With all the activity lately on his desire “fix” health care nationwide, ever wonder what President Obama has been reading, of late? There were some recent articles about just that, and if you haven’t seen these articles, we highly recommend them:

This article from Dr. Atul Gawande of Harvard Medical School, published by The New Yorker on June 1 started it all: The Cost Conundrum, What a Texas town can teach us about health care

By June 8, President Obama had seen the article and it “dramatically affected his thinking” according to The New York Times: Health Care Spending Disparities Stir a Fight - includes coverage of his talks with Senators

June 9: Blogs began to notice: President Obama read Atul Gawande’s excellent piece on Healthcare

June 12: President Obama speaks at a town hall meeting in Green Bay, WI, citing McAllen’s costs and compares them to costs at Mayo Clinic: Text of Obama’s remarks and an article about this speech

June 13: an editorial appeared in The New York Times: Doctors and the Cost of Care

June 14: Gawande fans at Seton Hall University School of Law write about it on their weblog: Why McAllen Texas Kant be the answer to health reform

After you read any one of those, you’ll see that Dr. Gawande’s thinking, despite being a doctor himself, is squarely pointed at physicians. Reportedly, President Obama sees the logic in that, at least in some way.

A question often asked by hospitals during CMS’ Outreach Sessions in various states concerns what is often called “reach-thru effect. This refers to what happens when Part A claims filed by hospitals are subsequently denied by a RAC for lack of medical necessity, due to either a lack of (physician written) documentation or an alternative determination about the medical necessity of the service(s) provided, or the appropriateness of the setting in which they were provided (inpatient vs. outpatient). If a hospital’s claim for an inpatient stay is denied for medical necessity, many if not all “down-stream” claims are in danger of being denied as well, such as subsequent SNF stays, ambulance services, and even physician E&M services.

A New Policy Statement

CMS just issued an update, reported by the AHA on their site - it is not posted where expected on the CMS site, but appears in the “Overview” section of CMS’ RAC website. Anyway, it clearly states that while “all provider claims types are available for RAC review, at this time,” a RAC will not automatically deny claims that are associated with a full inpatient denial. The statement goes on to state that these claims may be reviewed and adjusted, based upon submitted documentation.

We have heard several reports from people who attended recent webinars held by CMS and Connolly who were disturbed by what they heard on this subject. Regardless of what was said in those sessions, the update by CMS, as posted by AHA, appears to confirm hospital providers’ fears — that CMS seems to be mostly focused on the highest returns possible via the RACs, and physician claims do not seem to be of much interest, due to their small dollar amounts.

Unfortunately for hospital providers, it is common sense that a RAC will pursue their targets in the most efficient (i.e., profitable) manner available to them. .

AHA reports the update as follows:

CMS Update - June 26, 2009: CMS is often asked about the phase-in strategy for RAC reviews. CMS has implemented a phase in strategy by review type. CMS’ phase in strategy can be found in the downloads section on the recent updates page. CMS has not put a phase in strategy in place by provider type. All provider types are available for RAC review once provider outreach has occurred in the state. Any reviews completed by the RAC must have been first approved by CMS and posted to the RAC websites. The RAC websites can be found in the RAC contact information document in the downloads section below. CMS expects the first approved new issues to be posted in July 2009.

CMS is often asked about other claim types that may be affected by a full inpatient denial and if the RACs will deny other claim types associated with the inpatient stay, such as physician evaluation and management services. At this time the RAC will not automatically deny claims that are associated with a full inpatient denial. However, these claims may be reviewed individually and there may be a need to fully/partially adjust the claim based on the documentation submitted. (source: AHA website)

What Does the Official Manual Say?

We’ve heard the Medicare Program Integrity Manual quoted as a source for the official policy about how CMS audit contractors in general are to set their priorities, due to their “limited resources.” Well, we looked it up (find it here on www.myedutrax.com), and here’s what it says in Medicare Program Integrity Manual , Chapter 3.2, Paragraph B. There’s nothing about specific kinds of claims or billings, but the manual leaves no doubt as to what CMS is after and how they will set priorities (see page 10, all the bold below is my emphasis):

“Contractors shall focus administrative resources to achieve the greatest dollars returned to the Medicare program for resources used. This requires establishing a priority setting process to assure MR focuses on areas with the greatest potential for fraud and abuse. Fraud and abuse may be demonstrated by high dollar payments, high volume of services, dramatic changes, or significant risk for negative impact on beneficiaries (e.g., low volume but unnecessary surgery).

Efforts to stem errors shall be targeted to those areas which pose the greatest financial risk to the Medicare program and which represent the best investment of resources. Contractors should focus where the services billed have significant potential to be non-covered, incorrectly coded, or misrepresented. Target areas may be selected because of: High volume; High cost; Dramatic change; Adverse impact on beneficiaries; and/or Problems which, if not addressed, may escalate.

Contractors have the authority to review any claim at any time, however, the claims volume of the Medicare program prohibits review of every claim. Resources dictate that in attempting to make only correct payments, contractors make deliberate decisions on the best uses of limited resources to maximize returns.”

So, it’s not hard to see where they are getting their priorities from.

We would like to hear comments from providers about their response to this policy. You are welcome to post them here!

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CMS has issued a sample demand letter for providers, as an example of what to expect from the RACs. They intend this to be only the first sample letter in a series from CMS.  Download a copy HERE.

HealthDataInsights indicated during a May 28 Region D training session that CMS will be developing multiple uniform letters addressing various situations for providers. This is intended to help providers understand exactly what is going on when they receive RAC-generated demand letters.

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The RAC for Region C, Connolly Healthcare, has evidently decided to use Milliman guidelines as their preferred tool for judging status designations in Medicare facility-based claims.

We received an email from a client facility, quoting an email from Christine Castelli, Principal, Healthcare Division, Connolly Consulting, dated May 25, stating the following:

“..As of today, Connolly will be using Milliman. Please be aware that both Milliman or InterQual are only tools, they are not decision makers.”

Region C States:

CO, NM, OK, TX, AR, LA, MS, AL, TN, GA, FL, SC, NC, VA, WV

Connolly Healthcare Services website:

http://www.connollyhealthcare.com/RAC/Pages/cms_RAC_Program.aspx

Milliman Guidelines website: http://www.careguidelines.com/

Analysis Coming Soon:

We will be posting soon an analysis of what impact we can determine that this might have on audits of claims from facilities that use the competing and more popular guidelines, McKesson’s InterQual guidelines.

Your comments and questions are welcome here on our journal, so please feel free to register and post! Stay tuned for more details…

recovery audit contractor

If you have any questions or problems with the RAC program, CMS asks that you email them to this address:  rac@cms.hhs.gov

Alternatively, CMS has given out and listed the names and contact numbers for the four RAC Project Officers - each is responsible for a specific RAC Region - and even encouraged providers to call them directly:

• Region A:        Ebony Brandon           410-786-1585
• Region B:        Scott Wakefield          410-786-4301
• Region C:        Amy Reese                  410-786-8627
• Region D:        Kathleen Wallace        410-786-1534

RAC Contractor Websites

The RACs themselves are required to have websites running to further enable an interface with providers. At this time, two of the contractors have RAC-specific websites available, and the other two will have their up shortly.

Here are the websites by Region:

o       Region A (ME, NH, VT, MA, RI, NY, NJ, PA, DE, MD) http://www.dcsrac.com - Diversified Collection Services.

o       Region B (MN, WI, MI, IL, IN, OH, KY)  http://racb.cgi.com - CGI Federal, CGI Technology & Solutions.

o       Region C (CO, NM, OK, TX, AR, LA, MS, AL, TN, GA, FL, SC, NC, VA, WV)  http://www.connollyhealthcare.com/RAC/Pages/cms_RAC_Program.aspx - Connolly Healthcare Services.

o       Region D (AK, HI, CA, WA, OR, NV, ID, MT, WY, UT, AZ)  http://www.healthdatainsights.com/RecoveryAuditContractor.aspx or you can email them at racinfo@emailhdi.com - Health Data Insights.

Of these sites, so far, only the Connolly site has any really helpful information. You can, however, provide YOUR contact information, including who you want to receive Records Request Letters, Review Results Letters and Demand Letters, at the DCS and Connolly sites.

The other two sites are slowly having more pages added, but as yet, they have little real information available.

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eduTrax is offering a free webinar for all providers on the RAC Appeals Process. The webinar is scheduled for Tuesday, May 19, 2009, at 1:30pm ET (12:30pm CT / 11:30am MT / 10:30am PT) and will last for 60 minutes.

Click HERE to Register for FREE

Who handles the RAC requests in your office or facility? Knowing the process and how to address these requests will make you better prepared to defend revenue.

Attend this session with Paula Digby and get your plans in place.

WEBINAR AGENDA (the short version)

• A Short Review — How the RACs Operate
• Your First Line of Defense — Documenation!
• The Levels of Appeals — all 5 Levels explored
• Further Recommendations

Seating is limited, so Register Now to reserve your seat.

CMS continued its efforts last week to educate healthcare providers on the permanent Recovery Audit Contractor program with two Open Door Forum calls. The following points were discussed during one of the calls:

Record Request Limits: Record Request Limits are evidently to be based on group NPIs, not the number of NPIs assigned to individual physicians. (find the official document here) This may be good news, or it may not, depending on your setup. For example, a group of 18 physicians might have 2 NPIs, if they are setup in two locations, with 9 MDs in each. The rule states that a group NPI (with 6-15 MDs/group) has a limit of 30 records every 45 days. So, the two groups together could get requests for 60 records every 45 days. However, if there are 3 NPIs, with 6 MDs in each of 3 groups, then there could requests for up to 90 records every 45 days.

Line-item billing: For a claim containing multiple CPT codes for the same date of service, each code (i.e., procedure) constitutes an item that RACs can review. Many providers consider an encounter or visit as a single claim for that patient for a date of service, even if it includes several CPT codes.

Contingency fees: RACs receive the same contingency fee regardless of whether they identify overpayments or underpayments. However, keep in mind that during the demonstration project, the number of overpayments found FAR exceeded the number of underpayments found. Let’s not hold our breath waiting for underpayments to be found by a RAC.

Electronic Submissions: Per the call, the RACs are not prepared to receive electronic data interchange now, and will not be for quite some time. For now, providers should submit paper claims (via fax) or send images of electronic medical records via CD or DVD.

Recordings/Transcripts Promised

CMS has promised to make recordings of both calls available on the CMS Open Door Forum Web site. If past history is any guide, these will probably be transcripts, instead of audio recordings. However, at the moment, the due dates have passed and no recordings are yet available, at the time of this writing. We will post a notice here, on the blog, when the “recordings” do become available.

Outreach Schedule Updated

CMS’ recently updated their RAC education and outreach schedule — you should check it for information on sessions coming to a city near you. The schedule includes information regarding which providers (e.g., hospitals, physicians, etc.) should attend the sessions. CMS plans to update the RAC schedule as new sessions become available.

Providers in a yellow or green state have sessions scheduled in various cities, soon.

If you are in a yellow or green state, and believe CMS has no outreach sessions for your type of provider scheduled in your area, we highly recommend that you e-mail CMS to inform them and request more sessions.

Providers in a blue state have outreach sessions scheduled beginning in August. If you do not see any sessions scheduled near you, keep checking back, as more will likely be scheduled before August.

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Current CMS Scheduled RAC Outreach Sessions leave some providers with no opportunity to attend an outreach session. CMS recently acknowledged as much, during the Q&A portion of their April 14 RAC Open Door Forum. They recognized and admitted that the sessions currently scheduled limit participation to “members only” of the “hosting” hospital associations and/or medical societies. This leaves out other providers, such as physical therapy clinics or DME providers, and could even leave out physicians, if the sessions are hosted by a hospital association.

We can easily identify a few examples of truly limited participation:

In Texas: in a huge state with over 600 hospitals, CMS originally only scheduled a single outreach session. Thru the efforts of the Texas Hospital Association (THA), CMS added sessions: one (1) audio tele-conference will be held, but is limited to just 200 pre-registered callers; two (2) face-to-face sessions were added, bringing the total to three (3), scheduled in Dallas, San Antonio, and Houston. Those sessions will also have limited participation, again limited to only pre-registered attendees. Texas hospitals can pre-register at the THA website.

In Georgia: in a state with over 190 hospitals, the single session scheduled so far is at a hospital association conference (HomeTown Health Network), held in St. Simon’s Island, certainly not a central location for the state. The association has less than 60 member hospitals.

CMS Controls These Sessions, Not the Hosts

For what we have been able to gather from the few “hosting” associations we have spoken to so far, CMS is actually running these sessions from their Washington offices. They are also hosting the conference calls, and controlling all aspects of the calls/sessions.

At this writing, it is unclear how much or how many of the RAC Contractors themselves will be involved and/or participate in these sessions. We would hope that they will be very active in the sessions, but we are so far unable to confirm such. Keep in mind, there is nothing in the RAC Statement of Work that requires the contractors to participate in these specific sessions, although there is a perhaps nebulous requirement for them to do some provider outreach.

Also keep in mind: the RACs are prohibited from doing any “education” of providers. The RACs are simply required to “reach out” to providers to explain their processes and how to work with them, but not explain how to be in compliance with CMS rules and regulations. CMS alone is tasked with that effort.

No Transcripts or Recordings to be Offered

Again, as of this writing, CMS seems to have no plans to make recordings or transcripts of these sessions available, but we have heard that they do plan to provide an outreach presentation on its web site for providers who are unable to attend a live session. We’ve been told that the sessions are all meant to have identical content.

If you find this situation alarming and unsatisfying, we recommend two steps:

Write down and email your concerns to CMS (try here), and

Contact your national trade organization, or express your concerns to organizations such as the American Physical Therapy Association, the National Association of Rehab Providers and Agencies, or the National Association for Homecare and Hospice.

recovery audit contractor

Most Providers Unaware of New FTC Red Flag Rules

On November 1, 2008, the Federal Trade Commission (FTC) implemented some new so-called Red Flag Rules, to combat rising identity theft, and its impact on healthcare costs. Essentially, the new rules require any business that extends credit to its clients/customers must put new policies in place to avoid identity theft. The new rule, so says the FTC, applies to healthcare providers, both facilities and physician practices.

The American Medical Association (AMA) has argued that existing HIPAA regulations cover this, but the FTC disagrees, and intends to begin enforcing the rules as of May 1, 2009.

In a March 9 letter to the FTC, the AMA asked the Federal Trade Commission (FTC) to suspend the application of rules “to physicians” and publish a new rule so that physicians have an opportunity to provide comments. The AMA insists that because they were unaware that the rules applied to them, the “physician community” did not have opportunity to comment.

Under the Red Flag Rules, which were finalized in October 2007, via the Fair and Accurate Credit Transactions Act (FACTA), financial institutions and creditors must develop and implement written identity theft prevention programs.

FACTA provides a broad definition of “creditor” as “any entity that regularly extends, renews or continues credit.” The FTC has interpreted the definition to include healthcare providers and physicians.

See our complete article on the eduTrax portal HERE.

We are working with Morris, Manning & Martin, an Atlanta-based law firm with offices nationwide, to prepare more education on this subject as well as others. See their website for many free recorded webinars on many compliance issues of concern to healthcare providers.

Providers in Georgia just began receiving letters from the Georgia Department of Community Health (DCH), calling for providers to audit themselves for 2 years worth of records (7/1/2006 thru 6/30/2008), for Readmissions with Three Days of Discharge. DCH indicates, in the letter, that it’s Program Integrity Unit (PI) has already conducted a review of hospital admission claims, and found there to be potential billing errors submitted for reimbursement by hospitals.

Here are the salient points in the letter we wish to call to your attention:

1. DCH indicates that this kind of UR review is demanded of them by Federal Regulations.
2. Readmission within three days is the same admission, and cannot be billed. (There is an exception in the GA manual, however)
3. Documentation must exist to justify Medical Necessity and appropriateness of setting.
4. Lack of said sufficient documentation will result in recoupment.
5. Self Disclosure is encouraged.
6. Facilities who do not respond to this request will be audited by DCH-PI beginning May 1.

A letter we’ve seen is dated April 2, 2009, was received by a provider facility on April 7, so they have less than three weeks to review an unknown number of records, audit them, evaluate them, decide what and how to report them, then produce some kind of report to send to DCH, or DCH will visit the facility and do the audit themselves.

Downlaod a PDF of one of these letters from Georgia DCH HERE.

The letter does not state anything about what a “response” to DCH can entail, but we imagine that they might at least consider a “we’re working on it” letter as a satisfactory response, at least for a few weeks. Our own experience with Georgia DCH (and even the DOJ) indicates that they are reasonable and would probably be satisfied with this kind of a sincere response. You should make sure you do in fact give them a response in writing.

The letter does provide a name and number to call at DCH, should a provider have questions.

What Does This Mean?

It means, dear reader, buckle your seat belt.

You thought the RACs were bad news? These other agencies don’t have the limits that are being placed on the RACs, and the RACs will never show up at your door. They do mean business, because after all, these are tax-payer dollars being sent to you, and they are entrusted with safeguarding them.