Learn who RAC is and how it may affect you and your organization. Includes answers to most often asked questions.

1. Welcome
to
a
“Medical
Billing
Errors
&
Omissions:
Exposures
and
Solu;ons”.
My
name
is
Sco?
Fikes,
Vice
President
of
Physician
Services
for
InLight
Risk
Management,
a
specialty
insurance
firm
exclusively
serving
the
healthcare
industry.
During
this
Webinar,
we
will
review
Who
RAC
is,
its
objec;ves
and
solu;ons
designed
to
protect
your
healthcare
organiza;on
from
the
unexpected
financial
loss
of
a
government
or
commercial
payor
audit.
1

2. In
the
Tax
Relief
and
Health
Care
Act
of
2006,
Congress
required
a
permanent
and
na;onal
RAC
program
to
be
in
place
by
January
1,
2010.
The
na;onal
RAC
program
is
the
outgrowth
of
a
successful
demonstra;on
program
that
used
RACs
to
iden;fy
Medicare
overpayments
and
underpayments
to
health
care
providers
and
supplier.
RAC
is
the
acronym
for
Recovery
Audit
Contractors.
2

3. The
demonstra;on
was
limited
to
only
a
few
select
states
mostly
located
in
the
west
and
east
coast.
The
demonstra;on
resulted
in
over
$900
million
in
overpayments
being
returned
to
the
Medicare
Trust
Fund
between
2005
and
2008
and
nearly
$38
million
in
underpayments
returned
to
health
care
providers.
3

4. The
goal
of
the
recovery
audit
program
is
to
iden;fy
improper
payments
made
on
claims
of
health
care
services
provided
to
Medicare
beneficiaries.
Improper
payments
may
be
overpayments
or
underpayments.
Overpayments
can
occur
when
health
care
providers
submit
claims
that
do
not
meet
Medicare’s
coding
or
medical
necessity
policies.
Underpayments
can
occur
when
health
care
providers
submit
claims
for
a
simple
procedure
but
the
medical
record
reveals
that
a
more
complicated
procedure
was
actually
performed.
4

5. RAC
audits
include
Medicare
Parts
A
&
B.
5

6. This
illustra;on
provides
the
proposed
jurisdic;ons.
Focusing
on
jurisdic;on
“C”,
Oklahoma,
Texas,,
Florida,
New
Mexico
and
Colorado
will
begin
March
2009
with
the
remaining
states
to
follow
in
August
2009
or
later.
6

7. 7

8. Medicare
delayed
the
contract
award
due
to
a
dispute
in
the
bidding
process
by
two
unsuccessful
bidders
for
the
RAC
program.
Under
the
GAO
(General
Accoun;ng
Office),
a
deadline
of
100
days
was
given
to
make
a
determina;on.
8

9. On
February
4,
2009
the
par;es
involved
in
the
protest
of
the
award
of
the
Recovery
Audit
Contractor
(RAC)
contracts
se?led
the
protests.
The
se?lement
means
that
the
stop
work
order
has
been
liied
and
CMS
will
now
con;nue
with
the
implementa;on
of
the
RAC
program.
9

10. In
jurisdic;on
“C”,
Connolly
Consul;ng,
Inc.
received
the
RAC
award.
All
correspondence,
websites
and
call
centers
will
be
in
the
name
of
the
RAC’s.
10

11. Connelly
Consul;ng
Associates,
Inc.
is
located
in
Wilton,
Connec;cut.
About
Connolly
Healthcare
Connolly
Healthcare,
a
division
of
Connolly
Consul;ng,
is
the
recovery
audit
expert
that
uses
advanced
data
mining
techniques
to
iden;fy
and
recover
a
broad
range
of
erroneous
medical
claim
payments,
all
with
a
high
sensi;vity
to
important
provider
rela;onships.
In
2007,
Connolly
reviewed
more
than
$150
billion
dollars
in
paid
medical
claims
working
with
some
of
the
largest
health
plans
in
the
United
States.
Recovery
audi;ng
is
recognized
as
a
best
prac;ce
and
Connolly's
exper;se
places
it
in
a
posi;on
to
propose
vital
process
improvement
recommenda;ons
to
reduce
or
eliminate
future
improper
payments.
Informa;on
on
Connolly
Healthcare
and
its
services
can
be
obtained
at:
www.connollyhealthcare.com
or
by
contac;ng
Connolly's
Press
Release
Contact:
PRContact@connollyhealthcare.com
SOURCE
Connolly
Healthcare
William
Pisani,
+1-­‐203-­‐529-­‐2000,
of
Connolly
Healthcare
11

12. 12

13. 1. Is
RAC
a
new
issue
facing
the
healthcare
industry?
No.
Medical
facili;es
have
had
RAC-­‐related
issues
since
the
1980s.
2.
What
were
the
biggest
challenges
confron;ng
medical
facilitates
par;cipa;ng
in
the
3-­‐year
RAC
demonstra;on
program?
Managing
data
such
as
the
number
of
requests
coming
in
and
the
paperwork
going
out
of
the
facility.
Another
challenge
was
managing
the
review
process
and
remi?ances,
which
included
keeping
track
of
monetary
flows
and
differen;a;ng
RAC
requests
from
other
requests.
It
is
important
to
be
prepared
from
a
ROI
standpoint.
You
must
make
sure
you
have
adequate
staff
to
handle
requests
and
be
able
to
handle
DRG
coding
issues,
which
may
lead
to
RAC
denials
which
is
a
result
of
uneducated
staff.
Tracking
RAC
ac;vi;es
is
also
cri;cal.
Medical
facili;es
started
out
tracking
data
on
Excel
spreadsheets
but
later
had
to
move
the
informa;on
to
a
database
because
of
the
large
amounts
of
informa;on.
3.
What
was
the
biggest
obstacle
that
confronted
RAC
providers
during
the
demonstra;on
program?
Last
minute
requests
from
par;cipa;ng
medical
facili;es
asking
for
extensions
on
delivering
RAC
medical
requests.
4. What
was
the
most
difficult
area
to
target
for
par;cipa;ng
medical
facili;es?
Separa;ng
simple
versus
complex
pneumonia
cases,
sepsis
versus
neuro-­‐
sepsis,
CHS,
wound
debridements,
chest
pains,
syncope,,
medical
necessity,
and
denial
of
inpa;ent
rehab
encounters
were
all
difficult.
13

14. 5.
Does
CMS
offer
documenta;on
that
pinpoints
what
caused
the
worst
RAC
issues
for
organiza;ons
par;cipa;ng
in
the
demonstra;on
program?
Yes.
CMS
offers
two
reports
posted
on
their
web
site
outlining
the
various
issues
encountered,
including
challenges
with
coding,
medical
necessity,
etc.
To
see
these
reports,
go
to
h?p://www.cms.hhs.gov/rac.
6. Was
the
RAC
demonstra;on
ini;a;ve
random?
No.
The
CMS
was
not
commissioned
to
use
a
random
approach.
RACs
are
not
only
looking
at
DRGs
but
are
also
reviewing
ICD9
diagnosis
codes,
charges,
and
length
of
stays
for
inpa;ents.
A
DRG
payment
that
is
significantly
higher
than
the
charges
is
a
red
flag
to
RAC
and
will
probably
be
inves;gated.
7. On
average,
how
may
RAC
reviews
uncover
an
improper
payment
finding?
Three
out
of
10
reviews
reveal
an
improper
payment.
HealthPort
::
RAC
Preparedness
8. How
important
is
day-­‐to-­‐day
coding
when
it
comes
to
the
RAC
demonstra;on?
Very
important.
RAC’s
methodology
is
based
on
ICD9
and
CPT4
coded
data
because
payment
is
based
on
coding.
RAC
will
easily
recognize
a
sepsis
that
is
a
two-­‐day
stay
and
a
secondary
UTI
diagnosis.
14

15. 9. Did
facili;es
par;cipa;ng
in
the
RAC
demonstra;on
follow
CMS’s
instruc;ons
on
extrapola;on
methodology
for
internal
findings?
No.
None
of
the
par;cipa;ng
facili;es
did
extrapola;on.
For
extrapola;on
a
provider
must
have
a
high
level
of
error
that
can
be
demonstrated
by
a
sta;s;cian
and
other
similar
professionals.
For
more
details
on
extrapola;on,
go
to
www.cms.hhs.gov/manuals.
10. Will
extrapola;on
eliminate
the
RAC
process
for
organiza;ons?
No,
because
it
is
targeted
to
limited
areas.
HealthPort
::
RAC
Preparedness
::
RAC
FAQs
h?p://
www.healthport.com/RAC_FAQs.aspx
11. Did
RAC
focus
on
one
type
of
medical
facility
over
another
(i.e.
profit
or
not-­‐for-­‐
profit,
teaching
or
non-­‐teaching
hospital,
urban
or
suburban
facility,
acute
care
or
long-­‐term
cri;cal
access?
No.
They
included
all
types
of
medical
facili;es.
15

16. 12. Were
states
that
had
less
CMS
beneficiaries
reviewed
differently?
A
final
decision
has
not
been
made
on
the
limita;on
cap.
During
the
RAC
demonstra;on,
PRG
Connolly
based
medical
record
limits
on
the
number
of
monthly
chart
requests;
however,
HDI
thought
it
was
fairer
to
base
it
on
Medicare
revenue
per
provider.
13. Whom
should
a
medical
facility
appoint
as
gatekeeper
for
the
RAC
process?
While
it
is
each
facility’s
decision,
based
on
its
par;cular
needs,
an
onslaught
of
coding
and
reimbursement
issues
would
necessitate
that
the
Health
Informa;on
Management
(HIM)
department
should
be
gatekeeper.
HIM
also
holds
the
records.
However,
if
the
biggest
area
of
risk
is
medical
necessity,
than
Case
Management
or
Pa;ent
Financial
Services
may
want
to
handle
this
responsibility.
A
facility
may
also
develop
a
task
force
that
includes
Corporate
Compliance,
Revenue,
and
the
Central
Business
Office,
with
HIM
heading
up
the
task
force.
14. Will
RAC
use
cer;fied
coders
and
medical
directors
in
the
na;onal
program?
Yes.
RAC’s
statement
of
work
requires
hiring
only
cer;fied
coders.
During
the
early
por;on
of
the
RAC
demonstra;on,
some
non-­‐cer;fied
coders
were
ini;ally
used.
However
going
forward,
RAC
has
s;pulated
that
only
cer;fied
coders
should
be
used.
Likewise,
in
the
na;onal
program,
the
four
RACs
will
be
required
to
use
medical
directors,
as
well.
15. When
will
CMS
start
distribu;ng
the
RAC
le?ers?
It
is
an;cipated
that
the
RAC
le?ers
will
begin
going
out
in
April
or
May
2009.
HealthPort
::
RAC
Preparedness
::
RAC
FAQs
h?p://
www.healthport.com/RAC_FAQs.aspx
16

17. Selected
under
a
full
and
open
compe;;on.
The
RACs
will
be
paid
on
a
con;ngency
fee
basis
on
both
the
overpayments
and
underpayments
they
find.
The
selec;on
was
based
on
a
best
value
determina;on
for
the
Federal
government
that
included
a
sound
technical
approach
for
the
level
and
quality
of
claim
analysis
and
detail
to
excep;onal
customer
service,
conflict
of
interest
reviews
and
lowest
con;ngency
fee.
17

18. Medicare
RAC
Appeals
/
Denials
/
Overpayment
Determina7on
The
following
informa;on
MUST
be
included
with
your
request
for
all
appeal
levels:
Beneficiary
name
Medicare
Health
Insurance
Claim
(HIC)
Number
Specific
service(s)
and/or
item(s)
for
which
the
redetermina;on
/
reconsidera;on
is
being
requested
Specific
date(s)
of
the
service;
and
Name
and
signature
of
the
provider
or
the
representa;ve
of
the
provider
First
Level
–
Redetermina7on
(Medicare
Administra7ve
Contractor)
Claim
denials
or
overpayments
must
be
ini;ally
reviewed
(appealed)
to
the
appropriate
Medicare
Administra;ve
Contractor
(MAC)
by
reques;ng
a
redetermina;on
of
the
claim
within
120
days
of
the
RACs
ini;al
decision.
Medicare
Administra;ve
Contractors
are
required
to
respond
to
a
provider’s
request
for
redetermina;on
within
60
days
of
receipt.
Second
Level
–
Reconsidera7on
(Qualified
Independent
Contractor)
If
a
provider
is
dissa;sfied
with
the
outcome
of
the
Level
1
appeal
or
redetermina;on
process,
a
request
for
“reconsidera;on”
may
be
filed
with
the
appropriate
Qualified
Independent
Contractor
(QIC)
within
180
days
of
the
redetermina;on.
Requests
for
reconsidera;on
are
required
to
be
processed
within
60
days
by
the
QIC.
Third
Level
–
Administra7ve
Law
Judge
Hearing
If
a
provider
is
not
sa;sfied
with
Level
2
and
the
result
of
reconsidera;on,
a
hearing
before
an
Administra;ve
Law
Judge
(ALJ)
can
be
requested.
The
amount
in
controversy
must
be
a
minimum
of
$120
and
requests
for
a
hearing
from
an
ALJ
must
be
received
within
60
days
of
the
provider’s
no;ce
of
the
reconsidera;on
outcome.
Fourth
Level
–
Medicare
Appeals
Council
(MAC)
If
the
Level
3
appeal
and
decision
by
the
ALJ
is
considered
unfavorable
by
the
provider,
a
fourth
level
appeal
request
may
be
filed
with
the
Departmental
Appeals
Board
(DAB)
/
Medicare
Appeals
Council
(MAC).
Requests
for
a
MAC
review
must
be
filed
within
60
days
of
receipt
of
the
ALJ’s
decision.
The
MAC
must
subsequently
issue
a
determina;on
within
90
days
of
the
review.
FiIh
Level
–
U.S.
District
Court
Review
If
the
Level
4
decision
of
the
MAC
is
deemed
unfavorable
to
the
provider,
the
final
step
in
the
appeals
process
is
to
file
suit
in
U.S.
District
Court.
Requests
must
be
filed
within
60
days
of
the
MACs
decision
and
the
amount
in
controversy
must
be
at
least
$1,180.
18

19. 19

20. 20

21. 21

22. 22

23. 23

24. 24

25. 25