AHA RAC Advocacy Initiatives

April 28, 2013

Overview of Audit Concerns

• Recovery Auditors are biased due to contingency fee payments

• Recovery Auditors are not targeting widespread payment errors– RACTrac: only 38% of audits result in an overpayment determination.– RACTrac: over 40% of denials are appealed – 72% of claims appealed are

overturned in favor of the provider.

• CMS’s proposed rule that prevents hospitals from rebilling for full Part B payment for “medically necessary, wrong setting” denials outside of the timely filing window is inappropriate

• Auditors are making subjective decisions on short-stay cases, despite lack of clear policy guidance

Additional Audit Concerns

• Medical record request limits are inappropriately being used to target high-dollar inpatient claims

• Burden of case-by-case appeals is very heavy, relative to the minimal RAC investment per denial

– A single auditor can produce dozens of appeals per day, while hospitals must appeal every incorrect denial through a 2+ year, one-claim-at-a-time appeal process.

– RACTrac: 72% of appealed RAC denials are overturned in favor of the hospital.

Overburdened Appeals System

• Providers are becoming more proactive about appealing improper denials by RACs

– Hospitals are appealing 42 percent of RAC denials.– These appeals are overturned in favor of the hospital 72 percent of the

time.

• Appeals system is overburdened, but no additional resources for processing appeals are on the horizon

– QIC regularly sending out letters that they cannot meet 60-day window for making determination, offering escalation to ALJ.

– ALJs are overburdened and providers are experiencing delays in receiving determinations.

• FI/MAC and QIC are largely perceived as being less willing to overturn improper denials than ALJs

CMS Changes Rebilling Policy

• CMS published in Monday, March 18 Federal Register (Vol. 78, No. 52):– Administrator’s Ruling (pps. 16614 – 16617)

http://www.gpo.gov/fdsys/pkg/FR-2013-03-18/pdf/2013-06159.pdf

– Proposed Rule (pps 16632 – 16646) http://www.gpo.gov/fdsys/pkg/FR-2013-03-18/pdf/2013-06163.pdf

• CMS terminates Part A to Part B Rebilling Demonstration

CMS's Longstanding Policy on Rebilling

• Hospitals permitted to bill for only a limited list of Part B inpatient services, – provided the services are billed within 1 year of the provision of the

services (i.e., the timely filing period)

• AHA, five hospital systems sued HHS last year.  – Legal claim: CMS’s policy is not consistent with Medicare law that

requires payment for all reasonable and necessary care – Requested remedy: Court should overrule CMS’s policy and order full

reimbursement to hospitals for the care they provided

• AHA’s view of CMS’s recent actions: – CMS’s interim policy change is a victory for hospitals; its long-term

proposed solution is not. – It is essential to continue the AHA litigation.

Administrator’s Ruling

• Establishes interim policy – Effective March 13, 2013 – Remains in effect until CMS issues final rule

• What is the interim policy established by the Ruling?– When a Medicare review contractor denies a Part A claim because the

inpatient admission was not reasonable and necessary, a hospital may submit a Part B inpatient claim for reasonable and necessary services that would have been payable had the beneficiary originally been treated as an outpatient instead of an inpatient 

– Except for those services that specifically require outpatient status (e.g., outpatient visits, emergency department visits and observation services) 

– Limits scope of ALJ consideration of appeals ofinpatient claims to Part A payment

• CMS proposes to pay hospitals for all reasonable and necessary Part B services that would have been payable had the beneficiary originally been treated as an outpatient instead of an inpatient  – Except for services provided after an order for admission that

specifically require an outpatient status

• WHEN?– An Medicare review contractor denies a Part A claim because

the inpatient admission was not reasonable and necessary, OR

– The hospital determines, after a beneficiary is discharged, that his or her inpatient admission was not reasonable and necessary

Proposed Rule on Rebilling

• CMS proposes to apply the timely filing restriction to the rebilling of all Part B inpatient services – Requires that rebilled claims for Part B services must be filed within

1 year from the date the services were originally provided

• The Problem for Hospitals:– Recovery audit contractors typically reviews claims that are more

than a year old, so CMS’s proposal would again leave hospitals without fair reimbursement for the care they provide to Medicare patients

• Deadline to comment: May 17, 2013– Sample comment letter is available for members

online at www.aha.org/RAC

Critical Difference in Proposed Rule

AHA Advocacy on Audit Concerns

• Mar 2013: Revised RAC bill is reintroduced in US House• Nov 2012: AHA, four hospital systems filed rebilling lawsuit against HHS• Oct 2012: Introduction of H.R. 6575 in US House; AHA submitted

recommended RAC and program integrity changes to HHS OIG• Sept 2012: AHA highlighted problems with inconsistent MAC and RAC audit

protocols during meetings with GAO• Aug 2012: The AHA OPPS comment letter made preliminary

recommendations re: short-stay vs. observation cases.• June 2012: AHA submitted audit recommendations to Senate Finance

Committee

RAC Bill Reintroduced

• H.R. 6575, Medicare Audit Improvement Act of 2012 was introduced last October in US House of Representatives

– Bill was not adopted prior to end of Congressional session

• H.R. 1250 – the Medicare Audit Improvement Act – was introduced in the U.S. House of Representatives on March 19, 2013

– Institutes combined cap across RACs, MACs, CERT of 2 percent of a hospital’s claims, as well as limits by claim type (inpatient, outpatient)

– Financial penalties for auditors that fail to adhere to program guidelines or who deny a claim that is eventually overturned on appeal

– Makes publicly reported information on auditor performance available including number of claims audited, denied and claims overturned on appeal

– Permit rebilling for denied inpatient claims; remove timely filing requirement for denied claims

– Physician validation of all claim denials– Stronger statutory language to protect hospitals due

process rights for claims older than one year

AHA Next Steps on RACs

• Work with providers to engage Congress on H.R. 1250• Continued advocacy with CMS and Congress on rebilling;• Monthly meetings with CMS on RAC operational fixes;• RACTrac: Data collection for Q1 2013 just ended. Results

will be available is approximately six weeks at www.aha.org/ractrac; and

• AHA’s 2012 Audit Education Series resources are still available online for AHA members.– AHA has compiled member advisories and webinars

into a single resource, i.e. a “RAC Toolkit,” for members

RACTrac: Medical Record Requests

Wednesday, February 15Naval Heritage Center

9:30 AM

Source: AHA RACTrac Survey, January 2013. Survey results collected from 2,335 participating hospitals; 1,233 hospitals participated in Q4 2012.

Number of Medical Records Requested from Participating Hospitals, through 4th Quarter 2012

RACTrac: Complex Audit Outcomes

Wednesday, February 15Naval Heritage Center

9:30 AM

Outcomes of Audits and Percentage of Hospitals Reporting Short-Stay as Most Common Reason for Denial, through 4th Quarter 2012

Almost $1.3b in denials through

Q4 2012

Source: AHA RACTrac Survey, January 2013. Survey results collected from 2,335 participating hospitals; 1,233 hospitals participated in Q4 2012.

RACTrac: Appeals of Denials

Wednesday, February 15Naval Heritage Center

9:30 AM

RAC Denial Appeals Rate and Outcomes, 2nd – 4th Quarter 2012

Source: AHA RACTrac Survey, January 2013. Survey results collected from 2,335 participating hospitals; 1,233 hospitals participating this quarter.

RACTrac: Resource Utilization for RAC(From Q4 2012 Survey)

Percent of Participating Hospitals* Reporting Average Cost Associated in Managing the RAC Program, 4th Quarter 2012

* Includes participating hospitals with and without RAC activity

Source: AHA RACTrac Survey, January 2013. Survey results collected from 2,335 participating hospitals; 1,233 hospitals participated in Q4 2012.

AHA RAC and Audit Resources

AHA is Helping Hospitals Improve Payment Accuracy

•Main AHA RAC Page: www.aha.org/rac

– Newly updated to make it easier to find the information providers need

•AHA RACTrac Page: www.aha.org/ractrac; www.aharactrac.com

•AHA Audit Series: www.aha.org/auditseries

•Email RAC Questions: racinfo@aha.org

For more information visit AHA’s RAC Website:

http://www.aha.org/RACracinfo@aha.org

RACTrac Support: Ractracsupport@providercs.com

1-888-722-8712