How to Successfully Appeal a RAC Audit. Kelly McCloskey Cherf Hogan Marren, Ltd.

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How to Successfully Appeal

How to Successfully Appeal

a RAC Audit

a RAC Audit

Kelly McCloskey Cherf

Kelly McCloskey Cherf

Hogan Marren, Ltd.

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General Background

General Background

“RACRAC””- - Recovery Audit ContractorRecovery Audit Contractor

The Medicare Prescription Drug, The Medicare Prescription Drug,

Improvement, and Modernization Act (2003) Improvement, and Modernization Act (2003)

The RAC Demonstration Program: The RAC Demonstration Program:

– California, Florida and New YorkCalifornia, Florida and New York –

– Extended to Massachusetts, South Carolina Extended to Massachusetts, South Carolina and Arizona

and Arizona

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General Background Cont’d…

Region A

Region A – – Diversified Collection Services (Diversified Collection Services (““DCSDCS””) Healthcare) Healthcare Region B

Region B – – CGI FederalCGI Federal Region C

Region C – – Connolly HealthcareConnolly Healthcare Region D

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Who and What are the RACs Auditing?

Who and What are the RACs Auditing?

Hospital claims accounted for 95% Hospital claims accounted for 95%

of Overpayments collected during of Overpayments collected during

the Demonstration the Demonstration

The Basis for Overpayment Determinations: The Basis for Overpayment Determinations:

– 40% Not Medically Necessary40% Not Medically Necessary –

– 35% Incorrect Coding35% Incorrect Coding –

– 17% Clerical Errors (i.e., Duplicate Claims)17% Clerical Errors (i.e., Duplicate Claims) –

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How to Prepare for a RAC Audit

How to Prepare for a RAC Audit

Four Key Measures

Four Key Measures

– DocumentationDocumentation –

– Stay InformedStay Informed –

– Monitor Activities and Identify Monitor Activities and Identify Risks

Risks –

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Documentation

Documentation

Establish and Maintain Sufficient Medical

Establish and Maintain Sufficient Medical

Records

Records

Medical Documentation helps

Medical Documentation helps

Prevent

Prevent

RAC

RAC

claim denials and

claim denials and

Support

Support

the Challenge of a

the Challenge of a

denial through the Appeals Process

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Stay Informed

Stay Informed

The CMS Website

The CMS Website

The RAC websites

The RAC websites

Monitor for Updates

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Monitor Activities and Identify Risks

Monitor Activities and Identify Risks

Don

Don

t Repeat Mistakes

t Repeat Mistakes

Identify Common Issues

Identify Common Issues

Repay Indentified Overpayments

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The Role of A Physician Advisor

The Role of A Physician Advisor

(e.g., Accretive Health, Inc.)

(e.g., Accretive Health, Inc.)

Provide Classification Status

Provide Classification Status

Educate the Staff

Educate the Staff

Know the Appeals Process

Know the Appeals Process

Write Appeal Letters:

Write Appeal Letters:

– Include Proper DocumentationInclude Proper Documentation –

– Refer to CMS PolicyRefer to CMS Policy –

– Cite to Medical LiteratureCite to Medical Literature –

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The Review Process

The Review Process

Two Types of Post Payment Review

Two Types of Post Payment Review

– Automated Review:Automated Review:

Computer Algorithm

Computer Algorithm

No Record Request

No Record Request

Demand Letter only if there is an Overpayment

Demand Letter only if there is an Overpayment

– Complex Review:Complex Review:

Request for Medical Records (w/in 45 days)

Request for Medical Records (w/in 45 days)

Review Results Letter

Review Results Letter

Demand Letter if there is Overpayment

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The Five Stages of The Formal

The Five Stages of The Formal

Appeal Process

Appeal Process

1.

1. Request for RedeterminationRequest for Redetermination

2.

2. Request for ReconsiderationRequest for Reconsideration

3.

3. Administrative Law Judge (Administrative Law Judge (““ALJALJ””) Hearing) Hearing

4.

4. Medicare Appeals Council (the Medicare Appeals Council (the ““CouncilCouncil””) ) Review

Review

5.

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Request for Redetermination

Request for Redetermination

File within 120 days of Receipt of the File within 120 days of Receipt of the

Demand Letter Demand Letter

Explain why the Initial Determination Explain why the Initial Determination

was Wrong was Wrong

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Request for Reconsideration

Request for Reconsideration

File with the Qualified Independent Contractor File with the Qualified Independent Contractor

(

(““QICQIC””) within 180 days of the Redetermination ) within 180 days of the Redetermination Decision

Decision

Explain why the Initial Determination and Explain why the Initial Determination and

Redetermination were wrong Redetermination were wrong

Ensure that all evidence is made part of the record at Ensure that all evidence is made part of the record at

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Administrative Law Judge Hearing

Administrative Law Judge Hearing

The Amount in Controversy must exceed $130 The Amount in Controversy must exceed $130

File with the ALJ within 60 days of receiving File with the ALJ within 60 days of receiving

the Notice of Reconsideration the Notice of Reconsideration

Specify the Reason for the Appeal Specify the Reason for the Appeal

The ALJ conducts a

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Medicare Appeals Council Review

Medicare Appeals Council Review

File with the Council within 60 days of Receipt of the File with the Council within 60 days of Receipt of the

ALJ

ALJ’’s s DecisionDecision

State why the

State why the ALJALJ’’s s Decision is wrong and provide Decision is wrong and provide Facts and Law Supporting your Position

Facts and Law Supporting your Position

The Council conducts a

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Judicial Review

Judicial Review

The Amount in Controversy must exceed $1,260 The Amount in Controversy must exceed $1,260

File in Federal Court within 60 days of receiving the File in Federal Court within 60 days of receiving the

Council

Council’’s Decisions Decision

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Why Appeal?

Why Appeal?

According to the CMS

According to the CMS

June 2010 Report,

June 2010 Report,

The

The

Medical Recovery Audit Contract (RAC)

Medical Recovery Audit Contract (RAC)

Program: Update to the Evaluation of the 3

Program: Update to the Evaluation of the 3

-

-Year Demonstration,

Year Demonstration,

the success rate for

the success rate for

providers challenging RAC determinations

providers challenging RAC determinations

through March 9, 2010 was approximately

through March 9, 2010 was approximately

64%

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Types of Appeals

Types of Appeals

Medical Necessity: Medical Necessity:

– 40% of claims were found to be Medically Unnecessary40% of claims were found to be Medically Unnecessary –

– CMS has not Authorized CMS has not Authorized RACs RACs to Conduct Medical to Conduct Medical Necessity Reviews in the Permanent Phase

Necessity Reviews in the Permanent Phase

– RACs RACs are Expected to Begin Medical Necessity Reviews are Expected to Begin Medical Necessity Reviews later this Summer

later this Summer

Strategy for Appeals: Strategy for Appeals:

– Retain and Produce Medical Records that show Retain and Produce Medical Records that show Beneficiary

Beneficiary’’s Condition at Presentations Condition at Presentation –

– Obtain a Second Opinion from another Physician (i.e., a Obtain a Second Opinion from another Physician (i.e., a Physician Advisor)

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Types of Appeals Cont

Types of Appeals Cont

d

d

Extrapolations: Extrapolations:

– Not used in the Demonstration PhaseNot used in the Demonstration Phase

– RACs RACs are Permitted to Estimate an Overpayment are Permitted to Estimate an Overpayment through use of an Identified Error Rate

through use of an Identified Error Rate

– The Methodology must be Approved by CMS prior The Methodology must be Approved by CMS prior to the Audit

to the Audit

– Strategy for AppealsStrategy for Appeals

The Provider may Appeal Individual Claims

The Provider may Appeal Individual Claims

The Provider may Appeal the Method of Extrapolation

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Recent Law

Recent Law

In the Case of

In the Case of OO’’Connor Hospital Connor Hospital (Feb. 2010)(Feb. 2010)

– Medicare paid the ProviderMedicare paid the Provider’’s claim for inpatient hospitalization s claim for inpatient hospitalization services (Medicare Part A)

services (Medicare Part A)

– The RAC found the services were not Medically Necessary The RAC found the services were not Medically Necessary –

– On Appeal, although the Administrative Law Judge (On Appeal, although the Administrative Law Judge (““ALJALJ””) found that ) found that the services were not reasonable and necessary, the ALJ found th

the services were not reasonable and necessary, the ALJ found that the at the “

“observation and the underlying care were warrantedobservation and the underlying care were warranted” ” and therefore and therefore required payment under Medicare Part B (outpatient care expenses

required payment under Medicare Part B (outpatient care expenses)) –

– Feb. 1, 2010, Council affirmed Feb. 1, 2010, Council affirmed ALJALJ’’s s decision and required the decision and required the Contractor to work with the Provider to arrange for Payment unde

Contractor to work with the Provider to arrange for Payment under r Medicare Part B

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Recent Law Cont

Recent Law Cont

d

d

Palomar Medical Center v.

Palomar Medical Center v. Sebelius Sebelius (Cal. March 2009)(Cal. March 2009)

– RAC Reopened a Claim and denied coverage more than One Year afteRAC Reopened a Claim and denied coverage more than One Year after r Payment by Medicare

Payment by Medicare

– The Provider filed an appeal asserting lack of The Provider filed an appeal asserting lack of ““good causegood cause” ”for the reopeningfor the reopening –

– ALJ held that the RAC lacked ALJ held that the RAC lacked ““good causegood cause”” –

– The Council reversed the The Council reversed the ALJALJ’’s sdecision finding the decision finding the RACRAC’’s sdecision to reopen decision to reopen final

final

– The Federal Magistrate issued a Report Recommending that the CouThe Federal Magistrate issued a Report Recommending that the Court enter an rt enter an Order finding the

Order finding the RACRAC’’s s decision finaldecision final –

– The Provider recently filed a Motion to Stay Proceedings in this The Provider recently filed a Motion to Stay Proceedings in thismatter until matter until the resolution of a related case arising from a Freedom of Infor

the resolution of a related case arising from a Freedom of Information Act mation Act request issued by the Provider

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Patient Protection and

Patient Protection and

Affordable Care Act

Affordable Care Act

Signed into law in March 2010 Signed into law in March 2010

Mandates the Expansion of the RAC Program to Mandates the Expansion of the RAC Program to

Medicaid for all States Medicaid for all States

– States must enter by December 31, 2010States must enter by December 31, 2010

Mandates the Expansion of the RAC Program into Mandates the Expansion of the RAC Program into

Medicare Parts C (Medicare Advantage) and D Medicare Parts C (Medicare Advantage) and D

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Q & A

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References

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