC2008                       44
What to do if the inpt is denied?
11-6-08 communication with Commander Casey, RN-CMS
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.

                               RAC2008                             45
                 The 4 Re‟s
 Rebuttal   – upon receipt of the initial proposed
 recoupment letter from the RAC, 15 days to
 send a written reply to the RAC. Does not stop
 the recoupment process.
 Recoupment      - begins in 41 days from the first
 demand letter unless a formal request for a
 redetermination (1st level) by the 30th day
 following the date of the 1st demand letter.
 Formal Appeal stops recoupment.

                       RAC2008                        46
                More Re‟s
 Redetermination    – Letter of determination
  was received. Appeal must be filed within
  30 days. (1st level with FI/MAC)
 Reconsideration – Decision from 1st level
  upheld, appealing to the QIC (not the
  FI/MAC). File appeal within 60 days of the
  appropriate receipt of letter/notice.
 Question: Cost to continue to appeal
  (interest, labor, outside company)
                     RAC2008                 47
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..
                                       See table

                             RAC2008                           48
01/01/08   RAC2008   49
01/01/08   RAC2008   50
01/01/08   RAC2008   51
     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 11.75%       day period. (CR 6183)

                     RAC2008                      52
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
                             chart copy
                                         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
                                              Gather, copy supporting documents                               AND SUPPORTING DOCUMENTS
                                              Input From Utilization Nursing, Nurse Auditors,
                                              Medical Records, HIM

                                                                     RAC2008 Demo project                                                                     53
           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              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.

                                  RAC2008                                            54
        Documentation Process
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.
                                 RAC2008                            55
     RAC Appeal Guidelines

May use CMS-20027 (Redetermination
 Request Form) or
Send letter on provider letterhead

Also include
  ~ RAC determination letter
  ~ Detail page specific to claim
  ~ Any additional supporting information
Send to FI
                   RAC2008                  56
           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
    the initial stated amt. FI/MAC will recalculate the
    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.
                             RAC2008                           57
            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.
                       RAC2008                     58
RAC2008   59
RAC2008   60
RAC2008   61
RAC2008   62
      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    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.

                                   RAC2008                                     63
    How to file a Reconsideration
                Level 2
   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:
                                   Bene name
   Follow instructions on         Bene‟s HIC #
    Medicare                       Specific service & items for which the
    Redetermination Notice          reconsideration is requested and
                                    specific dates of service
                                   Name and signature of party
   Use standard form CMS-         Name of the contractor that made the
    20033.                          redetermination
                                   Clearly state why you disagree with
   Form is mailed with the         reconsideration determination.
                          RAC2008                                     64
    3 Potential Outcomes with
 Full reversal – same as redeterminations
 Partial reversal – this reduces the
  overpayment. QIC issue a revised demand letter
  or make appropriate payments if due of an
  underpayment amt. Recoupment will begin on
  the 30th day from the date of the notice of the
  revised payment.
 Affirmation – recoupment may resume on the
  30th calendar after the date of the notice of the
                       RAC2008                    65
    2007 Reconsideration History
 QIC (Qualified             Reconsideration
  Independent                 Dispositions:
  Contractors)               Part A: 79%
  processed appox             unfavorable, 3%
  400,000 appeals in          partial, 18%
  2007.                       favorable.
 DME is separate.           Part B: 64%
                              unfavorable, 5%
                              partial, 31%
                       RAC2008                  66
         Who are the Original Medicare
  Qualified Independent Contractors/QIC?
 Part A East: Maxiumus, Inc
 Part A West: First Coast Services Opt, Inc
 Part B North: First Coast Services, Inc
 Part B South: Q2 Administrators, LLC
 DME: Rivertrust Solutions, Inc


                     RAC2008               67
         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.
                           RAC2008                          68
       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

                    RAC2008                           69
          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,
    continued inhouse defense auditing.
   Determine best practices for TNT..
   Develop corrective action w/immediate
    implementation. This is not optional!
                        RAC2008                   70
RAC2008   71
           First Level of Appeal
WHAT:         Redetermination
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
                            RAC2008            72
      Second Level of Appeal
WHAT:     Reconsideration
WHO:      Carried out by the QIC/qualified indpt
USING:    Form CMS 20033
HOW:      Request sent to QIC
TIME:     180 days from the date of
          Redetermination decision
~ No minimum amount in controversy
Review must be completed in 60 days
                        RAC2008                    73
          Third Level of Appeal
WHO:      Administrative Law Judge (ALJ)
HOW:      File with the entity specified in QIC‟s
     reconsideration notice
          (HHS OMHA field office)
TIME:     60 days from the date of QIC‟s
     reconsideration notice

~ Amount in controversy must be at least $120 as of
  January 1, 2006
RESULTS: Review must be completed in 90 days
                        RAC2008                     74
        Fourth Level of Appeal
WHO:       Medicare Appeals Council
           (Also referred to as Departmental
           Appeals Board)
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
                      RAC2008                   75
 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

                RAC2008               76
        Fifth Level of Appeal
WHAT:     Federal Court Review
WHO:      Carried out by The Federal District
TIME:     60 days from the Medicare Appeals
                Council decision
INCLUDE: ~ Amount in controversy - $1180
              (effective 01/01/06)
         ~ Date of request

                    RAC2008                     77
Fifth Level of Appeal
Federal Court Review Address:

Department of Health and Human Services
General Counsel
200 Independence Avenue, SW
Washington, DC 20201

                  RAC2008                 78
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
and 310.1
Information on appeals process

Documentation requirements
– MNU 2006‐01, January 2006
                           RAC2008                      79
References: Appeals information
Appeals: Administration Law Judge;
Departmental Appeals Board; U.S. District
Court Review
Changes to chapter 29 – Appeals of claims
decisions –revised
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
2) CMS 03/07/2006_Appeals_Session_Materials
                                                          RAC2008                               80
          Tools for Success
 Look  at a tracking tool (Excel sample)
 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 mining.
 Internally audit, train – audit, train some
 Explore creation of a RAC Specialist
                    RAC2008                 81
             RAC References

For Concerns about the RAC Demonstration
More on the appeal process:

                       RAC2008                    82
           ARS Training Library
 Join us for the Regional Trainings
 “Consumerism in PFS ++ RAC ATTACK –
  Let‟s Go Data Mining and Understanding
 Oct/Atlanta Nov/Baltimore Dec/Phoenix
   Ongoing RAC Updates and Audios –

                         RAC2008              83
        AR Systems‟ Contact Info

Day Egusquiza, President
AR Systems, Inc
Box 2521
Twin Falls, Id 83303
208 423 9036

Thanks for joining us!

                           RAC2008   84
                           RAC 2008
THANKS! Co-Presenters-
Contact information:
Virginia Gleason, LPN, JD/MPA, CHC, CPHRM
Phone: 406-759-5728

Day Egusquiza, President           Stacey Levitt, RN, MSN, CPC
AR Systems, Inc                    Director, Pt Care Mgmt
Box 2521                           Lenox Hill Hospital, NY, NY
Twin Falls, Id 83303     
208 423 9036

                              RAC2008                            85

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