How Prepared Are You For the RAC? A Closer Look at the RAC Readiness Checklist

1. How Prepared Are You For the RAC?A Closer Look at the RAC Readiness Checklist Presented by: HomeTown Health August 26, 2009 Kathy Whitmire & Dale Gibson

2. RAC READINESS CHECKLIST Use the following checklist as your facility prepares for the Recovery Audit Contractor (RAC) program to be implemented in August 2009.

3. ASSESSMENT

4. Assess risks with a pre RAC review conducted by someone knowledgeable in CMS coverage and coding regulations and RAC processes. What types of risks were identified? What is your corrective action plan to eliminate these risks on future claims? Have you set aside the money to cover the potential takeback risk identified?

5. Projected Program Costs 50 Claims per Month = Per year 600 Approved in appeal to RAC 50% Appealed to ALJ level 300 Cost to appeal to ALJ level $1,000 Estimated Program Cost $300,000 Average Take-back per claim $4,000 Claims appealed to ALJ level 300 Take-backs $1,200,000 ALJ Overturn success rate 75% Hospital Recovery $900,000

6. Learn as much as you can! Review the RAC Scope of Work. http://www.cms.hhs.gov/RAC/downloads/Final%20RAC%20SOW.pdf

7. Review the lessons learned from the RAC demonstration program. http://www.cms.hhs.gov/RAC/Downloads/RAC_Demonstration_Evaluation_Report.pdf

8. ORGANIZATION/STRUCTURE

9. Determine the primary and back-up contact person for RAC communications (RAC Coordinator) and define their job functions. Who is the primary and back-up contact person for RAC communications in your facility? Have you completed the contact forms and returned to Connolly?

10. Establish a RAC Multidisciplinary Team. • RAC Liaison – primary point of contact • Health Information Management (HIM) • Compliance • Accounting • Patient Financial Services (PFS) • Case Management (CM) • Utilization Review (UR) • Risk Management • Legal • Physician Liaison

11. Define the RAC Team process Such as: 1) meeting often to review new requests and status of those in process; 2) prioritizing requests by time remaining to respond, dollar impact, and volume of claims with common issues; 3) establishing criteria and decision points for appealing; identifying practices with high potential for denial; design standard templates for specific types of denials; define dashboard and metrics.

12. Assess available external resources for assistance with planning and implementation to meet project timelines and support the internal RAC team. Also consider if external resources may be effective to meet defined ongoing responsibilities in the RAC response management process HTH RAC Response Team Led by Dale Gibson Sherry Milton Michelle Madison, MMM Linda Braswell

13. REQUESTS

14. Review record copying procedures and policies anticipating an increase in volume. Set up process for electronic record submission (strongly advised) http://www.connollyhealthcare.com/RAC/pages/record_submission.aspx Establish a RAC processing timeline to assure imposed deadlines are met.

15. Review new requests and status of those in process. Review the RAC medical record request limits pertinent to your facility or practice. Track copying costs: RAC pays Medicare rate of 12 cents/page

16. Prioritize requests by time remaining to respond, dollar impact, and volume of claims with common issues.

17. APPEALS

18. If appeal within 30 days – NO Recoupment

19. Investigate approaches to manage appeals (internal process versus external vendor services).

20. Identify practices with high potential for denial incorrect coding; Incorrect units of measure; duplicate claim submissions, use of wrong fee schedule, etc.

21. Establish criteria and decision points for appealing. Sample Decision Tree If claim = < $100 then No appeal If claim >$100 and < $500 then 1st level - Redetermination If Claim >$500 and <$1000 1st and 2nd level –Reconsideration (QIC)

22. Design standard responses and legal defenses for specific types of denials. • In addition to advocating the merits of a claim through various techniques, certain legal defenses are available. Defenses that have proven valuable for providers and suppliers challenging Medicare audit determinations include: • invoking the treating physician rule, • (2) arguing the “waiver of liability” defense, • (3) arguing the provider is without fault, • (4) challenging the timeliness of the audit and claim denial, and • (5) challenging the statistical extrapolation (if • one was involved).

23. Example – Legal defense. Treating Physician Rule It may be appropriate in many audit settings to assert the “treating physician rule.” The treating physician rule involves the legal principle that the treating physician, who has examined the patient and is most familiar with the patient’s condition, is in the best position to make medical necessity determinations. The treating physician rule, as adopted by some courts, reflects that the treating physician’s determination that a service is medically necessary is binding unless contradicted by substantial evidence and is entitled to some extra weight, even if contradicted by substantial evidence, because the treating physician is inherently more familiar with the patient’s medical condition. Thus, providers should reference the treating physician rule to demonstrate that the treating physician’s medical judgment as to the medical necessity of the services provided should prevail absent substantial contradictory evidence. Journal of Health Care Compliance — September – October 2008

24. CHARGES

25. Review and update the charge description master. Review and update department charge sheets. Instruct staff responsible for entering charges regarding charge entry when more than one service is performed.

26. Collaborate with patient care delivery departments and HIM to clarify charging responsibilities in order to avoid duplicate charges. For example, is HIM coding endoscopy procedures or are these entered as charges through the charge master mechanism? If excessive charges are entered that result in a cost outlier payment, this can be discovered by the RAC by reviewing the detailed bill.

27. COMMUNICATIONS PLAN

28. Develop a RAC Communications Plan To ensure that one person coordinates and maintains all communications

29. Create a central repository for all communication between the facility and the RAC. Document all encounters Put it in writing!!!

30. TRACKING/MONITORING

31. Design a tracking mechanism or database that will monitor strict deadlines, workloads, and allow for collaboration with other team members. RAC tracking software supports demanding audit schedules and seamless process management. A tracking mechanism that integrates with existing systems is optimal.

32. Design a tracking mechanism or database that will monitor strict deadlines, workloads, and allow for collaboration with other team members. See RAC Readiness Checklist at www.racshelp.com

33. A provider that is well prepared for RAC will be able to: 1) Respond to all RAC chart requests on a timely basis to avoid automatic denials 2) File appeals on all cases, as appropriate 3) Track RAC chart requests and overpayment determinations by DRG 4) Monitor appeal filings and status 5) Identify opportunities for improving clinical documentation

34. Establish Case Management coverage 7 days a week. This will reduce admissions that do not meet criteria One-Day stays!

35. Establish an auditing process – focusing on coding and medical necessity for RAC target areas

36. RAC Target Areas Coding Targets: • Reporting of excisional debridement (86.22) w/o adequate medical record documentation to meet the definition of “excisional.” • MSDRG 573-578 and MS-DRGs 463, 464 and 465 • DRGs designated as CC or MCC with only one secondary diagnosis. i.e., • MSDRG 329 Major Small & Large bowel with MCC 4.5059 • MSDRG 330 Major Small & Large bowel with CC 2.8935 • MSDRG 331 Major Small & Large bowel w/o cc/MCC 1.8415 (Are you coding from pathology reports without physician documentation?) (Are you coding from lab reports without physician documentation?) • Correct coding of discharge status for post acute care transfer (discharge status codes)

37. RAC Target Areas Coding Targets: • Unit Coding • grams vs. milligram, • number or procedures per day (e.g., appendectomy, colonoscopy) (automated review) • blood transfusion 36430, billed 1 service per pint rather than 1 service per transfusion session (automated review) • speech/hearing therapy 92507, billed 1 service per 15 minutes rather than 1 service per session. Processing manual 100-5, Chap 5, Sec 20.2 (automated review) • Neulasta J2505, billed 1 service per mg when the definition of the code is 1 service per 6 mg vial. Transmittal 949. (automated review)

38. RAC Target Areas Medical Necessity Targets: • Inpatient admissions for procedures that are eligible for outpatient surgery (eg. laparoscopy, cholecystectomy) • One-day stays that would qualify as observation • Chest pain: MSDRG 313 • Back Pain: MSDRG 551 • Three-day stays to qualify for SNF care • Inpatient rehabilitation (joint replacement patients)-RAC determines service was medically unnecessary for inpatient setting according to Medicare ruling 85-2 and Medicare Benefit Polity Manual Section 110.

39. RAC Target Areas Medical Necessity Targets: • Wrong principal diagnosis – • Incorrect coding – principal diagnosis on claims did not match the principal diagnosis in the medical record. Example: respiratory failure 518.81 was listed as the principal diagnosis but the medical record indicates that sepsis 038-038.9 was the principal diagnosis. • Most common MSDRGs 981-983 • Incorrect coding – hospital reported a principal diagnosis of 03.89 septicemia. Medical record shows diagnosis of urosepsis, not septicemia or sepsis; blood cultures were negative. • Most Frequent Medically Unnecessary Errors* – • MSDRG 313 Chest Pain 20.1% • MSDRG 551 Medical Back 15.5% • MSDRG 391 Esoph,Gastroent 11.9% • MSDRG 640 Nutr & Misc Metab Disor 10.7% • MSDRG 287 Circ Disor 9.8% • MSDRG 264 Oth Circ Sys OR Proc 9.6% • MSDRG 637 Diabetes 9.2% • MSDRG 312 Syncope 8.1% * January 2008 CMS Improper Medicare FFS Payments Report

40. Review RAC focus MS-DRG categories: 61, Acute ischemic stroke w use of thrombolytic agent w MCC 62, Acute ischemic stroke w use of thrombolytic agent w CC 64, Intracranial hemorrhage or cerebral infarction w MCC 65, Intracranial hemorrhage or cerebral infarction w CC 166-7, Other resp system O.R. procedures w MCC – (167 – w CC) 177-8, Respiratory infections & inflammations w MCC (178 – wCC) 180-1, Respiratory neoplasms w MCC (181 – wCC) 193-4, Simple pneumonia & pleurisy w MCC (194 – wCC) 196-7, Interstitial lung disease w MCC (197 – wCC) 207-8, Respiratory system diagnosis w ventilatorsupport 96+ hours (208 - <96 hours) 286-7, Circulatory disorders except AMI, w card cath w MCC (287 – w/oMCC) 291-3, Heart failure & shock w MCC (293 - w/o CC/MCC)

41. Review RAC focus MS-DRG categories: 329-31, Major small & large bowel procedures w MCC (331 - w/oCC/MCC) 344-6, Minor small & large bowel procedures wMCC – (346-w/oCC/MCC) 356-8, Other digestive system O.R. procedures wMCC - (358-w/oCC/MCC) 417-9, Laparoscopic cholecystectomy w/o c.d.e. wMCC- (419-w/oCC/MCC 463-5, Wnd debrid & skn grft exc hand, formusculo-conn tiss dis w MCC 573-8, Skin graft &/or debrid for skn ulcer orcellulitis w MCC 578 w/oCC/MCC 689-90, Kidney & urinary tract infections w MCC (690 – w/o MCC) 695-6, Kidney & urinary tract signs & symptomsw MCC (696 – w/o MCC) 856-8, Postoperative or post-traumatic infectionsw O.R. proc w MCC 870-2, Septicemia w MV 96+ hours ( 872 –w MX +) 981-3 Extensive O.R. procedure unrelated to principal diagnosis w MCC – w/o http://www.patientcareanalyst.com/documentation/codes/DRGFY08.pdf

42. PROCESS IMPROVEMENTS

43. Use RAC demonstration and reported activities to date to prospectively improve identified coding and documentation issues. http://www.cms.hhs.gov/RAC/Downloads/RAC_Demonstration_Evaluation_Report.pdf

44. Implement preprinted physician order sheet with specific orders for "admit to inpatient status“ Effective immediately: O/P Order should read Observation services NOT Admit to OBS

45. Review and update as needed the procedure for determining correct discharge disposition status. 03 • Skilled nursing facility (SNF) • SNF rehabilitation unit (a unit within the SNF) • Sub-Acute Care • Transitional Care Unit (TCU) App_H_Table_2.5_v2.1a_Discharge_Status_Disposition.pdf

46. EDUCATION

47. Outline an education mechanism for organizational stakeholders and departments impacted by the RAC program as well as medical staff to inform them of the RAC program, its impacts to the facility and the process changes that have been developed to address issues that are raised by the RAC program. HTH RAC READINESS PROGRAM INCLUDES: On-site training for Dept Heads, Medical Staff, Boards, Authorities, Local leaders, etc.

48. Use tools and resources available from HPMPResources.org, a web site developed to provide information, tools, and data to hospitals and health care providers related to payment error prevention. http://www.hpmpresources.org/Home/tabid/52/Default.aspx to access this site.