Health Law Attorney Blog

When a patient presents at an emergency department of a hospital, they are evaluated by a ER physician to determine whether they should be admitted as inpatient or outpatient observation. An inpatient admission occurs when a person is admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services. The criteria when evaluating for a patient to be inpatient or outpatient are, but not limited to:

1. The severity of the signs and symptoms exhibited by the patient
2. The medical predictability of something adverse happening to the patient
3. The need for further diagnostic studies to assist in assessing whether the patient should be admitted
4. The availability of diagnostic procedures at the time and location that the patient presents

Sometimes, it may be too difficult to determine an inpatient admission within the first few hours the patient presents with their condition. At which point, the physician and caregivers can elect to utilize observation status. Observation status is used for patients who are presenting with an unknown cause of condition, for further diagnostics or monitoring, or if a patient has a complication from an outpatient procedure, or until the decision is made to admit the patient as inpatient.

Most inpatient admissions usually require a stay of 24-hours or longer, however, there is no specified time frame for a short-stay inpatient admission and inpatient claims are not covered solely on the basis of the length of time that the patient spent as an inpatient. The physician must write an order that describes the reason for the admission.
The change in a patient's status from observation to inpatient is based on the change in clinical status. This change in status must be documented before the patient's discharge and billing submission. Several scenerios may occur:

1. When changing inpatient status to outpatient (observation), services are billed with a condition code 44 on a 13X bill type
2. When changing outpatient status to inpatient, services performed prior to the admission decision are billed as outpatient, while services billed post-inpatient decision are billed as inpatient
3. In the event that an inpatient procedure claim is denied for failure to meet inpatient criteria, and no appeal is planned, the provider may bill professional services using a 12X bill type

"The National Government Services Mobile Medical Review Team, along with other agencies such as the recovery audit contractors (RAC), are currently reviewing inpatient admissions with one day stays with the objective of determining if claims are paid correctly as inpatient admissions (versus observation outpatient claims). Findings are similar throughout the RAC and the Mobile Medical Review Team. Notably, that the majority of one day inpatient stays reviewed do not qualify for inpatient admissions per Medicare guidelines."

According to the CMS IOM Publication 100-08, Medicare Program Integrity Manual, Chapter 6, Section 6.5.2.A:
"Inpatient care rather than outpatient care is required only if the patient's medical condition, safety, or health would otherwise be significantly and directly threatened if care was provided in a less intensive setting."

Providers should clearly document all contributing factors that impacted the decision to admit a patient as an inpatient. Factors such as comorbidities, surgical history, current medical needs (including medications), abnormal vital signs, presenting or persistent symptoms, availability of diagnostic procedures, and the safety of the patient should all be taken into consideration during the provider's decision making period. It is also critical that these decisions be clearly documented in the medical record.

Significantly, although RACs and NGS routinely take the position that "the majority of one day inpatient stays reviewed do not qualify for inpatient admissions per Medicare guidelines," this is not a position supported by Medicare guidelines. In fact, Medicare guidelines expressly indicate that patients expected to need 24 hours or more of care ought to be admitted as an inpatient. Pursuant to the Medicare Benefit Policy Manual, CMS Pub. 100-02, Chapter 1, Section 10, "Generally, a patient is considered an inpatient if formally admitted as inpatient with the expectation that he or she will remain at least overnight and occupy a bed even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a hospital bed overnight. The physician or other practitioner responsible for a patient's care at the hospital is also responsible for deciding whether the patient should be admitted as an inpatient. Physicians should use a 24-hour period as a benchmark, i.e., they should order admission for patients who are expected to need hospital care for 24 hours or more, and treat other patients on an outpatient basis... Admissions of particular patients are not covered or noncovered solely on the basis of the length of time the patient actually spends in the hospital..."

Furthermore, it should be noted that hospitals appealing short stay inpatient denials have experienced success. That is, the Administrative Law Judges ("ALJs") that review these types of cases have not agreed that "the majority of one day inpatient stays reviewed do not qualify for inpatient admissions per Medicare guidelines." During the RAC demonstration program, of those claims reviewed, 64.4 percent of appealed claims were decided in the provider's favor. http://www.cms.gov/Recovery-Audit-Program/Downloads/DemoAppealsUpdate61410.pdf

Continue reading "Inpatient Admission v. Outpatient Observation" »

Modern Healthcare reports that two anti-fraud demonstration projects announced in November by CMS were delayed after they drew heavy provider opposition.

The first project would require pre-authorization for scooters and power wheelchairs prescribed to Medicare beneficiaries in any of the seven states with the highest concentration of fraud or billing errors, including, California, Michigan, New York, Illinois, North Carolina, Florida and Texas. According to CMS, the process of preauthorization was developed to ensure that medical conditions warrant the proper medical equipment.

Recovery Audit Contractor (RAC) authority expansion is the second anti-fraud project, which allows RACs to review claims before they are paid. The focus is on the seven states with the highest rates of improper payments (California, Michigan, New York, Illinois, Texas, Florida and Louisiana) and claims with high volumes for short inpatient hospital stays in four other states.

CMS plans to notify providers at least 30 days before the delayed projects begin.

For more information about this topic, please contact Abby Pendleton or Jessica Gustafson at (248) 995-8510 or visit The Health Law Partners at www.thehealthlawpartners.com

On December 30, 2011, CMS issued an informational bulletin CPI-B 12-01 entitled, Affordable Care Act Program integrity Provisions - Guidance to States - Section 6411(a) - Expansion of the Recovery Audit Contractor (RAC) Program to Medicaid ("Bulletin").

By way of brief background, Section 6411(a) of the Patient Protection and Affordable Care Act ("PPACA") expands the RAC Program to Medicaid and requires, in part, that the fees paid to the contractors be made on a contingent basis. 42 CFR §455.510 provides that States determine the contingency fees to be paid to the Medicaid RACs. 42 CFR §455.510(b)(4) delineates the requirements for paying Medicaid RACs, specifically stating the following:

Except as provided in paragraph (5) of this section, the contingency fee may not exceed that of the highest Medicare RAC, as specified by CMS in the Federal Register, unless the State submits, and CMS approves, a waiver of the specified maximum rate. If a State does not obtain a waiver of the specified maximum rate, any amount exceeding the specified maximum rate is not eligible for FFP, either from the collected overpayment amounts, or in the form of any other administrative or medical assistance claimed expenditure.

According to the Bulletin, CMS increased the contingency fee for recovery of improper payments associated with durable medical equipment ("DME") claims. The contingency fee paid to a Medicare RAC is now 17.5% (up 5%) for DME claims. As such, absent a waiver, the Medicaid RAC contingency fees may not exceed 17.5% for DME claims.

Continue reading "DME RAC Contingency Fee Up 5% to 17.5%" »

Today, CMS held its Open Door Forum related to the CMS A/B Rebilling Demonstration. General information related to the CMS call is available at http://go.cms.gov/cert-demos. This website includes a Frequently Asked Question document, slides related to the call, and the enrollment application.

CMS outlines the process for the rebilling demonstration as follows:

Once a provider submits a short stay inpatient (Part A) claim, defined as two days or less within the same spell of illness
• Inpatient admission is deemed not medically necessary by MAC, Recovery Auditor, CERT, or Provider self-audit (should have been outpatient)
• Denials and voluntary refunds are for full amount
• If part of the demonstration, providers can re-bill for all outpatient services
- Payment will be made at 90% after co-insurance and deductible.

The demonstration will be limited to 380 hospitals, accepted on a first come, first served basis. The 380 hospitals will be broken down as follows:
• 80 "Large Facilities," defined as 300+ beds
• 120 "Moderate Facilities," defined as 100-299 beds
• 180 "Small Facilities," defined as fewer than 100 beds

Applications will be accepted beginning December 12, 2011 at 2:00 p.m. Applications will not be accepted prior to this. If a hospital is not one of the first 380 hospitals to apply, they will be placed on a waiting list. Additional information regarding this process is available at http://go.cms.gov/cert-demos.

There are two provisions of this demonstration project that may prove particularly troubling to hospitals, and may give some hospitals pause prior to applying to participate in this demonstration:
• If a hospital chooses to participate in the demonstration program, then the hospital must agree not to appeal any Part A short stay inpatient claim (defined as a claim for inpatient hospital services 2-days or less).
• Also, if the hospital chooses to re-bill, it may not re-bill for observation services.

Given the above considerations and also given many hospitals' success rate during the appeals process, many hospitals may choose not to participate in this demonstration.

Continue reading "RAC Part A/B Rebilling Demonstration Call Held" »

The Centers for Medicare and Medicaid Services ("CMS") defines an overpayment as a payment to a provider or supplier that exceeds the amounts payable under Medicare statutes and regulations. If CMS identifies an overpayment made to a provider or supplier, it will initiate a recovery process for those identified overpayments.

CMS' recovery process begins by sending the provider or supplier a demand letter, which requests overpayments it believes a provider or supplier wrongfully possesses. Typically, three notification letters are sent to providers/suppliers: (1) the demand letter, (2) a follow-up letter, and (3) an intent to refer letter.

Effective November 1, 2011, a second, follow-up letter (Day 30), will no longer be sent to providers/suppliers.

Those providers and suppliers receiving demand letters and wishing to appeal the audit decision should be prepared for part or all of this timeline

Continue reading "CMS Changes Medicare Overpayment Notification Process" »

The Medicare RAC program is expanding even further. By way of a Fact Sheet issued on November 15, 2011, CMS announced three new initiatives with respect to its Medicare RAC program. Beginning January 1, 2012, CMS will conduct demonstration projects with the goal to eliminate fraud, waste, and abuse in the Medicare program. The three demonstration projects are described by CMS as follows:

• Recovery Audit Prepayment Review: The Recovery Audit Prepayment Review demonstration will allow Medicare Recovery Auditors (RACs) to review claims before they are paid to ensure that the provider complied with all Medicare payment rules. The RACs will conduct prepayment reviews on certain types of claims that historically result in high rates of improper payments. These reviews will focus on seven states with high populations of fraud- and error-prone providers (FL, CA, MI, TX, NY, LA, IL) and four states with high claims volumes of short inpatient hospital stays (PA, OH, NC, MO) for a total of 11 states. This demonstration will also help lower the error rate by preventing improper payments rather than the traditional "pay and chase" methods of looking for improper payments after they have been made.

• Prior Authorization for Certain Medical Equipment: The second demonstration... will require Prior Authorization for certain medical equipment for all people with Medicare who reside in seven states with high populations of fraud- and error-prone providers (CA, FL, IL, MI, NY, NC and TX). This is an important step toward paying appropriately for certain medical equipment that has a high error rate. This demonstration will help ensure that a beneficiary's medical condition warrants their medical equipment under existing coverage guidelines...

• Part A to Part B Rebilling: The third initiative will allow hospitals to rebill for 90 percent of the Part B payment when a Medicare contractor denies a Part A inpatient short stay claim as not reasonable and necessary due to the hospital billing for the wrong setting. Currently, when outpatient services are billed as inpatient services, the entire claim is denied in full...

The third demonstration project, allowing hospitals to rebill for 90 percent of the Part B payment when a Medicare contractor denies a Part A inpatient short stay claim as not reasonable and necessary will have important financial implications for hospitals. Currently, if a RAC issues this type of denial, the entire claim is denied in full. In order to obtain reimbursement, the hospitals need to appeal the claim and seek relief through the Medicare appeals process. According to an FAQ on the CMS website:

Providers can re-bill for Inpatient Part B services, also known as ancillary services, but only for the services on the list in the Benefit Policy Manual. That list can be found in Ch. 6, Section 10: http://www.cms.hhs.gov/manuals/Downloads/bp102c06.pdf. Rebilling for any service will only be allowed if all claim processing rules and claim timeliness rules are met. There are no exceptions to the rules in the national program. Normal timely filing rules can be found in the Claims Processing Manual, Chapter 1, Section 70: http://www.cms.hhs.gov/manuals/downloads/clm104c01.pdf.

Of note, the third demonstration listed above, which would allow hospitals to rebill Part B claims when an inpatient hospital claim is denied as not reasonable and necessary due to the hospital billing for the wrong setting, will be limited to a representative sample of 380 hospitals nationwide that volunteer to be part of the program. A Fact Sheet regarding the rebilling initiative is also available on the CMS website.

Continue reading "RAC Program Further Expanding " »

In an indictment unsealed on October 12, Matthew Kolodesh (a/k/a "Matvei Kolodech") was charged with a laundry list of crimes, including 1 count of conspiracy to commit healthcare fraud, 21 counts of healthcare fraud, 2 counts of mail fraud and 11 counts of money laundering of monetary instruments over $10,000. Kolodesh set up, controlled and operated Home Care Hospice, Inc. wherein he allegedly "authorized the submission of claims to Medicare totaling approximately $14.3 million, which claims defendant Kolodesh and A.P. knew were false and fraudulent." "A.P." is the name given in the indictment to Kolodesh's business partner.

The government alleges, in part, that in committing healthcare fraud Kolodesh paid for referrals, paid for certifications of hospice eligibility, authorized fabrication of patient records and supporting documentation, created phony schedules of continuous care visits to patients who were not qualified for continuous care or were never provided continuous care, falsified records submitted in connection with a Medicare audit and siphoned funds from Home Care Hospice that were "fraudulently obtained Medicare payments" to unjustly enrich himself and his family.

According to the Department of Justice press release, "if convicted of all charges, Kolodesh faces a statutory maximum sentence of 370 years in prison. The government will also seek restitution to Medicare in the amount of $14.3 million and proceeds from the money laundering."

Continue reading "Hospice Provider Charged with Defrauding Medicare for More Than $14 Million" »

The Centers for Medicare and Medicaid Services ("CMS"), as required by Section 6411 of the Patient Protection and Affordable Care Act ("PPACA"), must annually report to Congress "concerning the effectiveness of the Recovery Audit Contractor program under Medicaid and Medicare and shall include such reports recommendations for expanding or improving the program." In its FY 2010 Report to Congress Regarding the Recovery Audit Contractor ("RAC") Program ("Report"), the Recovery Auditors identified and corrected combined overpayments and underpayments totaling $92.3 million--82% of which were overpayments and 18% of which were underpayments. CMS provided a breakdown of amounts corrected by region and Recovery Auditor:

Most notably in the Report are the audit statistics in which CMS stated, "[h]ealth care providers have appealed 8,449 claims to date, which constitutes 5 percent of all claims collected in FY 2010. Of those, 2,902 claims--2.4 percent of all collected claims--were ruled in the providers' favor, for a total overturned amount of $2.6 million." Based on these figures, over 34 percent of the appealed claims already have been ruled in the providers' favor. It should also be noted that the appeals process can take up to two (2) years. The reported data represents appeals results to date of the claims originating and appealed in FY 2010.

CMS provides the following table elaborating on the FY 2010 RAC appeals statistics:

CMS also identifies "issue codes" or "major findings," which are vulnerabilities tracked and identified through the RAC program. CMS states it posts its major findings to "allow providers to understand where improper payments are occurring so they can develop additional corrective actions."

Finally, the Report also contains a number of other helpful appendices including tables breaking down improper payments by state; region/Recovery Auditor; and Medicare Part A, B, and DME claims.

Continue reading "CMS' FY 2010 Report to Congress On the RAC Program" »

Medicare Part A and Part B providers and suppliers appealing Medicare audit decisions at the administrative law judge ("ALJ") level or through a judicial review must meet an amount in controversy ("AIC") threshold amount pursuant to regulation at 42 CFR 405.1006(b) and (c). The regulations require the Secretary of the Department of Health and Human Services ("Secretary") to publish annually the AIC threshold amounts in the Federal Register; the Centers for Medicare and Medicaid Services ("CMS") published these new amounts in the September 23, 2011 Federal Register.

Requests for ALJ hearings and judicial review filed on or after January 1, 2012 require an AIC of $130 for ALJ hearings and $1, 350 for judicial review. CMS also provided the following table of AIC threshold amounts from 2005-12:

Continue reading "2012 Amount in Controversy for Medicare Appeals Issued" »

As many already know, when a review contractor (e.g., Recovery Audit Contractors ("RACs"), Medicare Administrative Contractors ("MACs"), the Comprehensive Error Rate Testing ("CERT") contractor, the Program Error Rate Measurement ("PERM") contractor, and Zone Program Integrity Contractors ("ZPIC")) identifies an improper payment, the review contractor requests medical documentation from the provider or supplier to ensure the claim and supporting documentation comply with the Medicare reimbursement rules. This request is typically in the form of a paper letter to the provider or supplier wherein the provider or supplier may only submit the requested records by mail or fax.

However, recently, the Centers for Medicare and Medicaid Services ("CMS") began conducting a pilot program--the Electronic Submission of Medical Documentation ("esMD") pilot--which allows providers and suppliers to send their records to review contractors electronically. According to an MLN Matters article regarding the new esMD pilot program, "[t]he primary intent of esMD is to reduce provider costs and cycle time by minimizing and eventually eliminating paper processing and mailing of medical documentation to review contractors. A secondary goal of esMD is to reduce costs and time at review contractors." Provider and supplier participation in esMD is completely voluntary and submission of paper and/or fax documentation continues to be acceptable.

This pilot program will be conducted in two phases. During Phase 1, beginning September 15, 2011, review contractors will continue to send paper requests for medical documentation and providers or suppliers will have the option to send the medical documentation electronically in portable document format ("PDF"). During Phase 2, beginning October 2012, review contractors will send electronic requests for medical documentation. CMS provides the following graphics depicting the simplified relationship between the review contractors and the provider at each phase:

Providers and suppliers wanting to begin submitting their medical documentation via esMD must obtain access to a CONNECT-compatible getaway. A CONNECT-compatible gateway is the medium through which medical documentation can be exchanged using Nationwide Health Information Network specifications and standards that allow for the secure and private exchange of health information over the Internet. Providers and suppliers looking for CONNECT-compatible gateways may look to Health Information Handlers ("HIHs")--companies that handle health information on a provider or supplier's behalf. A list of HIHs that offer esMD gateway services is provided in the MLN Matters article linked above or on CMS' esMD page.

CMS provides the following more detailed graphics depicting Phases 1 and 2 in their entirety:

Phase 1:

Phase 2:

CMS also provided a timeline for Phase 1 when some review contractors will be scheduled to accept esMD transactions:

Note: CMS expects that the Region C and D RACs and the remaining MACs will begin accepting esMD transactions within the next twelve (12) months.

Continue reading "Medicare Electronic Submission of Medical Documentation Pilot Program Begins September 2011" »

Section 6411 of the Patient Protection and Affordable Care Act ("PPACA") requires states to establish a Medicaid recovery audit contractor ("Medicaid RAC") program similar to the existing Medicare RAC program. Like Medicare RACs, Medicaid RACs will be tasked with auditing claims to identify overpayments and underpayments and will be compensated on a contingency fee basis. On November 10, 2010, the Medicaid RAC proposed rule ("Proposed Rule") was published in the Federal Register. Now, the final rule ("Final Rule") has been issued finalizing the additions to 42 CFR Part 455 Subpart F, which governs Medicaid Program Integrity.

Although the initial implementation date was slated for April 1, 2011, CMS chose to delay implementation until it had issued its Final Rule. Under the Final Rule, the new implementation date for the Medicaid RAC program is January 1, 2012. Some notable aspects of the Final Rule are below:

The Final Rule requires certain specific program elements that are consistent with Medicare RAC program elements. Some of these elements include:

• A 3-year maximum claims look-back period;


• A State-established limit on the number and frequency of medical records requested by a RAC;


• State coordination of recovery audit efforts with other auditing entities; and


• Returning contingency fees within a reasonable time frame if the Medicaid RAC determination is overturned at any level of appeal.

CMS "strongly encourage[s]" States to adopt specific program elements present in the existing Medicare RAC program:

• Medical necessity reviews;


• Extrapolation of audit findings;


• External validation of accuracy of RAC findings; and


• Types of claims audited.

CMS grants States "complete flexibility" in the following areas:

• Underpayment methodology;


• State appeals processes;


• Contingency fee rates (States have complete flexibility in the contingency fee rates they pay, exclusive of FFP. However, CMS will provide FFP only for amounts that do not exceed the then-highest contingency fee rate paid to Medicare RACs) ;


• State exclusion of claims;


• Bundling of procurements; and


• Coordination of the collection of RAC overpayments.

With respect to contingency fee payments paid to the Medicaid RACs, States have two options to pay contingency fees to RACs: (i) States may pay RACs from amounts identified and recovered, but not fully adjudicated, but the RAC would be required to return any contingency fee that corresponded to the amount of an overpayment overturned at any level of appeal within a reasonable time frame as prescribed by the State; or (ii) the State may pay the RAC after the overpayment is fully adjudicated. According to the Final Rule, contingency payments may not exceed the total amounts recovered and payments may not be based upon amounts merely identified but not recovered, or amounts that may initially be recovered but that subsequently must be repaid due to determinations made in appeals proceedings.

CMS has left the appeals process extremely flexible for States, allowing States to maintain an existing appeals process or develop a new appeals process. Many commenters indicated that difficulties may arise in providers that practice in multiple States if each State's appeals process varies. CMS recognized the difficulty, but maintained that States will have the flexibility to design their own appeals processes.

Comparing the Proposed Rule and the Final Rule, CMS provided the following list of provisions where the Final Rule differs from the Proposed Rule:

• States may exclude Medicaid managed care claims from review by Medicaid RACs (§455.506(a)(1)).


• States must coordinate the recovery audit efforts of their Medicaid RACs with other auditing entities (§455.506(c)).


• States must make referrals of suspected fraud and/or abuse to the MFCU or other appropriate law enforcement agency (§455.506(d)).


• States must set limits on the number and frequency of medical records to be reviewed by the Medicaid RACs subject to requests for exceptions made by the RACs (§455.506(e)).


• Each RAC must hire a minimum of 1.0 FTE Contractor Medical Director who is a Doctor of Medicine or Doctor of Osteopathy in good standing with the relevant State licensing authorities and has relevant work and educational experience. A State may seek to be excepted, in accordance with §455.516, from requiring its RAC to hire a minimum of 1.0 FTE Contractor Medical Director by submitting to CMS a written request for CMS review and approval (§455.508(b)).


• RACs must hire certified coders unless the State determines that certified coders are not required for the effective review of Medicaid claims (§455.508(c)).


• RACs must work with the State to develop an education and outreach program (including notification of audit policies and protocols) (§455.508(d)).


• RACs must provide minimum customer service measures including: providing a tollfree customer service telephone number in all correspondence sent to providers, and staffing the toll-free number during normal business hours from 8:00 a.m. to 4:30 p.m. in the applicable time zone (§455.508(e)(1)); compiling and maintaining provider approved addresses and points of contact (§455.508(e)(2)); mandatory acceptance of provider submissions of electronic medical records on CD/DVD or via facsimile at the providers' request (§455.508(e)(3)); notifying providers of overpayment findings within 60 calendar days (§455.508(e)(4)).


• RACs must not review claims that are older than 3 years from the date of the claim, unless it receives approval from the State (§455.508(f)).


• RACs should not audit claims that have already been audited or that are currently being audited by another entity (§455.508(g)).


• If a provider appeals a Medicaid RAC overpayment determination and the determination is reversed, at any level, then the Medicaid RAC must return its contingency within a reasonable timeframe as prescribed by the State (§455.510(b)(3)).


• States must adequately incentivize the detection of underpayments (§455.510(c)(2)).


• States must notify providers of underpayments that are identified by the Medicaid RACs (§455.510(c)(3)).


• States must provide appeal rights under State law or administrative procedures to Medicaid providers that seek review of an adverse Medicaid RAC determination (§455.512).

Update: The Final Rule was published in the Federal Register on September 16.

Continue reading "Medicaid RACs: Final Rule Issued" »

This month, the Centers for Medicare and Medicaid Services ("CMS") published a revised recovery audit contractor ("RAC" or "Auditors") statement of work ("SOW") which is, as CMS described, a "contract" between CMS and the Auditors to support CMS in its mission to "reduce Medicare improper payments through the efficient detection and collection of overpayments, the identification of underpayments and the implementation of actions that will prevent future improper payments."

While much of the SOW is a reiteration of familiar concepts, CMS has also added some new aspects. One key change incorporated into the revised Statement of Work relates to the claim review process.

Types of Review

CMS has identified three (3) types of reviews: automated reviews, complex reviews and now semi-automated reviews. While the automated and complex reviews are familiar to most providers and suppliers, it is the semi-automated review that is the newest type of review authorized by CMS.

1. Automated Reviews - CMS describes automated reviews as "occur[ring] when a Recovery Auditor makes a claim determination at the system level without a human review of the medical record. An automated review is permissible if two (2) conditions are met: (i) there is a certainty that the service is not covered or is incorrectly coded, and (ii) there is a written Medicare policy, Medicare article or Medicare-sanction coding guideline exists.


2. Complex Reviews - CMS describes complex reviews as "occur[ring] when a Recovery Auditor makes a claim determination utilizing human review of the medical record." Typically, complex reviews are used when there is a high probability (versus a certainty, which is required for the automated reviews) that the service is not covered or where no Medicare policy, Medicare article or Medicare-sanctioned coding guideline exists.


3. Semi-Automated Reviews - Semi-automated reviews are two-part reviews in which there is (i) an identification of flawed billing through an automated review using claims data, and (ii) a notification letter is sent to the provider explaining the potential error identified. Once a provider receives the notification letter, the provider has forty-five (45) days to submit documentation that supports its original billing. Failure to submit the documentation, or if the documentation submitted fails to support the original billing, will result in the claim being sent to the Medicare claims processing contractor for an adjustment and a demand letter will be issued. If, on the other hand, the documentation supports the claims billed, then the claim will not be sent for adjustment and the provider will be notified that the review has been closed. While CMS has been using Semi-Automated Reviews for some time, and has published a Frequently Asked Question related to these types of reviews, the revised Statement of Work expressly authorizes the RACs to conduct Semi-Automated Reviews.

Continue reading "Revised RAC Statement of Work Published" »

The Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") has issued its monthly Recovery Act Oversight report for July 2011. The report revealed what many already know: audits and investigations are have increased considerably since 2009, the year the American Recovery and Reinvestment Act of 2009 ("Recovery Act") was signed into law.

Comparing data from July of 2009, 2010 and 2011, it is clear that the number of active OIG investigations has been rising dramatically, with almost twice as many active investigations in July 2011 than in July 2010. We can also see an overall increase in the number of audits, inspections, evaluations and reviews in process since 2009. Even though the numbers of audits, inspections, evaluations and reviews experienced a slight dip in July 2011 versus July 2010, the overall trend has been, and will likely continue to be, an upward growth.


This data should be, yet another, reminder that providers and suppliers have been, and will continue to be, the focus of government scrutiny.

Continue reading "July 2011 OIG Recovery Act Oversight Monthly Report" »

On July 28, 2011, the House Oversight and Government Reform Committee held a hearing on Improper Medicare Payments. The hearing highlights the ongoing friction between providers and recovery audit contractors (RACs) and the fact that the Centers for Medicare and Medicaid Services (CMS) is continuing their effort to combat fraud through such efforts as pre-enrollment screening and predictive modeling.

Daniel R. Levinson, the Inspector General, Office of the Inspector General (OIG), Health & Human Services (HHS), began the hearing discussing the 2010 fiscal year, where there was an estimated $48 billion in Medicare improper payments. While some of the improper payments were a result of fraud, other improper payments were the result of medically unnecessary claims, miscoded claims, eligibility errors, or insufficient documentation. The OIG conducts targeted reviews to determine the scope of the improper payments for service types and makes recommendations to address them.

Michelle Snyder, CMS Deputy Chief Operating Officer, noted that most improper payments are not fraudulent but the result of documentation errors, incorrect coding, and reasonable and necessary determinations. She emphasized that CMS pays about 5 million claims per day, and that under the Comprehensive Error Rate Testing (CERT) program, CMS has done considerable outreach and education to providers, performed system edits, and used online analytic tools to correct for errors.

Additionally, Ms. Snyder discussed the new contractor solicitation for an automated provider enrollment screening solution. CMS anticipates that this new screening technology will automatically verify information provided on an enrollment application for all Medicare provider supplier types.

James Lankford (R-OK) focused the hearing on RACs and the frustration hospitals and doctors have had in feeling "guilty until proven innocent." Ms. King said there have been missteps by the RACs, and Mr. Lankford asked if CMS has added any staff for RAC oversight. Ms. Snyder stated that CMS has hired two validation contractors to give oversight of the RACs to prevent RACs from being overly aggressive with hospitals and doctors. While Mr. Levinson testified that the OIG would be releasing a report on RACs later this year, he did mention that one of the problems with RACs is that they are built on the pay and chase model of fraud enforcement.

Jim Cooper (D-TN) agreed that much of the $48 billion in improper payments actually represented overpayments by providers. He asked about fee-for-service problems versus managed care and thought it fascinating that there were no statistics yet on Part D.

Ms. Eleanor Holmes Norton (D-DC) picked up on the fact that there were no statistics yet for Part D and asked whether CMS has been ignoring fraud enforcement in this area. Ms. Snyder admitted that no statistics have been produced on Part D fraud, however CMS has been looking into it. She also proposed that CMS should have a composite rate on Part D fraud efforts this audit year.

Mr. Platt returned to the RAC audit issues identified by Mr. Lankford and asked whether the cost of appeal and the appeal process in general is fair. Ms. Snyder said there has been a robust appeals process that has resulted in edit changes. Mr. Platt also asked about recertifying all providers, and Ms. Snyder said CMS is focusing on new providers first and plans to have all providers recertified or significantly in process of recertification by January 2013. Mr. Platts thought it would be a good idea for CMS to coordinate with the U.S. Census process to conduct face-to-face recertifications while the Census collectors were out in the field.

The Congressional Hearing demonstrates that fraud will continue to be a significant area of Congressional interest. Congress and HHS plan to continue working together to root out additional areas of fraud, waste and abuse.

Continue reading "RAC Audits the Focus of Recent Congressional Hearing" »

The Centers for Medicare & Medicaid Services ("CMS") recently released the Medicare Fee-For-Service Recovery Audit Program ("RAC") statistics for the third quarter of the fiscal year ("FY") 2011. $233.4 million of overpayments was collected during that time period. In comparison, only $55.9 million of underpayments was returned during the same three month period. The latest recoveries bring the total amount of overpayments collected by the national program to $575.2 million since October 2009, while the total amount of underpayments returned since October 2009 is now at $109.6 million. Top overpayment issues during the third quarter included medical necessity, incorrect coding, and billing for bundled services separately. The CMS report may be viewed here.

RAC overpayment and underpayment corrections continue to vary between the four RAC regions. Region D correction totals ($145.9 million) were significantly higher and approximately equaled the correction totals of Regions A, B, and C combined ($143.4 million). Further details may be viewed here.

Continue reading "RAC Recoveries Continue To Climb in FY 2011 Q3" »