Medicare and Medicaid Audits: RACs to ZPICs

1. Arkansas Hospital AssociationMedicare and Medicaid AuditsFrom RACs to ZPICs(and Everything In Between)May 25, 2016Little Rock, Arkansas Jane W. Duke Partner

2. Disclaimer These materials have been prepared for informational purposes only and are not legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking professional counsel.

4. Acronyms • RAC—Recovery Audit Contractors • CERT—Comprehensive Error Rate Testing • ZPIC—Zone Program Integrity Contractors • PSC—Program Safeguard Contractors • MAC—Medicare-Administrative Contractors • ADR – Additional Documentation Request • MIC – Medicaid Integrity Contractors

5. Auditing v. Monitoring Auditing: *Formalized approach, independent, and objective. *Audits are performed by someone who has no vested interest in the outcomes or business area being reviewed. *Audits have established approach and methodology for sampling.

6. Auditing v. Monitoring Monitoring: *Day to day reviews. *Not necessarily independent of business unit. *Part of doing business and approach may be informal.

7. Auditing v. Monitoring A Time & A Season for Everything: Audit when objective results needed and integrity is critical. For cause reviews Not-for-cause reviews to assess risk Effectiveness of corrective actions Monitor when watching compliance becomes part of daily operations. Implementing new rules Implementing corrective actions High risk areas in between audits

8. MEDICARE v. MEDICAID AUDITS

9. Recovery Audit Contractor Program

10. The Recovery Audit Contractor Program • Recovery Audit Contractors (RACs) are charged with identifying and recouping improper payments under Medicare Parts A and B

11. Background of the RAC Program • The Medicare Recovery Audit Contractor Program began as a demonstration program to identify Medicare overpayments and underpayments to health care providers and suppliers in California , Florida , New York , Massachusetts , South Carolina, and Arizona. • The demonstration program resulted in nearly $1 billion returned to the Medicare Trust Fund and approximately $38 million in underpayments returned to providers.

12. Demonstration Program • RACs are paid a contingency fee based on the amount of collected repayments • Fee may be as high as 12.5% for all non-DME claims • DME claims range from 14.0 – 17.5% • The amount of the contingency fee is a percentage of the improper payment recovered from, or reimbursed to, providers. • The RACs made $187.2 million in contingency fees during the demonstration program • The demonstration program proved to be cost effective for CMS

13. Permanent Program • Due to the success of the demonstration program, Congress required a permanent and national RAC program to be in place by 2010, under the Tax Relief and Health Care Act of 2006 • The Affordable Care Act expanded the RAC program to cover Medicare Parts C and D • Medicare Advantage • Medicare Prescription Drug

14. Who are the Medicare Recovery Audit Contractors? • The Recovery Auditors in each region are: • Region A: Performant Recovery • Region B: CGI Technology and Solutions • Region C: Connolly, Inc. • Region D: HealthDataInsights (HDI)

15. Arkansas’ Medicare RAC Map of each of the four Recovery Audit Program regions.

16. Provider Service 866.360.2507 RACInfo@Cotiviti.com (inquiries only, no medical documentation) Provider Service Specialists are available Monday through Friday from 8:00 a.m. to 6:30 p.m. EST excluding Federal Holidays Fax: 203.529.2995 ________________________ Mailing Address: Cotiviti – CMS Recovery Audit Spring Mill Corporate Center Suite 6125 555 E. North Lane Conshohocken, PA 19428

17. Performance of the Recovery Auditors FY 2014, the Recovery Auditors identified and corrected $2.57 billion in improper payments $2.39 billion collected in overpayments $173.1 million in identified underpayments After taking into consideration the Recovery Audit Program’s administrative costs, underpayments paid to providers, and appeal reversals, the Medicare FFS Recovery Audit Program returned $1.6 billion to the Medicare trust funds in FY 2014

18. The Return on Investment CMS spent $460.9 million to operate the Medicare FFS Recovery Audit Program, of which $274.6 million were contingency fees paid to Recovery Auditors. Administrative costs, such as processing appeals at the first two levels, adjusting claims, support contractors, and oversight of the program, accounted for the additional $186.3 million. These amounts do not take into account costs incurred at the third and fourth levels of appeal, as these components do not receive Recovery Audit Program funding for those appeals. This equates to a Return on Investment of over 2:1.

19. FY 2014 Program Corrections Were 31.5% Below FY 2013 Limited reviews took place during the close-out process of the existing Recovery Auditor contracts. Resources were focused on completing as many open reviews as possible. CMS prohibited RAs from sending ADRs to initiate new complex reviews after February 2014 and all claim adjustment files had to be sent to the MACs by June 2014. During this time, RAs continued to complete open reviews, maintain their customer service obligations, and support the appeals process. And, after the publication of the IPPS Final Rule, CMS prohibited the RAs from performing inpatient hospital patient status reviews for claims with dates of admission on or after October 1, 2013 and allowed the MACs to engage in a Probe and Educate process for the new hospital admission policy. Inpatient hospital patient status reviews previously accounted for a substantial portion of RA corrections.

21. Region C Recovery Auditor, Connolly, had the most corrections in terms of both overpayments and underpayments

22. Getting Prepared • What preparation is necessary? • Should the RAC be contacted prophylactically? • What needs to be done internally? • Do Self-Audits have a place? • What education steps should be taken? • What happens if an overpayment is discovered in a self-audit?

23. RAC Claims Review Improper claims will be identified in four areas: • Payments made for services that were not medically necessary or that were provided in a setting that was not necessary • Payments made for services that were not correctly coded • Payments made where there is not enough documentation to support the claim • Payments made involving other errors

24. What are RACs looking at currently? • All issues reviewed by the RAC must go through a CMS approval process. Once approved by CMS, all areas the RAC intends to review must be posted on its website prior to widespread review • The RACs will use their own proprietary software and data-mining systems as well as their knowledge of Medicare rules and regulations to determine what areas to review.

29. The Audit Process • RACs are permitted to review claims limited to a three-year look-back period • RACs are not allowed to reviewthe following claims: • Issues not approved by CMS • Claims previously reviewed by another Medicare contractor • Claims involved in potential fraud investigation • Claims submitted before October 1, 2007 • Claims involved in Medicare demonstration programs or that have other special processing rules

30. The Audit Process • How do RACs identify overpayments? • How will RACs obtain medical records for review and how will audit results be communicated? • What policies and articles do RACs use when reviewing claims for improper payments?

31. After the Audit • What is the appeals process? • When should an appeal be made? • If an overpayment is identified under Medicare Part A, can the claim be resubmitted for coverage under Part B?

32. RAC Process CGI Federal, Medicare RAC Region B Website, RAC Process Flowchart, http://racb.cgi.com/Docs/Rac%20Process%20Flowchart.pdf

35. Change to Provider’s Discussion Period There are a number of changes to the Recovery Audit program effective January 1, 2016.  One of those changes is the length of time a Provider has to submit a Discussion Request following a RAC review. Two important alerts: (1)  The Provider has the option to submit a Discussion Request within 30 days from the date of the Review Results Letter for a Complex review, and within 30 days from the date of the Portal notification for an Automated review.  During this period we will not submit an adjustment to your Payer.  We encourage all providers to utilize the Discussion process if there is additional information/documentation that you believe would change the outcome of our review. To do so, please utilize our updated Discussion Request Form on this page above.  For your convenience, the form can be completed electronically and directions for submission are on the form itself.  Please note that the Recovery Auditors are not required to entertain discussion requests submitted greater than 30 days after the date of Review Results Letter for Complex reviews or 30 days after the date of the Portal notification for Automated reviews.

36. (2)  We will display Automated review findings on the Provider Portal as soon as they become available.  (Previously they were not displayed until the Payer validated they were going to make the subsequent adjustment.)  The Status Effective Date will start the 30-day period described above.

37. Keys for a Successful RAC Appeal • Scan and save all documents in electronic format. • Make records readily available. • Resubmit records / documentation and highlight pertinent sections. • Use technology to review successful appeals. • Re-evaluate your decision to appeal at each level of appeal. 37

38. Steps That Hospitals Should Consider Prior to Receiving a RAC Audit Letter • Educate and Train Staff. Provide staff with the right tools to ensure accurate and proper claims coding.It is imperative that everyone involved in the submission of a Medicare claim understand the RAC program. • Develop a RAC Compliance Plan. Hospitals should have a written RAC plan that addresses RAC compliance issues, education efforts and reviews. • Designate a RAC Response Team and Team Leader. This team should consist of medical, compliance, coding and billing personnel. Providers have 45 days from the date of the initial RAC audit letter to submit a response. 38

39. Steps That Hospitals Should Consider Prior to Receiving a RAC Audit Letter (Con’t.) • Conduct Chart Reviews and Internal Audits. Review your compliance programs and make any necessary modifications. Hospitals should schedule and conduct frequent reviews of issues such as compliance with CMS coverage criteria, local coverage determinations, coding, billing and coverage, utilization, and patient documentation requirements. • Utilize Tracking and Reporting Systems. Hospitals should consider using tracking and reporting systems to manage the process and analyze audit patterns. Tracking deadlines, pending requests, RAC determinations, and appeal status enables the lab to manage the process and analyze and adjust documentation as necessary. 39

40. Steps That Hospitals Should Consider Prior to Receiving a RAC Audit Letter (Con’t.) • Develop Corrective Plans of Action. For any issues where issues currently exist or where the likelihood of noncompliance is high, develop and document plans of action to correct the deficiencies. • Monitorthe Trends and Enforcement in Your RAC Region. While the RAC auditors can review any of the approved issues for your region, regularly check your region’s RAC contractor’s website for updated information regarding recent activity and collection efforts. 40

41. Steps That Hospitals Should Consider Prior to Receiving a RAC Audit Letter (Con’t.) • Involve Your Legal Counsel During the Early Stages of the Planning Phase. The RAC auditing process is complicated and multi-faceted. Including legal counsel prior to an actual audit can be beneficial in determining areas of potential liability and steps to be taken during the audit process and future appeals. 41

42. Quality Improvement Organizations (“QIO”) What is the Quality Improvement Organization (QIO) Program? • Led by CMS • One of the largest federal programs dedicated to improving health quality at the local level. • Aligns with the six CMS Quality Strategy goals: • Make care safer by reducing harm caused in the delivery of care • Ensure that each person and family are engaged as partners in their care • Promote effective communication and coordination of care • Promote the most effective prevention and treatment practices for the leading causes of mortality, starting with cardiovascular disease • Work with communities to promote wide use of successful interventions to enable healthy living • Make quality care more affordable for individuals, families, employers, and governments by developing and spreading new health care delivery models.

43. Quality Improvement Organizations (“QIO”) What Does the QIO Do? QIOs work with local health care providers, serving as change agents, conveners, and collaborators. Form groups of health care providers and other stakeholders to learn from one another and to use that knowledge in making care more patient-centered, safer, and coordinated. QIOs share best practices with one another, providers benefit from the experience of their peers across the country, which further accelerates improvement. QIOs also help Medicare beneficiaries exercise their right to high-quality health care. Patients benefit from the QIO Program’s charge to address beneficiaries’ quality of care complaints and discharge appeals as well as from the QIO improvement initiatives those complaints and appeals inspire.

44. Quality Improvement Organizations (“QIO”) • Effective August 1, 2014, the QIO Program structure changed, and there are now two QIOs in each state: • Beneficiary and Family Centered Care Quality Improvement Organizations (BFCC-QIOs) manage all beneficiary complaints and quality of care reviews to ensure consistency in the review process while taking into consideration local factors important to beneficiaries and their families. • Quality Innovation Network - Quality Improvement Organizations (QIN-QIOs) are responsible for working with providers and communities on data-driven quality initiatives to improve patient safety, reduce harm, and improve clinical care and transparency at local, regional, and national levels.

45. BFCC-QIO

46. QIN-QIO

47. Inter-relationship Between RACs and QIO • Medicare RAC will review for accurate coding • QIO is reviewing for medical necessity/compliance with 2MN Rule • QIO an refer to RAC if it sees an issue its areas of review

48. Medicaid RAC Program • Section 6411 of the Affordable Care Act of 2010 also expanded the RAC program by requiring states to establish Medicaid RAC programs • Medicaid RACs • Identify payment errors • State issues • Not audit claims that have been or currently being audited • States afforded flexibility in the design and operation of Medicaid RAC programs

49. Medicare RACs v. Medicaid RACs • Key differences: • Funding • Authorization of the RAC programs • Control over the RAC programs • Medicaid RAC Final Rule: focused on flexibility for states

50. Status of Arkansas Medicaid RAC • Anyone?