Recovery Audit Contractors Eyeing Paid Claims Everywhere

The Centers for Medicare and Medicaid Services (CMS) reports that its Recovery Audit Contractor (RAC) program is a “viable and useful resource for detecting and correcting past improper payments” and will be expanded into a nationwide program. RACs filter paid Medicare claims through edit systems that detect patterns of error or suspicious frequency. Providers found in noncompliance by RAC investigators are asked to refund monies paid for claims that have been processed any time in the preceding 36 months.

A pilot RAC program was created in 2004 in Arizona, California, Florida, Massachusetts, New York, and South Carolina. During fiscal year 2007 (Oct. 1, 2006 to Sept. 31, 2007), RAC teams identified $357 million in overpayments in those states.

CMS announced in March that the RAC program will “gradually expand” beginning as early as January 2009 and will be fully implemented by January 2010. RACs earn a percentage of every refund they collect.

CMS will name four national RACs this spring. Physicians should find out who has won the contract in their region and take the RAC mission seriously. These auditors aren’t looking for perpetrators of fraud; they are reviewing claims to uncover minor errors in code selection or medical necessity requirements. Contractors working in the RAC program will be running Medicare claims through an editor who will identify practices in which errors in coding and billing are occurring, or practices with high frequencies of procedures targeted by the Office of Inspector General (OIG).

Once a practice is targeted, it receives a letter from the RAC requesting a photocopy of the Medicare patient’s entire medical record. Providers do not need to redact the records, as the RACs are operating within the scope of CMS and are authorized to view this information. The record must be delivered to the RAC within 45 days. The RAC has 60 days to review the record and notify the provider of the outcome of the review. A request may ask for one specific record or multiple records. It’s critical that the record is photocopied in its entirety for the RAC, as incomplete records could result in additional findings of insufficient documentation.

Keep in mind that almost half of the monies recovered in the pilot program were the result of incorrect coding. So what can urgent care facilities do to prepare for a RAC investigation?

Understand your risk. Perform your own retrospective audit, going back as much as three years to see what you uncover. Don’t focus on E/M leveling, as this is a topic that has temporarily been excluded from RACs as CMS considers an AMA proposal to change the way these services are reviewed. However, the auditors will still be looking at duplicate billings, global rules, consultations, and procedures on the same day as an E/M.

Employ certified coders. CMS is requiring RACs to use certified professional coders in their reviews, so if your facility doesn’t have certified coders, they won’t be able to talk peer-to-peer. Plus, certification ensures that there is knowledge and professionalism applied to your claims.

Educate your team about RAC. Who opens the mail at your practice? The mail room, front office, back office, and finance team should all be aware of the RAC program and alert to any RAC correspondence.

Name a RAC compliance leader. Your office should have one person charged with managing any RAC queries when they come. This person will want to document all correspondence, perform concurrent review of records that have been sent to RAC, and keep management apprised.

Know what’s in the 2008 OIG work plan. Many of the targets for RACs are taken directly from the OIG workplan, which can be downloaded at http://www.oig.hhs.gov/publications/docs/workplan/2008/Work_Plan_FY_2008.pdf. Some of the issues affecting immediate care facilities are as follows:

• “Incident to” services provided by non-physician practitioners. Medicare has very specific rules regarding reporting services provided by physician assistants or nurse practitioners. A physician assistant (PA) or nurse practitioner (NP) can be paid at 100 percent of the physician rate if the physician has established a treatment plan for the patient and is in the office at the time of the encounter. Otherwise, the PA or NP is reimbursed for services at 85 percent of the rate paid to a physician. Not adhering to these rules can be very expensive if your practice is audited and you are found to be noncompliant.

• Unbundling of procedures. Keep current with the National Correct Coding Initiative to ensure your office isn’t billing for more procedures than is appropriate. For example, if during a diagnostic colonoscopy the physician removes some polyps by snare, the code for the colonoscopy with snare retrieval of polyps would be the only code reported. The diagnostic colonoscopy is bundled into the primary procedure.

• Medical necessity. Ensure that the services provided to the patient meet the medical necessity requirements found in the National Coverage Decisions accessed on the Medicare Web site. Ensure the diagnosis is adequately documented in your medical record for the patient. “Rule out” diagnoses are never acceptable diagnoses; ensure your medical coders can find a “real” diagnosis in the record. For example, “rule out pneumonia” may be a reason for a chest X-ray, but the chart should describe why pneumonia was suspected. Fever, cough, and chest pain all can be codified and all meet the medical necessity rules for the chest X-ray; “rule out pneumonia” cannot and does not.

• Units of service. From X-ray services to pharmaceutical injections, ensure that the correct unit number is reported in the claim. One of the common errors cited in the RAC report involved billing for pegfilgrastim. In the past, one unit of the HCPCS Level II code for pegfilgrastim was reported for each milligram of drug delivered, but CMS changed the fee schedule and rules several years ago, and providers were told to bill one unit of the HCPCS code for each vial of drug delivered. Because the cost of one vial of pegfilgrastim is more than $2,000, recovery from misreporting of administration of this drug was significant.

• Other services. Outpatient services that resulted in the most collection include colonoscopy, infusion services, physical therapy, pharmaceutical injections, duplicate claims, vestibular function tests, and speech language pathology services. icb

Bradley Ericson, CPC, CPC-ORTHO, is director of publications at the American Academy of Professional Coders (AAPC), the nation’s largest education and credentialing association for medical coders.

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