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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.
DO NOT STOP GETTING READY! Look
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% ebony.brandon@cms.hhs.gov
B/Upper midwest CGI Technologies and Solutions, Inc of Fairfax, VA
Contingency fee: 12.50% scott.wakefield@cms.hhs.gov
C/Lower western Connolly Consulting Associates, Inc of Wilton, CT
Contingency fee: 9% marie.casey@cms.hhs.gov
D/Northwest HealthDataInsights, Inc of Las Vegas, NV
Contingency fee: 9.45% marie.casey@cms.hhs.gov
Rollout periods: Yellow states Oct, 2008 –Jan, 2009
Green states March, 2009
Blue states Aug, 2009
All states live no later than Jan , 2010
www.cms.hhs.gov/RAC/03_RecentUpdates.asp
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
payments
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
bene
CERT All Randomly Small To measure improper
payments
MAC All Targeted Depends on # of To prevent future
claims with improper improper payments
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
program/CMS/www.fbo.gov/sbg/NHS/HCFA/AGG/reference%2Dnu
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
underpayments.
RAC2008 13
How will the RACs know what to
audit?
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: http://www.cms.hhs.gov/manuals/downloads/clm104c05.pdf. 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
Apply?
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.
NO HEAD IN THE SAND!!
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
pending.)
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
required
audits
Limited #/still to be
Unlimited volume of
determined (has been)
requests
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!
payer
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 &
11000-15000/physicians
ST/9250x (1 unit) only
CDM /Charge capture
Hospital based physicians
RAC2008
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
Report
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
vulnerabilities:
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
w/mcc
Random auditing of high risk
areas.
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?
condition.
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
case=risk
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
specialist.
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
Review
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
Automated
Review RAC makes a
Issue claim The Collection Process
Posted to determination 3 4
RAC‟s Day 1
Carrier/
website RAC issues
FI/MAC
Demand 5
issues
Letter to
Remittance Day 41
Provider
Advice (RA)
(includes $$$ Carrier/FI/
to provider
and appeal MAC
N432: rights) recoups
Complex Review 10
“Adjustment
based on a
INTEREST
BEGINS TO
by offset
7 • Recoupment
6 9 Recovery ACCRUE
Audit” AFTER 30 will NOT
New RAC 8 RAC clinician RAC issues
DAYS FROM occur if:
Complex issues reviews Review Results
Provider DETERMINAT provider
Review Medical medical Letter
submits ION has paid in
Issue Record records; to provider
medical full; or
Posted to Request (does NOT
records makes a claim provider
RAC‟s Letter include $$$ 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
determination
Reconsideration 180 days from the QIC 60 days of receipt
redetermination
Hearing by the ALJ 60 days from the ALJ 90 days of receipt
QIC‟s
reconsideration;
Balance at least
$120
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
rebuttal.
ALL DONE WITHIN THE 45 DAYS TO REPLY TO THE LETTER
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
letter.
.
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.
www.cms.hhs.gov/transmittals/downloads/R141FM.pdf. 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
TIMELINE
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
determination
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
occurring
Day 41 Recoupment begins Provider can appeal and
potentially stop recoupment.
RAC2008 54
Redetermination
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
Redeterminations
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
Redeterminations
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
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RAC2008 62
Next steps for Recoupment
Process
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
notice
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:
redetermination.
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
(MRN)
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.
MRN.
RAC2008 64
3 Potential Outcomes with
Reconsiderations
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
reconsideration.
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%
favorable.
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
Source: www.cms.hhs.gov/OrgMedFFSAppeals
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
appeals.
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
payments.
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
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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
MAIL TO:
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
contractor
USING: Form CMS 20033
HOW: Request sent to QIC
TIME: 180 days from the date of
Redetermination decision
~ No minimum amount in controversy
RESULTS:
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
Court
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
References
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
http://www.empiremedicare.com/PartA/parta_appeals.htm
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
more
Explore creation of a RAC Specialist
RAC2008 81
RAC References
For Concerns about the RAC Demonstration
Program:
http://www.cms.hhs.gov/RAC/
More on the appeal process:
www.cms.hhs.gov/OrgMedFFSAppeals
Redeterminations:
www.cms.hhs.gov/OrgMedFFSAppeals/02_redetermination%
20by%20a%20Medicare%20Contractor.asp
RAC2008 82
ARS Training Library
Join us for the Regional Trainings
“Consumerism in PFS ++ RAC ATTACK –
Let‟s Go Data Mining and Understanding
Appeals”
Oct/Atlanta Nov/Baltimore Dec/Phoenix
www.healthcare-seminar.com/rtagenda.htm
Ongoing RAC Updates and Audios –
daylee1@mindspring.com
RAC2008 83
AR Systems‟ Contact Info
Day Egusquiza, President
AR Systems, Inc
Box 2521
Twin Falls, Id 83303
208 423 9036
daylee1@mindspring.com
Thanks for joining us!
RAC2008 84
RAC 2008
THANKS! Co-Presenters-
Contact information:
Virginia Gleason, LPN, JD/MPA, CHC, CPHRM
Phone: 406-759-5728
virginiagleason5@msn.com
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 sdlevitt@hotmail.com
208 423 9036
daylee1@mindspring.com
RAC2008 85
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