The List

Below are the 15 new issues, posted last week. Follow the links to each one, in the eduTrax RAC New Issue Database®, which can be seen with simple free registration at myedutrax.com.

More to Come

We’ll have more to say about the review of Physician orders, soon…

Equipment Available before passage of the Healthcare Reform Act of 2009

After bringing  a False Claims Act case to the attention of federal agencies, a Florida whistleblower remained working at WellCare Health Plans offices and then even went so far as to wear a hidden wire (probably just like you see on television) during business meetings, helping the Justice Department (DOJ) in an 18-month undercover operation to capture evidence of alleged fraudulent practices by WellCare officers and employees.

All of this has come to light as of June 25, 2010, when a U.S. District Court judge ordered the complaint unsealed. The original complaint is still not available, but the complaint filed on June 21, in the US District Court for the Middle Florida District, is now available.

(Find it here and other documents related to the case here.)

Might we see an episode of Law & Order soon with this kind of a case? I think it’s pretty gutsy to wear a wire for the Feds, but in this case, the pay-off is much more than just “doing the right thing” or even protecting future victims. Whistleblowers get pretty hefty pay-days, with or without a wire. Perhaps the investigators used that pay-day as a carrot? Wear a wire, get more evidence, you get a bigger pay-day?

Wait… A Settlement was Reached?

Three years later, WellCare reportedly announces that it has agreed to a “Preliminary Settlement” with the Department of Justice, Civil Division, to pay $137.5 million to “settle their pending inquiries.” (Notice that there is no mention of any criminal inquiries…) You can see what WellCare filed with the SEC about this, here. (We can’t seem to find any documents from WellCare or the government, yet, about this supposed settlement.)

Evidently, the whistleblower was not invited to the negotiation where a  settlement was reached, and understandably is not keen on the mere $137.5 million settlement that the government has agreed to with WellCare. According to the whistleblower’s attorney, “…the proposed settlement would permit taxpayers to be unfairly disadvantaged by a settlement that pays less than half of what our pleadings suggest was stolen, to say nothing of the requirement of triple damages under the False Claims Act.“  The attorney and his client estimated that WellCare received over $400 million to perhaps as much as $600 million in fraudulent payments, from a combination of Medicaid and Medicare programs.

Since whistleblowers get 15-25% of the total penalties and damages paid by the offending party, it’s pretty easy to see why this whistleblower is upset — he could be missing out on 15-25% of perhaps as much as $800 million.

The $137.5 million, however, is still only “preliminary” and must be approved in court. We’ve searched the web and there are yet no announcements by the DOJ or any of its Civil Divisions, nor by the OIG or the FBI, related to this settlement. One has to wonder, how did they arrive at this number, which is so much smaller than the alleged frauds? Oh, and, what about penalties and damages? Aren’t those supposed to be added on?

Even if the whistleblower’s figures are inflated, there still appears to be significant fraud. Did the FBI not find much then?

Where’s the beef?

According to several news reports, the DOJ amassed over 1,000 hours of audio and video evidence of alleged fraudulent conduct by WellCare. The whole investigation took almost four years, and included a raid by over 200 federal agents from the FBI, DOJ and the OIG, on the WellCare Tampa headquarters, where they seized many computers and files.

In the complaint, the whistleblower alleges that WellCare purposefully and knowingly over-billed the seven states that it contracted with as a Medicaid HMO. It appears that WellCare used accounting “tricks” to move money around to inflate costs, thereby avoiding having to pay back monies to the state Medicaid programs.

One of the most distrubing allegations concerns WellCare’s apparent complete lack of compassion and utter arrogance in handling care for a large number of newborn babies. One of the examples cited by the whistleblower involved not only unlawfully denying care to 475 newborns for the purpose of eliminating the costs of caring for them, but then rewarding the staff who executed those denials (and perpetrated the fraud) by honoring them with a large, expensive corporate dinner meeting.

Read the complaint, form your own opinion. But keep in mind, the government has yet to file ITS complaint.

But Wait…There’s More

This has been going on for years, now. So, one wonders, what happened to the WellCare officials who (allegedly) perpetrated these frauds?  According to at least one news report, they have all been replaced since then, and there is an ongoing criminal investigation into former executives accused of committing  frauds.

Nevertheless, there also appears to be an ongoing feud between the press — specifically Health News Florida — and the Florida state Insurance Commissioner Kevin McCarty, about the whole case. Health News Florida reported on July 1, 2010, that McCarty sent them a letter saying there is “no question” that some of WellCare’s dealings (under former management) were illegal, but that the whistleblower complaint also included “unfounded allegations.”

“Unfounded” or not, someone else in the Florida state government is still very concerned about all that fraud and wants somebody prosecuted: after the whitstleblower complaint was unsealed, the Florida secretary of healthcare administration sent a letter to Florida’s Attorney General and urged him to “investigate and attempt to prosecute officials at WellCare.”

We’ve seen this question from several providers, recently. The short answer is “Yes,” but under certain circumstances, it’s “No”; and so maybe the answer should be “Maybe”?

Timing is everything, in…

Timing, Timing, Timing

In the retail industry (and others), the three most important factors are said to be, “Location, Location, Location.” If that’s true for those industries, then perhaps something similar can be said for our industry, under the new healthcare reform environment.

I submit that at least in dealing with the RACs, the factors might be, “Timing, Timing, Timing.”

Timing is everything, in many things, don’t you agree?

So let me explain what I mean…

How RACs Perform Reviews

RACs have to get issues they want to review approved by CMS before they can do “widespread review” — the term “widespread” evidently refers to multiple records, multiple providers, and/or multiple states. (They can review ANY record on a very limited basis while assembling evidence needed to garner CMS approval for any issue, but that’s another subject…)

Approved Issues Lists

The RACs also have to post a list of approved issues on a public web page, before they can begin conducting records requests, conduct reviews and publish their results — most often in the form of Demand Letters, recouping the payments from the providers.

Once an issue is approved by CMS and posted on the RAC’s website, the RAC uses proprietary software and their own experience to do data mining and analysis of Medicare Part A and Part B claims, which CMS makes available to them. When the RAC identifies claims that they believe show a potential for an improper payment, they can perform one of two types of review: an Automated review, where an error is a certainty just from data analysis; or a Complex review, where an error is considered likely, but cannot be determined without a human review of the medical record for the claim in question.

For an Automated review, the error is certain, by definition, so a Demand Letter is produced and sent to the provider. For a Complex review, an Additional Documentation Request letter (ADR) is send to the provider, and requires the provider to send specific claims records to the RAC for review. The ADR must name the issue being reviewed by the RAC. It must list one issue, and this issue must already be approved by CMS and posted on that RAC’s approved issues web page.

Now, back to the question at hand:  once a RAC recieves a record in house, can they review it for other approved issues at the same time?

The CMS Answer

Here’s how the CMS RAC FAQs answer that exact question: READ CAREFULLY…

Question: Can the Recovery Audit Contractor (RAC ) do a medical necessity review on a claim that they originally reviewed for DRG validation?

Answer: At this time, if the RAC has already requested documentation and issued a review results letter to the provider for a DRG Validation, the RAC will not be allowed to re-review the claim again for medical necessity. However, if both issues are approved (DRG Validation and medical necessity) prior to the request of the additional documentation, the RAC may conduct both reviews simultaneously.

(see Answer ID 10007, posted 4/23/2010)

Let’s analyze this a bit…

So that’s…At Least Two Answers?

First, notice the phrase, “At this time,…” So, CMS might change their policy at a later date. Form your own opinion about the likelihood of that.

Second, while the first sentence mentions the review results letter, which appears to place a stop on multiple issue reviews on a claim (that was the NO answer), the second sentence allows multiple issue reviews on the same claim, as long as both issues were approved for review before the ADR was sent out for that claim (that’s the YES answer).

So, as long as both issues were approved for review before an ADR was sent out, it appears that a single claim can be reviewed for multiple approved issues.

However, if a new issue is approved after a Review Results letter was sent out for a previously approved issue, the RAC is not allowed to re-review that same record for the new issue.

And Maybe a Third Answer?

What the statement does NOT address is this: can the RAC send out a new ADR for the same claims, under the newly approved issue? (That’s what I call the MAYBE answer.)

Well, we would expect that the RAC could submit an ADR for any approved issue, even if the record has already been reviewed for something else… but we’re going to send this question in to CMS and see what their answer is, which we will then post here…

So, stay tuned.

Region B

CGI Federal added two new issues: one Automated Review and one that includes 3 DRG Validations:

Knee Orthoses — concerns certain additions not being separately payable.

MSDRG 239, 240, 241: DRG Validation for Amputation for Circulatory System Disorders Except Upper Limb and Toe.

This site remains the most difficult to track – it is designed to require human interaction across eight pages of issues.

Region C

Connolly Healthcare posted 19 new issues, including 21 new DRG Validations:

Region D

Even HDI added a new issue for Automated Review:

Part B Duplicates – Automated Review

When Will Medical Necessity Reviews Begin?

No one knows but the RACs, and so far, they ain’t sayin’.

BUT — If you would like to be notified immediately whenever they do get posted, simply to the click here to subscribe for free to the eduTrax RAC New Issues Alert Service®.

We post new issues, as in this article, and will send out an email notice immediately when medical necessity issues begin posting on the RAC websites.

“Musical” Change and Interpretation

When CMS started the pilot RAC program several years ago, few providers outside of the demonstration states paid any attention, if they had even heard of the initiative. A few more providers and organizations (very few) began to pay some attention when the first ‘big notes’ of CMS financial opportunity and recovery began to be sounded, and by the time the program was ‘made permanent’ the ability to influence or re-write the song for providers was past.

Jazz is a wonderful and uniquely American music form, many contributing nationalities, ethnicities, generations have allowed it to morph, grow and expand to the amazing ‘melting pot’ of sounds so many of us enjoy. However the path to growth and inclusion into this form of music has not been easy for individual musicians, bands, clubs, or communities. Places like Memphis, Nashville, Harlem, New Orleans and how many others have seen those ‘pushing the bounds’ of musical genius or musical mediocrity harassed, ignored, shunned or taken advantaged of? Change and interpretation of the ‘standard’ way of approaching or enjoying musical expression has not been without resistance and controversy or without outrage in some instances.

RAC  ‘Music’

Since the 60’s Medicare has been the songwriter if you will of overall payment for certain healthcare services to a defined beneficiary population here in the US. The song has been changed, re-written, melody (?!) redundant or sycophant, with so many new song writers. The goal all along has attempted to meet the growing needs of the population and to ‘sing’ in such a way that the participant providers who share the payment song will continue in the band. So now another new refrain has been added, the RAC music. Depending upon the ‘listener’ the music may be; dissonant, off key, flat, loud, over whelming, and downright awful; however other listeners may find the notes struck timely, relevant, ‘new age’ and important.

Regardless of your perspective, exposure to the various music forms allows listeners to appreciate the facets of the current world; I was not a fan of RAP music when it first appeared on the music scene and still don’t find it a favorite of mine, however it is expressive and relevant for many. Providers must all listen to the RAC music being played today, understand the flow of the melody, the growth of new stanza’s and employ those who can ‘enjoy’ the new music form.

Musical Conclusion

Most often the articles I have written here have been meant to convey some new information or perhaps new way of seeing that which is widely known regarding the RAC program. It is a serious endeavor for CMS and should be taken very seriously by all providers, but the choice to ‘change the channel’ or not listen to this form of payer music is not optional. You can dislike the music, but you best get the point of the lyrics.

In conclusion, I love Jazz and the Jazz Festival here in New Orleans; I love the city, the people, the food, the sounds….. all of it……interesting note however , one of the closing acts this year is not known for their Jazz music, rather a form I do not know or enjoy over much….. it seems fitting to me that they are included and the crowds will be huge for them………Pearl Jam………..hmmm not consistent with the original theme 41 years ago I imagine…….none the less timely and worth listening to for many.

Pat Dear, eduTrax CEO

New Orleans

May 1, 2010

CMS posted a recording of a RAC 101 seminar conducted by Connie Leonard and Commander Marie Casey, earlier in April. If you missed the RAC 101 conference call on April 28, this is probably the same script.

The video includes a short Q&A period, with what we would characterize as typical FAQs.

However, there were two questions asked during this video that produced two previously unheard answers:

• While RACs can use extrapolation, there are currently no issues approved that can use extrapolation; and
• When one RAC is approved for a new issue, the other three RACs do not automatically receive approval for that same issue — the other RACs must submit their own case to be approved for their region.

Find the video HERE.

Connolly Healthcare, the RAC for Region C, posted 20 new DRG Validation Issues to their list of CMS-Approved audit issues, on Friday, April16. The list includes eight (8) MS-DRGs with very high Relative Weights (which equates to high dollar reimbursements and thereby potentially high RAC fees) and six (6) with claim volumes in the top 25% of all DRGs (providing a rather large number of claims to potentially audit).

Four (4) of the newly approved issues are for MSDRGs with Relative Weights of better than 10.0.  Such claims have high dollar reimbursements, averaging over $45,000 per claim, nationwide.

Once again, these approval/postings seems to continue a pattern previously noted. (See our posts from February 9 and March 17.)

Virgina and West Virginia Now Included

The states of Virginia and West Virginia have been absent from the list of states affected or approved for any issues, until some recent changes to the lists, earlier in April. Still, not all the issues have been approved for these two states.

The New Issues

Below are the new posted and approved audit issues for RAC Region C, including Relative Weights and FY09 Discharge Ranks:  (a low rank number relates to a large number of discharges for that DRG, nationwide)

• MS-DRG 003: ECMO or Tracheotomy with Mechanical Ventilation 96+ Hours or Principal Diagnosis Except Face, Mouth and Neck with Major O.R. (RW 18.27; Rank 122)
• MS-DRG 001: Heart Transplant or Implant of Heart Assist System with MCC (RW 24.85; Rank 720)
• MS-DRG 005: Liver Transplant with MCC or Intestinal Transplant (RW 10.14; Rank 713)
• MS-DRG 332: Rectal Resection with MCC (RW 4.78; Rank 297)
• MS-DRG 562: Kidney Transplant (RW 1.38; Rank 79)
• MS-DRG 011: Tracheotomy for Face, Mouth, and Neck Diagnoses with MCC (RW 4.73; Rank 476)
• MS-DRG 012: Tracheotomy for Face, Mouth, and Neck Diagnoses with CC (RW 3.03; Rank 584)
• MS-DRG 020: Intracranial Vascular Procedures with Principal Diagnosis of Hemorrhage with MCC (RW 8.44; Rank 696)
• MS-DRG 021: Intracranial Vascular Procedures with Principal Diagnosis of Hemorrhage with CC (RW 6.21; Rank 696)
• MS-DRG 927: Extensive Burns or Full Thickness Burns with Mechanical Ventilation 96+ Hours with Skin Graft (RW 13.74; Rank 629)
• MS-DRG 929: Full Thickness Burn with Skin Graft or Inhalation Injury without CC/MCC (RW 2.01; Rank 728)
• MS-DRG 023: Craniotomy with Major Device Implant/Acute Complex Central Nervous System Principal Diagnosis with MCC or Chemo Implant (RW 4.94; Rank 469)
• MS-DRG 024: Craniotomy with Major Device Implant/Acute Complex Central Nervous System Principal Diagnosis without MCC (RW 3.26; Rank 212)
• MS-DRG 007: Lung Transplant (RW 9.45; Rank 689)
• MS-DRG 076: Viral Meningitis without CC/MCC (RW 0.83; Rank 510)
• MS-DRG 461: Bilateral or Multiple Major Joint Procedures of Lower Extremity with MCC (RW 4.56; Rank 187)
• MS-DRGs 799, 800, 801: Splenectomy w MCC, w CC, w/o CC/MCC (RW 5.11, 2.53, 1.59; Ranks 666, 709, 620)
• MS-DRG 177: Respiratory Infections & Inflammations with MCC (RW 2.05; Rank 35)
• MS-DRG 178: Respiratory Infections & Inflammations with CC (RW 1.49; Rank 132)
• MS-DRG 179: Respiratory Infections & Inflammations without CC/MCC (RW 1.01; Rank 119)

To see the complete original listings (on the RAC websites), visit this page.

Or, to find a more useful listing of all their posted issues, visit  this page on eduTrax.  (Registration required.)

Still No Medical Necessity Reviews

All of the above approved issues still include this caveat:

(At this time, Medical Necessity excluded from review).

As faithful readers know, however, Medical Necessity Reviews could be approved by CMS at any time now, since the CMS RAC Review Phase-In Strategy allows for such audits in calendar 2010.

We will shortly post further analysis, in an overview of the DRG Validations posted to date by all four RACs.

On February 1, 2010, the Council posted their decision: they did not agree and stated that the position of CMS was essentially inconsistent with policies found in its own manuals.

On December 7, 2007, the RAC charged with auditing California providers denied Medicare coverage for a claim of inpatient hospitalization services, as furnished to a beneficiary on November 1, and 2, 2004, at O’Connor Hospital. The RAC found the services provided were not “reasonable and necessary” per the Social Security Act, and therefore the hospital had received an overpayment. Like virtually every other claim filed by a RAC during the demonstration, said overpayment finding was upheld at both of the first two levels of the appeals process.

The first level of appeal in the RAC program, when requested by the provider, is a Redetermination. This is an additional examination of the claim by the RAC, supposedly by personnel who are different from the personnel who made the initial determination. One might consider this as simply a chance to ask the RAC to be sure to check their paperwork. We are not aware of any denials being overturned at this level of appeal during the Demonstration project.

The second level of appeal, again when requested, is a Reconsideration. These are always conducted by a Qualified Independent Contractor (QIC), thereby allowing an independent review of medical necessity issues by a panel of physicians or other health care professionals. (This is a change from previous programs, but did not originate with the RAC. These reviews were instituted in Section 521 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), and replaced the Hearing Officer Hearing process for Medicare Part B claims, while creating a “new” second level of appeal for Medicare Part A claims.)

The provider took the claims to the next level of appeal, the Administrative Law Judge, or ALJ. There were four claims in question for four different beneficiaries at O’Connor. On September 16, 2009, the ALJ overturned the RAC denial for three of the four claims, thereby reversing the denial and granting Medicare coverage for the inpatient services, as filed. The fourth claim, however, was a more sticky situation.

While the ALJ agreed with the RAC and denied the coverage for the inpatient services provided as billed on the fourth claim, the ALJ nevertheless found that “the observation and underlying care are warranted.” In other words, yes, the inpatient admission was not warranted, but the observation and other outpatient services were warranted and should therefore be paid by CMS, even though the services were never billed as such. Or, put another way: “down-code” the claim to Part B services and pay those.

The net effect was to reduce the recoupment to simply the difference between the Part A and Part B services provided for the fourth claim only, compared to complete recoupment of all four inpatient claims, as the RAC originally decided.

Even without knowing the exact figures involved, this all suggests that CMS may have lost money on the entire process — they had to return all monies recouped, less the difference noted, but the RAC got to keep their entire commission/fee/bounty, per their contract with CMS.

Of course, while the provider got back almost all their reimbursements for the four claims, they still had to pay legal fees out of their own pocket. Considering the time involved, these were likely not insignificant.

Without reviewing all the documents here, we do wish to note a few things we think providers should consider about these decisions, regarding potential strategies for RAC appeals:

First: Bring these decisions to the attention of your legal counsel. Providers should bring both these  decisions to the attention of their legal counsel, and their RAC Team.

Second:  In Part A Medical Necessity Denials, fight for reimbursements for Part B services, if provided. Medical necessity reviews have not yet been approved for RACs, but they are likely to begin at any time. Although the O’Connor case was a result of a RAC Demonstration project denial, the Medicare Appeals Council decision is at least the second time that the Council has reminded CMS that they in fact have current policies in place that not only say that such claims should be paid as described in these cases (unbilled Part B services are sometimes payable when Part A is denied), but that CMS even instructs contractors to do exactly that. These cases offer good reason to believe the Council will render decisions in the future that are consistent with these two.

Third: In such cases, refile for Part B services as provided. The date for “refiling” a claim under such circumstances could be difficult to determine, but may depend upon what the Medicare Appeals Council considers as “new evidence” — which, at least in the case of the UMDNJ appeal, could be inferred from the fact that the contractor reached a denial decision and informed the provider of same, thereby supplying the provider with “new evidence.” Even without such a date for “reopening” the file, in the case of the O’Connor appeal, the Council found that the time limit is simply the end of the entire process, its “finality.”

Fourth: Familiarize yourself with these decisions. The Council cites several documents that are important to the decisions.

The documents cited can all be found HERE on www.myedutrax.com in our Documents Section.

Connolly Healthcare, the RAC for Region C, posted 25 new DRG Validation Issues to their list of CMS-Approved audit issues, on Tuesday, March 16. Once again, Connolly has been approved for even more MS-DRGs with high Relative Weights (which equates to high dollar reimbursements) and high claim volumes (which equates to large number of claims to potentially audit).

Three (3) of the newly approved issues are for MSDRGs with Relative Weights of better than 5.0.  Also, six(6) of the 25 new issues are ranked (by number of discharges)  in the top 100 DRGs nationwide.

This latest round of approval/postings seems to continue a pattern we have previously noted here. (See our post from February 9.)

Noteably, the states of Virginia and West Virginia are still absent from the list of states affected or approved for any of these issues. The 13 states affected by these approved issues are: Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas.

The List

Below are the new posted and approved audit issues for RAC Region C:

1. MS-DRG 226: Cardiac Defibrillator Implant without Cardiac Catheterization with MCC 
2. MS-DRG 415: Cholecystectomy Except by Laparoscope without C.D.E. with CC 
3. MS-DRG 237: Major Cardiovascular Procedures with MCC or Thoracic Aortic Aneurysm Repair 
4. MS-DRG 969: HIV with Extensive O.R. Procedure with MCC 
5. MS-DRG 933: Extensive Burns or Full Thickness Burns with Mechanical Ventilation 96+ Hours without Skin Graft 
6. MS-DRG 239: Amputation for Circulatory System Disorders Except Upper Limb and Toe with MCC 
7. MS-DRG 934: Full Thickness Burn without Skin Graft or Inhalation Injury 
8. MS-DRG 243: Permanent Cardiac Pacemaker Implant with CC 
9. MS-DRG 246: Percutaneous Cardiovascular Procedure with Drug-Eluting Stent with MCC or 4+ Vessels/Stents 
10. MS-DRG 253: Other Vascular Procedures with CC 
11. MS-DRG 749: Other Female Reproductive System O.R. Procedures with CC/MCC 
12. MS-DRG 803: Other O.R. Procedures of the Blood and Blood-Forming Organs with CC 
13. MS-DRG 823: Lymphoma and Nonacute Leukemia with Other O.R. Procedure with MCC 
14. MS-DRG 315: Other Circulatory System Diagnoses with CC 
15. MS-DRG 617: Amputation of Lower Limb for Endocrine, Nutritional, and Metabolic Disorders with CC 
16. MS-DRG 829: Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Other O.R. Procedure with CC/MCC 
17. MS-DRG 486: Knee Procedures with Principal Diagnosis of Infection with CC 
18. MS-DRG 941: O.R. Procedure with Diagnoses of Other Contact with Health Services without CC/MCC 
19. MS-DRG 577: Skin Graft and/or Debridement Except for Skin Ulcer or Cellulitis with CC 
20. MS-DRG 358: Other Digestive System O.R. Procedures without CC/MCC 
21. MS-DRG 133: Other Ear, Nose, Mouth and Throat O.R. Procedures with CC/MCC 
22. MS-DRG 424: Other Hepatobiliary or Pancreas O.R. Procedures with CC 
23. MS-DRG 616: Amputation of Lower Limb for Endocrine, Nutritional, and Metabolic Disorders with MCC 
24. MS-DRG 675: Other Kidney and Urinary Tract Procedures without CC/MCC 
25. MS-DRG 717: Other Male Reproductive System O.R. Procedures except Malignancy with CC/MCC 

To see the complete original listings (on the RAC websites), visit this page.

Or, to find a more useful listing of all their posted issues, visit  this page on eduTrax.  (Registration required.)

Still No Medical Necessity Reviews

All of the above approved issues still include this caveat:

(At this time, Medical Necessity excluded from review).

We again remind everyone that Medical Necessity Reviews could be approved by CMS at any time now, since the CMS RAC Review Phase-In Strategy allows for such audits in calendar 2010.

Stay tuned, as the situation unfolds.