Articles Posted in Audit

The Office of Inspector General of the U.S. Department of Health and Human Services (OIG) released a report of its review of inpatient rehabilitation facilities’ transmission of patient assessment instruments for 2006 and 2007. Inpatient rehabilitation facilities (IRFs) are required to submit patient assessment instruments for each stay to the Centers for Medicare and Medicaid Services (CMS) National Assessment Collection Database. In 2001, CMS released guidance that required the assessments to be submitted by the 17th calendar day from the date of the beneficiary’s discharge. If the submission date is 10 calendar days late, the payment rate for the applicable case mix group should be reduced by 25 percent.

In its report released in June, the OIG reviewed calendar years 2006 and 2007 to determine if Medicare contractors were reducing case mix patient claims by 25 percent as required by the 2001 CMS rule. The CMS audit evaluated 10,338 claims, totaling $166 million in claims, for which the patient assessment instrument was submitted after 27-day deadline. Out of the over 10,000 claims, the study focused on 192 claims. The OIG report showed that in 113 of the 192 cases, the IRFs did not receive reduced payments despite the transmission of the patient assessment data past the 27-day deadline. CMS estimated that these payment errors totaled approximately $20.2 million overpayments to IRFs in 2006 and 2007.

The OIG determined that the overpayments were the result of inadequate internal controls at IRFs to ensure that the transmission date reported on the claim matched the actual date the IRF transmitted the instrument to the database. In addition, the OIG found that Medicare did not have “prepayment controls” to compare the actual dates of the patient assessment data submission with the date on the claim submitted to the fiscal intermediary.

Three Recovery Audit Contractors (RACs) posted new issues.

In its report, “The Medicare RAC Program: Update to the evaluation of the three-year demonstration,” the Centers for Medicare and Medicaid Services (CMS) reveals that providers have been winning more appeals since its last report in January 2009. The report first noted that the number of reported claims for appeal have decreased significantly since the January 2009 report. The decrease is due to a more accurate method of counting claims, i.e., claims are now counted only once regardless of how many levels of appeal the provider pursues. In addition, CMS removed claims from the category of “appealed” if the denial was reversed by the contractor after it received additional documentation from the provider.

CMS’s report also found that providers chose to appeal 12.7 percent (76,073) of the RAC determinations. Of those appealed claims, 64.4 percent were overturned on appeal.

If you need assistance with a RAC or third party payor audit or for more information, please visit www.racattorneys.com or contact a Wachler & Associates attorney at 248-544-0888.

The Director of Health Care for the Government Accountability Office (GAO), Kathleen M. King, recently testified before the Subcommittees on Health and Oversight, Committee on Ways and Means, House of Representatives. An important component of her testimony included a recommendation that Recovery Audit Contractors (RACs) should focus their post-payment review activities on home health and durable medical equipment providers.

Ms. King reported in her testimony that the Centers for Medicare & Medicaid Services (CMS) estimates improper payments for Medicare fee-for-service (FFS) reached $24.1 billion for calendar year 2009. However, Ms. King emphasized that this may not be the full figure, and identified challenges to and strategies for preventing fraud, waste, and abuse and to reduce improper payments. The GAO identified five strategies to help CMS address these challenges. The strategies are: (1) strengthening provider enrollment processes and standards, (2) improving pre-payment review of claims, (3) focusing post-payment claims review on most vulnerable areas, (4) improving oversight of contractors, and (5) developing a robust process for addressing identified vulnerabilities.

Ms. King also discussed the future strategy for RACs. She stated that since RACs are paid on a contingent fee basis, they often focus their post-payment reviews on health provider with expensive claims. However, the GAO recommends that RACs focus their post-payment review activities on items and services where RACs are not expected, specifically home health and durable medical equipment.

The RAC for Region D, HealthDataInsights, added two new RAC issues for Part B claims review to its CMS-approved list. The new issues are co-surgery not billed with modifier 62 and global days. The issues apply to providers in all Region D states.

For more information on RAC approved issues or if you need assistance with a RAC or third party payor audit, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

Recovery Audit Contractors (RACs) recently posted new issues approved for review:

The Centers for Medicare and Medicaid Services (CMS) issued a new transmittal to address concerns regarding the reporting of recoupment for overpayment on the remittance advice (RA). During the RAC demonstration project providers would receive an RA, which is a notice of payments and adjustments sent by Medicare contractors to providers, billers and suppliers. The RA would either be delivered as a companion to a claim payment, or as an explanation when no payment was made. If a RAC denied a claim and was entitled recoup money, the amount would be taken from a future payment. However, there was not a mechanism to trace the recouped payment back to the original claim that had been denied. The result was that providers were unable to maintain correct records.

Transmittal 659 addresses this concerning by instituting a system that will assign a control number at the point a recoupment demand is made. The control number will stay attached to the claim and will later be used on the RA when the payment is offset from the provider’s reimbursement. Therefore, the control number will identify a particular claim and providers will be able to maintain accurate records.

If you need assistance with a RAC or third party payor audit or for more information, please visit www.racattorneys.com or contact a Wachler & Associates attorney at 248-544-0888.

The RAC for Region C, Connolly Healthcare, has added 20 new DRG Validation issues to the list of CMS-approved audit issues. In addition, earlier this month several issues were approved for Region C providers in Virginia and West Virginia.

If you need assistance with a RAC or third party payor audit or for more information, please visit www.racattorneys.com or contact a Wachler & Associates attorney at 248-544-0888.

Providers and suppliers that receive request letters from Recovery Audit Contractors (RACs) should ensure the following:

In a decision issued February 10, 2010, the Medicare Appeals Council reached a decision on an appeal from the RAC Demonstration Project. The Recovery Audit Contractor (RAC) initially found that the provider had received an overpayment for the inpatient services covered under Medicare Part A, but the beneficiary met the criteria for outpatient observation. Nevertheless, the RAC denied the entire claim. The provider ultimately appealed to an Administrative Law Judge (ALJ). The ALJ’s decision was “partially favorable.” The ALJ denied Medicare Part A coverage for the inpatient services, but found that the “observation and underlying care” services under Medicare Part B were warranted. The Medicare Appeals Council followed the ALJ’s decision, stating that the Centers for Medicare and Medicaid Services’ (CMS) Medicare Benefits Policy Manual clearly indicates that the payment may be made for covered hospital services under Part B, if a Part A claim is denied for one of several reasons. The Council required the RAC to work with the provider to arrange for billing under Part B, and offset any Part A overpayment.

If you need assistance with a RAC or third party payor audit or for more information, please visit https://www.wachler.com/ or contact a Wachler & Associates attorney at 248-544-0888.