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RACs to ZPICs
Program Integrity Audits and the Ever Increasing Burden on Healthcare Providers
April 22, 2015
Claire Owens, JD
How did we get here? The High Cost of Healthcare
3
All about Program Integrity
Where did it come from? What is it?
The Medicare Program Integrity Program (MIP) was originally created through the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to address Medicare’s vulnerability to fraud.
Current Goal: to identify and combat fraud, waste, and abuse resulting in improper payments.
An improper payment is any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements.
What is Program Integrity?
Fraud consists of intentional acts of deception with knowledge that the action or representation could result in an inappropriate gain.
Waste includes inaccurate payments for services, such as unintentional duplicate payments.
Abuse represents actions inconsistent with acceptable business or medical practices.
Types of Improper Payments
Program Integrity OIG DOJ
Since 1996, Congress has taken important steps to increase Medicare program integrity funding and oversight, including the establishment of the Medicare Integrity Program.
Year Congressional action Statute
1996 Created the Medicare Integrity Program and established dedicated funding for activities to address fraud, waste, and abuse in federal health care programs, including Medicare
a Health Insurance Portability and Accountability Act of 1996
b
2003 Directed CMS to conduct a 3-year demonstration project on the use of recovery audit contractors (RAC) for identifying Medicare underpayments and recouping overpayments
Medicare Prescription Drug, Improvement, and Modernization
Act of 2003c
2006 Required CMS to implement a national RAC program by January 1, 2010. Tax Relief and Health Care Act of 2006
d
2010 Provided additional funding for program integrity activities and, among other things:
Established new provider enrollment requirements
Required CMS to extend the Medicare RACs to Parts C and D of the Medicare program
Required CMS to develop core elements for provider compliance programs
Authorized surety bond requirements for certain Medicare suppliers and providerse
Patient Protection and Affordable Care Act (PPACA)
f
2010 Required Medicare fee-for-service to begin using predictive analytics to identify and prevent fraud
g Small Business Jobs Act of 2010
h
Key Congressional Actions to Increase Medicare Program Integrity Funding and Oversight:
Source: GAO analysis of selected federal laws. 1
In 2013, the Centers for Medicare and Medicaid Services (CMS) estimates $50 billion in Medicare fraud, waste, and abuse. 2
Medicare Fee for Service (FFS) estimated improper payments were about $36 billion or about 10.1 percent of total FFS payments in 2013. 3
This is about $6.5 billion higher than in 2012. 2
The Government Accountability Office (GAO) reported to Congress that CMS did not meet the fiscal year 2013 target error rate of 8.3 percent despite the increase in funding and audit activity. 2
The GAO reports…
Program Integrity is a top priority of the Administration. "My Administration is committed to reducing payment errors and eliminating waste, fraud, and
abuse in Federal programs...agencies should use every tool available to identify and subsequently reclaim the funds associated with improper payments." -Barack Obama, President
The FY 2015 Budget increases funding for Program Integrity and Health Care Fraud and Abuse Control Program (HCFAC) authorizing a total of $428 million in new funds. 2
Administration recovers $7.70 for every dollar spent to fight health care-related fraud and abuse; third-highest on record.4
More than $27.8 billion has been returned to the Medicare Trust Fund over the life of the Health Care Fraud and Abuse Control (HCFAC) Program. 4
Program Integrity: Return on Investment
OIG investigations resulted in 971 criminal actions against individuals or entities that engaged in crimes related to Medicare and Medicaid;
OIG pursued 533 civil actions, which include false claims and unjust-enrichment lawsuits filed in Federal district court, civil monetary penalties (CMP) settlements, and administrative recoveries related to provider self-disclosure matters.
OIG also excluded 4,017 individuals and entities.
(Source: OIG’s Fall 2014 Semiannual Report to Congress )
Increased Enforcement 2014
10
Getting to know the Program Integrity Players
Review contractors:
Medicare Administrative Contractors (MACs)
Comprehensive Error Rate Testing (CERT) Contractors
Recovery Audit Contractors (RAC)
Zone Program Integrity Contractors (ZPICs)
Supplemental Medical Review Contractor (SMRC)
Program Integrity Contractors
FUNCTION: Data Analysis
To annually estimate the FFS improper payment rate.
The CERT estimates improper payments to be compliant with The Improper Payments Elimination and Recovery Improvement Act (IPERIA).
CERT data is used by other contractors identify target areas.
• Measures improper payments
• Pinpoints specifics service, provider type and contractor specific error rates
Comprehensive Error Rate Testing Contractors
BASIS FOR SELECTING CLAIMS:
Random sample selected from claims processed
Conducts 3% of claims reviewed in FY 2012 3
BHS 2014, CERTs accounted for 2% of PI Audits
Comprehensive Error Rate Testing Contractors
FUNCTION:
Identify provider noncompliance with coverage, coding, billing, and payment policies through the research and analysis of data including: profiling of providers, services, or beneficiary utilization.
Make appropriate recommendations for POE and ZPIC referrals.
Supplemental Medical Review Contractor
BASIS FOR SELECTING CLAIMS:
Focus areas directed by CMS may include, but not limited to vulnerabilities identified by:
CMS internal data analysis;
The CERT program; professional organizations;
Federal oversight agencies.
BHS 2014, SMRCs accounted for 5% of PI Audits
Supplemental Medical Review Contractor
FUNCTION:
Process and pay Medicare FFS claims.
Take actions to implement and enforce Medicare coverage rules.
• Section1842(a)(2)(B) of the Social Security Act requires MACs to "assist in the application of safeguards against unnecessary utilization of services furnished by providers ...; "
• Primarily use vulnerabilities identified by the CERT and RACs to target their improper payment prevention efforts.
Make referrals to Provider Outreach and Education (POE) and ZPICs.
Medicare Administrative Contractor
BASIS FOR SELECTING CLAIMS:
Claims from providers with a history of improper billing
Data analyses of paid claims to identify patterns of payments that may be improper
Conducted 6% of reviews in FY 2012 3
BHS 2014, MACs accounted for 25% of PI Audits
Medicare Administrative Contractor
MAC Program Integrity initiatives categories:
1. Prepayment and post payment claim review targeted to those services with the highest improper payments.
2. New or revised local coverage determinations (LCDs)
• LCDs are articles giving instructions to providers in understanding how to correctly submit claims and under what circumstances the services will be considered reasonable and necessary.
(http://cms.hhs.gov/medicare-coverage-database/)
3. Targeted provider education to items or services with the highest improper payments.
NOTE: Providers should pay special attention to MAC education as it can be indicative of an upcoming ZPIC or OIG investigation.
Medicare Administrative Contractor
• Hospice - Condition Code 07
• Final Rule CMS 1599-F, 2 Midnight Rule Inpatient Admissions
• Round 1 >2
• Round 2 >7
• CMS believes that, with the exception of cases involving services on the inpatient-only list, only in rare and unusual circumstances would an inpatient admission be reasonable in the absence of a reasonable expectation of a medically necessary stay spanning at least 2midnights.
• CPT 22513 and/ or CPT 22514 - VAPs
MAC: Cahaba Reviews 2014-2015
FUNCTION:
Conducts reviews of Medicare payments to health care providers, including:
• automated reviews that use computer software to detect improper payments
• complex reviews that utilize human review of medical records and other medical documentation
Refers potential fraud to the ZPICs or OIG
Recovery Audit Contractors
SCOPE:
Improper payments:
• incorrect payment amounts;
• incorrectly coded services (including Medicare severity diagnosis-related group (MS-DRG) miscoding;
• non-covered services (including services that are not reasonable and necessary); and
• duplicate services
Recovery Audit Contractors
BASIS FOR SELECTING CLAIMS:
Data analyses of all paid claims to identify services with payments most likely to be made improperly
CMS approves the RACs’ selection of services and the coverage and payment criteria to be applied to them in advance of review
Conducts 83% of claims reviewed in FY 2012.3
BHS 2014, RACs accounted for 29% of PI Audits
Recovery Audit Contractors
The original RACs largely concentrate their auditing on hospital claims for short inpatient stays
CMS reported that overpayments collected from the RACs increased from about $75 million in fiscal year 2010 to about $2.29 billion in fiscal year 2012.3
The OIG disclosed that RACs will likely recover $3.1 billion in erroneous charges from providers during the first half of the fiscal year (2014)--down nearly $1 billion from a year ago.5
Recovery Audit Contractors
In 2012, the RACs conducted over 1.1 million post payment claims reviews(83 %)
The RACs conducted almost five times as many reviews as the other three contractors (MACs, ZPICs, and the CERT) combined.3
Overall, all four types of contractors combined reviewed less than one 1 % of claims, about 1.4 million reviews of the 1 billion CMS claims submitted.
The RAC program was suspended on June 1, 2014.
In the fall of 2014, the program resumed on a limited basis.
ADRs are increasing in early 2015.
Recovery Audit Contractors
RAC Changes
2009 - Early 2013 Focus Areas:
• Level of care determinations
• Inpatient Claims
• Medical Patients
• Recoupment usually meant the entire payment
• High Volume
• High Denial Rates
Late 2013 - 2014 Focus Areas:
• Coding – sequencing, secondary dx, etc.
• Documentation of medical necessity – LCD/NCD
• Still mostly inpatient, but seeing some outpatient
• Majority Surgical
• Recoupment usually a part of the payment
• Low Volume, High $$
• Lower Denial Rates
Zone Program Integrity Contractors
FUNCTION:
To identify and investigate patterns of billing that indicate potentially fraudulent claims and providers.
To take swift action against fraudulent providers including stopping payment and referral to law enforcement.
BASIS FOR SELECTING CLAIMS: FOR CAUSE
Claims submitted by providers flagged as high risk by CMS’s Fraud Prevention System
Referrals from other contractors
Fraud hotline
Data analyses of paid claims to identify patterns of billing by a provider or group of providers that suggests potential fraud
Conducts 8% of claims reviewed in FY 2012 3
BHS 2014, ZPICs accounted for 0% of PI Audits
Zone Program Integrity Contractors
ZPICs identify potential targets for fraud investigations using three categories of sources:
1. Reactive sources: notifications of potential fraud submitted to ZPICs from MACs, OIG fraud hotline and CMS.
2. Proactive sources: Medicare claims data
3. FPS: identifies providers for ZPICs to investigate, with the goal of identifying aberrant billing patterns early so that ZPICs can investigate suspect providers before they generate large amounts of potentially fraudulent claims.
Zone Program Integrity Contractors
ACTIONS:
Zone Program Integrity Contractors
COST vs. ROI
CMS paid ZPICs about $108 million in 2012.
ZPICs reported spending most of this funding on fraud case development by investigative staff.
Conducted approximately:
• 3,600 beneficiary interviews
• 780 onsite inspections
• reviews of more than 200,000 Medicare claims.
ZPICs reported stopping $250M in Medicare claims in 2012.
(Source: GAO Report, October, 2013. 7)
Zone Program Integrity Contractors
Program Integrity Contractors with oversight of Alabama Providers
Contractor Type Contractor Location
MAC Part A/B Cahaba GBA Birmingham, AL
DME MAC CGS Nashville, TN
Home Health & Hospice Palmetto GBA Columbia, SC
RAC Connolly LLC Philadelphia, PA
ZPIC AdvanceMed Corp Nashville, TN
SMRC Strategic Health Solutions, LLC Omaha, NE
(Source: Medicare Review Contractor Interactive Map, Medicare.gov website, http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Review-Contractor-
Directory-Interactive-Map/)
The GAO recently reported:
Generally, post payment claims reviews involve the same general process regardless of which type of contractor conducts them
However, CMS has different requirements for many aspects of the process across these four contractor types
Some of these differences : • oversight of claims selection
• time frames for providers to send in documentation
• communications to providers about the reviews
• reviewer staffing
• processes to ensure the quality of claims reviews. 6
Contractor differences causes increased burden and confusion for Providers
Issues with CMS oversight
Contractors were established by different laws and for varying purposes, and they report to different units within CMS.
States have the primary responsibility for combating fraud, waste, and abuse in the Medicaid program
• Alabama has not been active
The Medicaid Integrity Program works in coordination with Medicaid program integrity activities funded through the HCFAC program. This program includes a collaborative effort across CMS to transform the Medicaid data enterprise through the Medicaid and CHIP Business Information and Solutions program
Medicaid Integrity Program: Alabama
35
Medicare Advantage (MA) Program Integrity
The New Frontier
In 2005, 84% of seniors had an MA option.
In 2015, 99% of seniors have a MA option.
82% can buy a MA with zero premiums.
Medicare Advantage is ubiquitous
MA Market Share Concentrated
FUNCTION:
Risk Adjustment
no financial liability for provider
CMS Compliance/reimbursement
Concurrent Audits
Level of Care
Post Payment
DRG
Coding
Documentation
Level of Care
MA Audits
BASIS FOR SELECTING CLAIMS:
??
MCC/CC
Cardiac/Ortho
Pneumonia
Acute on Chronic
For 2014, BHS 68% of PI audits.
MA Audits
Cost to produce records
Getting initial determination
Use of sub contractors
Appeals or lack thereof
Differing application of CMS rules
MA Audits Issues
41
Audit Operational Issues
Sausage Making 101
Audit Process Phases
Initial Review Determination
(Audit results)
Close Favorable
Appeal
Recoupment
Phase 1: Initial Review
Provider receives ADR
Provider Submits Records
Provider Receives Audit
Results
Generally the first provider notification is the Additional Documentation Request letter (ADR).
The provider must submit records 30-75 days depending on the contractor.
Records can be submitted via esMD, encrypted DVD, or paper.
Phase 1: Initial Review
Know who the contractor is and where the authority is derived
• Medicare Program Integrity Manual
• MA Contract
Research the audit focus on the CMS or Contractor website if applicable
Ensure that the auditor is within ADR limits and scope
• ADR info: http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/Provider-Resource.html
Check to ensure that the claims have not been audited previously by another contractor against prior audits
Data Warehouse
MA using multiple contractors
Make sure that everything is complete before records are submitted
Phase 1: Initial Review
Claims will be denied and monies recouped or held if you do not respond timely
Keep copies of everything!
• All letters and envelopes if dates differ significantly
• Everything that you submit to the contractor
• Shipping confirmations
Late documentation – Pitfalls to avoid
Request reimbursement for copying and postage/e-fees if records must be submitted multiple times.
Phase 1: Initial Review
The “Determination” is the auditor’s outcome.
• Favorable to provider = “no overpayment,” “underpayment,” “no recoupment”
• Unfavorable to the provider = “overpayment,” “recoupment”
Follow up with the contractor when the audit is expected to be completed.
• Use the contractor scope of work to determine the review period.
• Do NOT rely on the contractor to follow up with you
• Sometimes there are issues between the contractor and the payor with MA audits
Phase 2: Determination
In most cases (RAC complex), the provider will receive a Review Results letter RRL.
MACs do not send a letter.
SMRCs can take a year or more.
MA’s 45-60 days, but some get very far behind.
Keep Contracting in the loop
Have regularly scheduled meetings with payors
Be mindful of timely filing
Keep copies of all correspondence, remits, etc.
Phase 2: Determination
If determination is Unfavorable:
CRUCIAL - Demand Letter/Remit notice starts the appeal process • Sample letter: http://www.aha.org/content/11/samplemacdemandltr.pdf
Review the chart and the applicable guidelines (again)
• Billing expert
Recoupment is automatic at Day 41 if not appealed
Options:
• Utilize discussion phase for obvious oversights (RAC??)
• Rebill if within timely filing limits or allow recoupment
• Appeal to disagree with finding or to preserve other rights
Phase 2: Determination
Level 1 •MAC - Cahaba (yes, even if it is their audit)
Level 2 •QIC - Maximus
Level 3 •ALJ - Office Medicare Hearing & Appeals (OMHA)
Level 4 •DAB - HHS Departmental Appeals Board
Level 5 •Federal District Court
Phase 3: Medicare Appeals Process
Level One: Redetermination by the MAC
Within 120 days from the date indicated on the remittance advice or RRL, the provider can request redetermination from the contractor
The provider should also include any documentation that supports the overturn of the determination
A minimum monetary threshold is not required to request a redetermination
Instructions for appeal are included on the Cahaba website
*** Note, these are the general timeframes. Check the RRL, or
remittance advice for applicable appeals deadlines.***
Appeal Level 1
Appeal rights for Medicare Advantage are determined by contract. However, if no contract,
it defaults to the standard Medicare process.
Level Two: Reconsideration by a Qualified Independent Contractor (QIC)
If the provider disagrees with the Level 1 redetermination results, request a reconsideration in writing within 180 days to be performed by a QIC
A minimum monetary threshold is not required to request reconsideration
Reconsideration request forms are available on the Medicare administrative contractors' websites
Appeal Level 2
Level Three: Hearing Before an Administrative Law Judge (ALJ)
Within 60 days of the receipt of the QIC reconsideration decision, providers can submit a request for a hearing with the ALJ
Minimum amount still in controversy for 2013 = $140
Hearings are generally held by video teleconference or telephone, though an in-person hearing may be requested when good cause is demonstrated
Instructions for requesting a hearing can be found in the reconsideration letter from the QIC or OMHA website
Appeal Level 3
Level Four: Review by the Appeals Council (DAB)
Within 60 days of the ALJ's decision, or 90 days of no decision, the provider can request in writing a determination by the Appeals Council
The Council sits with the HHS Departmental Appeals Board
The ALJ decision letter will contain details regarding the procedures for filing a request for the Appeals Council review
Minimum in controversy is the same as at ALJ level
Appeal Level 4
Level Five: Judicial Review in Federal District Court
If a minimum amount (determined annually-for example, the 2013 minimum amount is $1,400) or more is still in controversy following the Appeals Council's decision, the provider can request a judicial review within 60 days
The Appeals Council's decision letter contains the instructions regarding the judicial review request
Appeal Level 5
Contact Information:
Claire Owens Director, Fiscal Integrity Baptist Health System (205)715-5461 Claire. [email protected]
Questions?
1. Medicare Fraud: Further Actions Needed to Address Fraud, Waste, and Abuse, Hearings before the Subcommittee on Oversight
and Investigations, Committee on Energy and Commerce, House of Representatives, (Statement of Kathleen M. King, GAO Director, Health Care), June 24, 2014.
2. MEDICARE: Further Action Could Improve Improper Payment Prevention and Recoupment Efforts, Hearings Before the Subcommittee on Energy Policy, Health Care and Entitlements, Committee on Oversight and Government Reform, House of Representatives, (Statement of Kathleen M. King, GAO Director, Health Care), May 20, 2014.
3. GAO Report to Congress, MEDICARE PROGRAM INTEGRITY: Increased Oversight and Guidance Could Improve Effectiveness and Efficiency of Post payment Claims Reviews, July 2014, GAO-14-474, available at: http://www.gao.gov/products/GAO-14-474.
4. The OIG’s Fall 2014 Semiannual Report to Congress is available at:https://oig.hhs.gov/reports-and-publications/archives/semiannual/2014/sar-fall2014.pdf.
5. Shinkman, Ron. "OIG: RAC Collections Drop." Fierce Health Finance. N.p., 2 June 2014. Web. 20 Apr. 2015.
6. GAO Report to Congress, MEDICARE PROGRAM INTEGRITY: Increasing Consistency of Contractor Requirements May Improve Administrative Efficiency , July 2013, GAO-13-522, available at: http://www.gao.gov/assets/660/656132.pdf.
7. GAO Report to Congress, MEDICARE PROGRAM INTEGRITY: Contractors Reported Generating Savings, but CMS Could Improve Its Oversight, GAO-14-111, Oct 2013, available at: http://www.gao.gov/assets/660/658565.pdf.
End Notes
