Prepare now to reduce risk and consequences of RAC audit
Prepare now to reduce risk and consequences of RAC audit
Demonstration project expands and will include home health
With more than $370 million in overpayments identified in fiscal year 2007 by auditors in the Recovery Audit Contractor (RAC) demonstration project, the Centers for Medicare and Medicaid Services (CMS) has designated the project a success and is making plans to expand the program beyond the three states in the demonstration project.
Home health and hospice managers have not had to worry about a RAC audit during the three-year demonstration project because the two types of organizations were excluded to simplify the administrative process for the project. This will change, however, as the program expands, says Peter Ashkenaz, CMS spokesman. "We expect the RAC program to include home health and hospice organizations as it expands," he says. Although home health likely won't be included in the first part of the program expansion, it will be added as the four regional RACs are named and get their programs up and running, he says.
Expansion of the RAC program from the demonstration states of California, Texas, and Florida to all states will begin in late spring as the regional contractors are named, then will expand gradually until 2010 when the program is fully implemented, says Ashkenaz.
"I don't think anyone realized how intrusive this comprehensive oversight would be for providers," says Michael Manthei, Esq., partner with Holland & Knight, a Boston-based law firm. Organizations that have undergone RAC audits have had to re-task administrative staff, approve overtime, or hire part-time staff to help gather files and information for the initial audit or for the appeals, he explains.
"CMS plans to ease some of the administrative burden as it makes the program permanent, but home health agencies should build contingencies into their budgets to address potential expenses of RAC," suggests Manthei. "Make sure you are able to respond to an auditor's demands and handle appeals in a timely manner and that may mean expense for additional staff," he adds. Because home health payments are based on a prospective payment system as opposed to fee-for-service, Manthei doesn't anticipate as much focus on home health initially but does foresee some RAC audits for the industry as CMS expands the program. "The program will affect all suppliers and providers because CMS is driven by fiscal concerns and leaving any group out of the program could potentially leave unrecovered funds," he explains.
Contractors paid a percentage of funds
One of health care providers' main concerns about the RAC program is the method that is used to determine payment to the RAC firms, says Robert W. Markette Jr., partner, Gilliland and Markette, an Indianapolis-based law firm. "Contractors are paid a percentage of the funds they recover," he explains. This means that auditors are likely to apply narrow interpretations of standards and requirements to claims in order to find reasons to improve the amount of funds recovered, he says.
Because the auditors work for third-party contractors that are relying upon recovered funds for income, an auditor is looking for problems as opposed to just verifying accuracy of claims, he adds. "If there are two possible interpretations of a standard with one interpretation leading to recovered funds and the other interpretation not leading to recovered funds, the auditor is more likely to choose the first interpretation," he explains.
Although there is an appeals process in place, the burden of proving the legitimacy of the initial claim falls to the home health agency, points out Markette. There is a narrow timeframe for appeals so be sure that someone in your agency is responsible for overseeing the process, he suggests. If you decide not to appeal the decision, you can negotiate a repayment plan, but act quickly, he warns. "If you do not negotiate a repayment plan, CMS will deduct what is owed from future reimbursements," he explains. "Many home health agencies cannot survive if 100% of their Medicare payments are held for any length of time," he adds.
There are certain trends identified in the demonstration project that can help home health agencies avoid negative RAC findings, says Manthei:
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Make sure coding is accurate.
"The biggest problem in the claims that RAC auditors found was upcoding," says Manthei. "Make sure that your coding staff are well-trained and send them to continuing education courses to stay on top of changes in codes," he suggests. Also, make sure your coding policies and procedures are clear and consistent, and review them regularly to ensure that they reflect changes, he adds.
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Document medical necessity.
You may have physician orders that indicate medical necessity for home health care, but if you have a patient who requires care for a longer period than is normal for the original diagnosis or for your region, be sure to document carefully, says Manthei. "Documentation is critical for all claims but especially if your physician orders something that makes the claim an outlier," he says. In these cases, you should include as much documentation as possible to support the reasons for the physician order, even more than might normally be included, he adds.
"There were cases in the RAC reviews of hospital claims in which physicians ordered inpatient rehabilitation services rather than discharging the patient and ordering outpatient rehab," he says. "Auditors saw no documentation that explained the necessity for a longer hospital stay for rehabilitation so they overruled the physicians' orders and declared that there was no medical necessity for the patient to stay in the hospital," he says. This means that you can't assume that a physician's order will automatically be considered proof of medical necessity, he adds.
Also, make sure your physicians' orders are in the appropriate charts, suggests Markette. "I've had cases of clients who were audited and the physicians' orders were not in the files," he says. Even if your agency has paperwork that travels through different offices or departments, make sure that someone is verifying that all documents are in the files when claims are made, he says. Also, be sure that you have a system to track the location of documentation so that you can find it quickly, he adds. "An auditor that can't find a physician's order in one file will assume that this is a mistake you make across the board and will include more claims in the audit," he says.
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Look carefully at therapy documentation.
Therapy visits have been the topic of many CMS appeals, even before RAC, says Markette. Make sure your therapists are communicating with case managers and that case managers are carefully reviewing therapists' notes, he suggests. There have been cases when a therapist has written that the patient reached the therapy goals in the seventh visit, yet the agency continued to send a therapist for three more visits because the original plan of care called for 10 visits, he says.
Another way to reduce your risk of a RAC audit is to carefully monitor or audit your own claims, says Markette. "An internal audit should be conducted on at least a quarterly basis," he says. Examine clinical documentation, make sure signatures are present, make sure that medical necessity and verification of homebound status are clearly documented, and double check coding, he recommends. "If you find mistakes that are being made, you can take steps to correct the mistakes and prevent future mistakes through staff education," he says. "Self-audits can be time-consuming and add to staff expense, but the investment in self-audits is less than the bill CMS might hand an agency after a RAC audit."
Sources
For more information about recovery audits, contact:
- Michael R. Manthei, Esq., partner, Holland & Knight, 10 St. James Avenue, 11th Floor, Boston, MA 02116. Phone: (617) 523-2700. Fax: (617) 523-6850. E-mail: [email protected].
- Robert W. Markette Jr., partner, Gilliland & Markette, 3905 Vincennes Road, Suite 204, Indianapolis, IN 46268. Phone: (317) 704-2400 or (800) 894-1243. Fax: (317) 704-2410. E-mail: [email protected].
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