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HCCA Delaware ValleyJune 6, 2014

Robert F. Bacon, MHA

AVP & Billing Compliance Officer

Audits, Appeals &

Other Emerging Compliance Risks

Disclaimer

• Opinions expressed are my own and do

not represent any guarantees,

warranties or endorsements by the

University of Pennsylvania or its

Trustees

o Emerging issues in the field of

Billing Compliance

oGovernment Audits

oConsumer awareness & media

o 2 Midnight Rule

Course Objectives

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• Penn Medicine offers comprehensive clinical services throughout the greater Philadelphia region

• Practice Plans

– Clinical Practices of the University of Pennsylvania

– Clinical Care Associates

• Hospitals

– Chester County Hospital

– Hospital of the University of Pennsylvania (the nation's first teaching hospital)

– PENN Presbyterian Medical Center

– Pennsylvania Hospital (the nation's first hospital)

– Penn Medicine at Rittenhouse

• Home Care & Hospice Services

– PENN Care at Home / PENN Home Infusion Therapy

– Wissahickon Hospice

From the beginning…Medicare 1965

And how things have changed…… Medicare 2014

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7777

Regulatory Environment

� Federal & State Authorities

� Office of the Inspector General

� Department of Justice

� Centers for Medicare & Medicaid Services

� Office of the State Attorney General

� Federal False Claims Act

� Pennsylvania False Claims Act

� Anti-Kickback Statute

� Beneficiary Inducement Law

� “Stark” law: Physician self-referral law

� UPHS Policy #03-03 “Fraud, Waste and Abuse”

Pace of Change with Post Payment

Audits Continues to Accelerate

Who What

RAs Recovery Auditors

MACs Medicare Administrative Contractors

PSCs Program Safeguard Contractors

ZPICs Zone Program Integrity Contractors

CERT Comprehensive Error Rate Testing

MIP Medicaid Integrity Plan

MIG CMS Medicaid Integrity Group

MICs Medicaid Integrity Contractors

MIGs Medicaid Inspector Generals

PERM Payment Error Rate Measurement

OIG Office of Inspector General

DOJ Department of Justice

FBI Federal Bureau of Investigation

9999

Who can access the Medical Record

Medical Record

Physicians & Other Medical

Staff

Internal Auditing

Government Payers

Legal Personnel

Patients & Families

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10101010

Proposed RA Transition

Current Contractors

Performant

Recovery

CGI Federal, Inc.

Connolly, Inc.

Health Data Insights, Inc.

Pennsylvania New Jersey DE, MD, DC

Skewed Audit Sampling

by Recovery Auditors

• Effective 8/5/13, record limit revised

– 70% of claim types such as inpatient

• Medical record limitation of 2% remains

– 160,000 x 2% = 3,200/year (max records)

– 2,240 limit per claim type (e.g. 70% Acute I/P)

– Inpatient fee-for-service admissions of

8,000/year (5.5% of total claims population)

28% of annual admissions in audit

Electronic Medical Record

• All rules apply

– No different than

paper

• Integrity

– Do not share sign-

on and password

• Complete, accurate,

timely

– Audit trail

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Health Care Fraud Prevention &

Enforcement Action Team (HEAT)

• Joint Medicare Fraud Strike Force

– Department of Justice, HHS/OIG & CMS

• Mission

– Help prevent waste, fraud & abuse

– Reduce cost & improve quality of care

Source of Improper Payments

• Medically Unnecessary Services

• Incorrectly Coded Services

• Duplicate Payments

• No Documentation

• Outdated Fee Schedules

• Medicare Secondary Payer (MSP)

Defense Strategies

• Ability to mange medical record request is

vital

• Ability to manage and track audit and

related appeals

– Timely filing

• Unfavorable findings attributable to medical

necessity

– InterQual guideline (for discharges prior to

10/1/13)

– Literature to support

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"Your board of directors locked themselves in rehab with

compliance fatigue."

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Medicare Appeal Process – 5 Levels

� Redetermination – Medicare Administrative Contractor (MAC)

• 120 days to file

• 60 days for decision

� Reconsideration – QIC (Qualified Independent Contractors)

• 180 days to file

• 60 days for decision

� Administrative Law Judge (ALJ) hearing

• 60 days to file – minimum $ amount in controversy

• 90 days for decision

� Department Appeals Board

� Federal District Court – Judicial review

Preparing for Audits

• Assume ALJ hearings for all appeals and prepare files accordingly

• Submit copies of supporting documentation beyond medical records

– Coding clinics

– Applicable Federal or local regulations

– Professional literature to include morbidity & mortality data

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View from the Trenches

• Providers must have aggressive appeal

strategies

• Prepare appeals with expectation of ALJ

hearings

• Consider external assistance with appeal

expertise & proven success rates

– Executive Health Resources (EHR)

Emerging Compliance Risk Considerations

• Implications of data mining

– “Pay and chase” is yesterday’s news

– Common work file

– Government audits predicated upon results of

data mining

– Requirement for providers to self audit with

presumption that all reported data is incorrect

OIG Audits -

Material Change In Approach

• Former Secretary Sebelius – Review and

enforce current policies (e.g. credits for

devices)

• Audit sample based upon data mining

• Significant increase in sample size with

presumption of error

• Requirement to “self audit” and complete

work sheets provided by the OIG

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Emerging Compliance Risk Considerations

• CMS approved Region C Recovery Auditor (RA)

Connolly to begin conducting audits of coding for

E&M services in physician offices

– Specifically, CPT code 99215

• Permitted to extrapolate findings based on a statistical

sample of such claims

• Likely to be approved in other Medicare regions in the

near future

Public Awareness

• Consumer

awareness &

media attention

•Reputational risk

•Justification of

charges

•Accurate CDM

View from the Trenches

• Substantial increase in operating costs to manage

audits and related appeals

• Hospitals must incorporate monitoring activity

with benchmarking data

– Risk avoidance

– Identification of opportunities

• Consider in your annual audit plan

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Time for a change?

• Has audit program become “same old; same old”?

• Have audit results stagnated?

• Does audit program demonstrate value added to

the organization?

• Do audit results change behavior?

It may be time to assess your program!

Value Added Auditing

• Audit sample

– Is audit population timely & reflective of current operations?

• Accurate & timely communications

• Audit findings

– Report unfavorable findings & opportunities

– Explain why in addition to what

– Management must recognize service orientation

Value Added Auditing

• Recommendations

– Results must be timely

– Use audit results to make a difference

– Improve performance & efficiency

– Identify causation (I.e. go beyond identification of discrepant data)

– Offer management a “road map” to correct issues

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Implement Monitoring, Auditing & Reporting

Systems

• Cost vs. Benefits

– 80/20 rule

• Select appropriate data to monitor

– Organizational risk

– Establishment of benchmarks

– Ability to change based upon identified

discrepancies

Implement Monitoring, Auditing & Reporting

Systems

� Concurrent vs. Retrospective Reviews

– Ability to access data (e.g. dictated notes & reports)

– Time requirement to complete audit to include holding claims

– Correct claims prior to submission

– Auditees ability to over-ride findings

– Refund policy for retrospective reviews

Audit Sampling

• Regular & periodic compliance reviews

– Sample size & tolerable error rate

• Types of testing

– Trend analysis

– Transaction testing

• Documentation and related billing

• Requisition forms

– Interviews

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View from the Trenches

Hospital Audit Programs

� Inpatient programs must consider:

– High Risk DRGs

• MCC & CC’s supported by only 1 diagnosis

– One Day Stays

– Post Acute Care Transfers

– Clinical coding denials – loss of cc or mcc

� Use of claim editor systems

DRG Audit Program

• Minimize risk to organization

• Review of OIG targeted DRG’s/DRG Pairs

• Discharge disposition status

Practical Considerations & Key Decision

Points

• Are the findings related to coding or medical

necessity?

• File an appeal?

– Stop recoupment?

• Financial risk associated with interest

(10.875%)

– Probability of favorable outcome?

• File appeals with expectation of ALJ hearing

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Practical Considerations & Key Decision

Points

• Extrapolations

– Integrity & validity of statistical sample

– What is the population subject to the

extrapolation?

– Need for external consultant?

AMC Audit Challenges

• “Cutting Edge” of medicine

– Introduction of new procedures &/or techniques that do not agree with CPT code descriptions (e.g. approach using arthroscopy versus open fashion as described in CPT)

– Use of unlisted codes

• Technological advances in medicine

– Extended timeframe for development of new codes

AMC Audit Challenges

• Tertiary/quaternary care institutes

– Patient acuity

• Teaching Physician New Rules (TPNR)

– Required attestation & tethering language

– Service fully documented by resident but

insufficient documentation by teaching

physician (e.g. demonstrate participation &

management)

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Development of Hospital Appeal Departments

• Predict appeals departments equal in size to

compliance departments

• Require expertise of coders and clinical

staff/utilization management with access to

physicians

Use of Appeal Templates

• Required data elements

• Allegations

• Medicare requirements

• Clinical summary

• Rebuttal of each allegation

– Page references

Timely Data/Reporting

• Trending analysis

• Implications for financial reporting

• Establishing sufficient reserves

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Practical Considerations & Key Decision

Points

• Are the findings related to coding or medical

necessity?

• File an appeal?

– Stop recoupment?

• Financial risk associated with interest

(~11%)

– Probability of favorable outcome?

• File appeals with expectation of ALJ hearing

To Pay or Not to Pay – Stop Recoupment

Dollars

($)High Medium Low

High Yes ? No

Medium Yes ? No

Low Yes ? No

← Probability of Recovery on Appeal →

Practical Considerations & Key Decision

Points

• Extrapolations

– Integrity & validity of statistical sample

– What is the population subject to the

extrapolation?

– Need for external consultant?

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AMC Audit Challenges

• “Cutting Edge” of medicine

– Introduction of new procedures &/or techniques that do not agree with CPT code descriptions (e.g. approach using arthroscopy versus open fashion as described in CPT)

– Use of unlisted codes

• Technological advances in medicine

– Extended timeframe for development of new codes

AMC Audit Challenges

• Tertiary/quaternary care institutes

– Patient acuity

• Teaching Physician New Rules (TPNR)

– Required attestation & tethering language

– Service fully documented by resident but

insufficient documentation by teaching

physician (e.g. demonstrate participation &

management)

Development of Hospital Appeal Departments

• Predict appeals departments equal in size to

compliance departments

• Require expertise of coders and clinical

staff/utilization management with access to

physicians

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2014 IPPS Final Rule

2 Midnight Rule

NEW

Material Changes in Admission Criteria

� Changes effective October 1, 2013

� 24 hour benchmark no longer applies

� Level of care and patient risk factors to include

comorbidities does not determine cause for admission

� Newly created time based admission guideline

� Generally appropriate for inpatient Part A stay if

patient-beneficiary crosses 2 midnights

� MAC ‘Probe’ audits currently being performed

2 Midnight Rule

� Physician expects patient-beneficiary to remain in the hospital

crossing at least 2 midnights

� Transfers: time spent in the sending hospital counts towards the

2 MN rule

� Outpatient if less than 2 midnights

� Exceptions

� Procedures listed as OPPS inpatient only;

� Patient expires; or,

� Patient transferred to another acute facility

� New guideline is consistent with CMS’s application of Medicare

utilization days

� Based upon number of midnights crossed

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IPPS: Inpatient Prospective Payment System

2 Midnight Rule

� Admission order must be present in the medical record

� Order must be placed at or before time of admission

� Order must be evaluated in the context of the evidence in the medical record

o Supported by admission & subsequent progress notes

� Physician must certify need for inpatient stay

� Must be signed and documented in medical record prior to discharge

� Guidelines regarding content forthcoming

� Recertify as of day 12 of admission, day 30, and every 30 days thereafter

Actual clinical notes on patient charts:

10. Patient complains of chest pain if she

lies on her left side for over a year

9. On the second day, the knee was better on

the third day it completely disappeared

8. The patient has no history of suicides

7. Patient has two teenage children, but no

other abnormalities

Actual clinical notes on patient charts:

6. Discharge status: alive but without permission

5. Rectal exam revealed a normal size thyroid

4. Patient states she had been constipated for

most of her life, until she got a divorce

3. The patient was in his usual state of geed health

until his airplane ran out of gas and crashed

2. Patient expired on the floor uneventfully

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Source: HGSAdministrators

Actual clinical notes on patient charts:

1. The patient was to have a bowel

resection, but he took a job as a

stockbroker instead