August 15, 2010 - CMS Starts Medical Necessity Reviews and Targets Providers Nationwide With Expanded Medicare Recovery Audits (RAC Audits)
In an effort to move-the-bar and collect on perceived overpayments to providers, Medicare is taking aggressive strides to accelerate the acceptance of evidence-based health care and lighten the load of a strained national budget. After spending the past 30 years collecting and analyzing outcomes data from internal programs (CERTs, HPMPs, QIOs, etc.), both Congress and CMS have committed unprecedented resources to enforce evidence-based coverage policies and
stop Medicare fraud.
Medicare PSC audits,
Medicare ZPIC audits, Medicaid Integrity Contractor audits and the Medicare One PI system are all examples of ongoing CMS audits and initiatives focused on provider payment. However, CMS is adopting recovery audits (or RAC audits) as the first real tangible effort to push hospitals and physicians down a path of revolutionizing the clinical practice of medicine. Using a classic "carrot and stick" approach, CMS has combined clinical pay-for-performance (P4P) incentives and value-based purchasing initiatives (the carrot) with the strong arm of RAC medical collection agencies (the stick) to insure both hospitals and physicians are doing their part to facilitate a more nationalized, evidence-based healthcare structure.
"If it's not documented, it’s not done” - this has been the charge of every hospital HIM department head and compliance officer for the past 20 years. Now both Medicare & Medicaid are adopting clearly defined coverage criteria, evidence-based coverage policies, defining clinical payment criteria, replacing QIOs with RACs, forcing the issue of evidence-based outcomes, verifying supporting medical documentation and insuring claim payment levels. CMS has hired independent medical collection agencies - Recovery Audit Contractors (RACs) - to lead the way and they are paying 9% - 12.5% contingency fees to guarantee the outcome ($187.0M in fees were paid during the 3-year demonstration project).
From 2005 - 2007, the Centers for Medicare and Medicaid Services (CMS) undertook the RAC demonstration project in Florida, New York, California (South Carolina, Massachusetts & Arizona were added late in 2007) while preparing for a nationwide roll out in 2009. In addition to an initial $36.2M in FY 2005, the RAC audits recovered $332.9M in FY 2006 and a staggering $610.9M in FY 2007 in overpayments to providers in the demonstration states. In addition to law enforcement efforts to stop Medicare fraud, CMS estimates billions of dollars in overpayments for patient services will be identified with the national RAC audit focus.
During the demonstration period, the RACs made approximately 525,000 overpayment determinations and providers filed over 125,000 RAC appeals.
Based upon outcomes from the demonstration project and the
Statement of Work for the nationwide audit program, RACs are clearly leveraging the prior work of their peers. Quality Improvement Organizations (QIOs), Comprehensive Error Rate Tests (CERTs) and the Hospital Payment Monitoring Program (HPMPs) all have played a vital role in guiding the initial stages of the RAC audit process. As a result, 85% of Medicare RAC audit identified overpayments have been directly related to coding assignment, determination of medical necessity and/or a need to enhance detailed documentation gathered in support of submitted claims (these are similar outcomes to other previous CMS audits).
It is critical that providers realize that Recovery Audit Contractors have the ability to analyze claims with payment dates reaching as far back as October 1, 2007. Providers should also be very aware of the potential Medicare fraud & abuse ramifications and consider that a wide range of whistleblower suits have been brought in RAC audit related focus areas.
RACs are initially focusing on picking the low-hanging-fruit and reaching deep into the pockets of hospitals, inpatient rehabilitation facilities and physician practices. However, RAC auditors and CMS are dedicated to implementing a systematic methodology to insure absolute and ongoing clinical compliance with National Coverage Determinations, Local Coverage Determinations & QIO guidelines.
Under the program, RAC audits focus on CMS established payment criteria and consist of both automated claims history reviews from the CMS database as well as complex clinical reviews of patient medical records. Specific areas of concentration include those similar to CMS audits such as Medicare PSC audits, Medicare ZPIC audits and Medicaid Integrity Contractor audits (MIC audits) - "not medically necessary services" (or those not meeting the established CMS clinical payment criteria), non-covered services, incorrectly coded claims, duplicate services and incorrect payment amounts.
