Articles Posted in Audit

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The Centers for Medicare & Medicaid Services (CMS) intends to roll out its Part D RAC program during the third quarter of 2011. In implementing the program, CMS has contracted with ACLR Strategic Business Solutions to be the Part D recovery audit contractor. This company has already recovered tens of millions of dollars through its auditing process for government contractors. John Spiegel, director of the Medicare Program Integrity Group, stated that “CMS is working on business planning, technology requirements, staffing and communications initiatives to achieve the program goals.” He also mentioned that CMS intends to implement a website that will provide additional Medicare Parts C and D RAC information.

Medicare Part D plans and sponsors should consider conducting internal audits and implementing compliance programs at this time in order to be in the best position to avoid or defend against a RAC audit.

If you need assistance in preparing for, or defending against Part D RAC audits, or implementing a corporate compliance program geared toward identifying and correcting potential risk areas for Part D RAC audits, please contact a Wachler & Associates attorney at 248-544-0888.

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Over $365 Million in Improper Payments Identified By RACs Since October 2009

CMS recently reported that RACs have identified $312.2 million in overpayments from October 2009 through March 2011. During the same period, $52.6 million in underpayments were identified. While these figures are well below the over $1 billion in improper payments identified during the demonstration program, they are expected to increase. RACs are currently reviewing large numbers of DRGs in coding and medical necessity reviews and it is anticipated that these will result in identification of more improperly billed claims. The first quarter of 2011 accounted for $184.6 million in identified improper payments and these trends can be expected to continue for the foreseeable future.

CMS also released the top approved issue for each RAC region. The top issue for RAC Region A is Ventilator Support of 96+ hours; the top issue for RAC Region B is Extensive Operating Room Procedure Unrelated to Principal Diagnosis; the top issue for RAC Region C is Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Provided During an Inpatient Stay; and the top issue for RAC Region D is Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Provided During an Inpatient Stay.

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DCS Healthcare: The Region A RAC added three new medical necessity claims to its approved issues list. These claims are:

  • Peripheral/cranial nerve and other nervous system procedures with MCC (MS-DRG 040);
  • ECMO or tracheostomy with MV 96+ hrs or PDX except face, mouth and neck with major O.R. (MS-DRG 003);
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Recovery Audit Contractors (RAC) recovered $237.8 million in the six-month period that ended in March. This amount is already three times more than the amount of money recovered in the previous year. According to recent estimates, CMS alleges that the total sum of Medicare improper payments exceeds $47 billion annually. If you have been audited by a RAC, ZPIC, MAC, carrier or other Medicare contractor and need assistance with the defense of the audit, please contact a Wachler & Associates attorney at 248-544-0888.

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CGI, the Recovery Audit Contractor (RAC) for Region B, recently removed four DRG validation issues from its list.  This means that providers in Region B will no longer be subject to RAC audits on these particular procedures.

Connolly has added several new RAC issues to its CMS approved list.  One issue, Duplicate Claims, has been added for outpatient hospital claims.  Twelve issues have been added to DRG validation claims, and twenty-four issues have been added for medical necessity claims.  Providers in Region C need to be aware and prepared for these new issues being audited.

Some examples of the new medical necessity issues include: Skin graft and/or debridement DRG 577; Endocrine, nutritional and metabolic disorders DRG 639; Acute inpatient admission, MS-DRG 491.  For a full list of the new issues in Region C, please visit Connolly’s website.

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Effective February 14, 2011, CMS has limited the number of records RACs may request when reviewing Medicare claims from Physicians and other practitioners.  These requests for medical records, which are used in connection with complex claims reviews, will be limited based on the size of the group/office being audited.

If you have any questions regarding RAC, Medicare or other third party payor audits, please contact a Wachler & Associates attorney at 248-544-0888 or www.Wachler.com.

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Connolly Healthcare, the region C RAC, recently posted 77 new issues eligible for review.  Twenty-three of these new issues involve Medical Necessity reviews, several of which include reviews of acute inpatient admissions to validate the medical necessity of short stay admissions.  These new approved issues implicate a variety of MS-DRGs, which will involve reviews for the medical necessity of the services and whether the MS-DRGs, which will involve reviews for the medical necessity of the services and whether the MS-DRG at issue was billed correctly.

DCS Healthcare, the RAC for region A, posted 7 new issues for review.  The new approved issues involve MS-DRG validation.  The issue description provided by DCS Healthcare indicates that the reviews require that diagnostic and procedural information and the discharge status of the beneficiary, as coded on the claim, matches the attending physician’s description and the patient’s medical record.

If you are facing a RAC audit or would like more information about a RAC related issues, please contact a Wachler & Associates attorney at (248) 544-0888 or visit www.Wachler.com.

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The Centers for Medicare and Medicaid Services (CMS) published a proposed rule on November 5 regarding RAC activities for Medicaid programs.  Section 6411 of the Patient Protection and Affordable Care Act (PPACA) requires states to contract with one or more Medicaid RACs by December 31, 2010.  By that date, states are also required to submit to CMS a State Plan Amendment (SPA) which documents the initiation of the Medicaid RAC program.  The proposed rule stated April 1, 2011 as a goal for Medicaid RAC implementation.

The proposed rule addresses four main points including contingency fees, reporting, appeals and coordination of audit efforts.  Comments are requested on the current methodologies for determining the maximum contingency fees allowed under the Medicaid RAC program.  According to the proposed rule, no state will pay a contingency fee higher than the maximum allowed under the Medicare RAC program, unless it provides ample justification for an exception based on the existing state law.  States must also provide incentives for the identification of underpayments to the Medicaid payments.

In addition, under the proposed rule states will report to the federal government only the net amount of collected overpayments after contingency fees that were paid to the contractor have been subtracted from the total.  Each state will be required to refund the federal share of the net overpayment amount to the federal government.  States will also have to issue reports describing the effectiveness of their Medicaid RAC programs.

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The RACs for Regions A, B and C recently added new approved issues for review.  The RAC for Region A, DCS Healthcare, added two issues, DRG validation claims and outpatient claims, to its list for providers in Region A states.  CGI, the RAC for Region B, added two new issues for professional services claims and the RAC for Region C, Connolly Healthcare, added a new issue for outpatient hospital claims and physician (carrier) claims.

For more information on Recovery Audit Contractors, or for assistance with a Medicare audit, please contact a Wachler & Associates attorney at 248-544-0888. 

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On October 4, 2010 the Centers for Medicare and Medicaid Services (CMS) published a letter that was sent to state Medicaid directors as part of a series of letters that will provide guidance for the implementation of provisions of the Patient Protection and Affordable Care Act (PPACA), including the expansion of the Recovery Audit Contractor (RAC) program to Medicaid.  States are required to contract with Medicaid RACs consistent with state law and the RACs will be paid through contingency fees.  States will submit a State Plan Amendment (SPA) to CMS through which the State will either attest that it will establish a Medicaid RAC program by December 31, 2010 or indicate that it is seeking an exemption from the requirements.  CMS will permit states to maintain flexibility in the design of the state’s Medicaid RAC program and the number of entities the state will enter into contracts with, so long as the states act within the parameters of the statutory requirements. 

States that seeks to request variances or exceptions from the Medicaid RAC program must submit to CMS a written request from the state’s Medicaid Director to the CMS/Medicaid Integrity Group.  CMS has expressed that it will grant complete Medicaid RAC program exceptions rarely and only under the most compelling of circumstances.

Another important component of the Medicaid RAC program is the contingency fee payment to the contractors.  PPACA requires that Medicaid RACs be paid only from amounts “recovered” on a contingent basis for collecting overpayments and in amounts specified by the State for identifying underpayments.  Although CMS will not dictate the contingency fee rates, the maximum rate will be established.  CMS will publish a notice in the Federal Register, no later than December 31, 2010, to announce the highest Medicare RAC contingency fee rate and this rate will apply to Medicaid RAC contracts with a performance period beginning on or after July 1, 2014.  The contingency fee rates should be reasonable and take into account several factors, including: the level of the effort performed by the RAC, the size of the state’s Medicaid population, the nature of the state’s Medicaid health care delivery system and the number of Medicaid RACs engaged.  The fees paid to Medicaid RACs must include amounts associated with (1) identifying and recovering overpayments and (2) identifying underpayments.  States must maintain an accounting of amounts recovered and paid, and ensure that the total Medicaid RAC fees paid are not more than the total amount of overpayments collected.

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