Revenue Cycle

Q&A with Debbie Mackaman: Recovery auditors and more

Medicare Update for CAHs, February 22, 2012

1. What type of impact do you think the newly announced demonstration project for recovery auditor (RA) prepayment review will have on providers?

We won’t see any actual impact until later this year since CMS had delayed this project and then recently announced that it is expected to begin on or after June 1, 2012. In theory, it could reduce the number of appeals that providers would have to file when they disagreed with the RAs’ findings. However at this time several things remain unclear - what the focus areas will be, what the volume of claims may be, or what the process will be if the provider disagrees with the findings of the prepayment review. CMS’ intent is to “lower the error rate by preventing improper payments rather than the traditional pay and chase methods” with its focus primarily being on claims that have historically resulted in high rates of improper payments.

Comparing the recovery auditor program (RAP) prepayment to current prepayment reviews under the MAC or CERT, providers will be looking at a delay in payment during the review process and hospitals from the 11 states that will be participating in the demonstration project should begin to consider the ramifications. CMS has not indicated that certain hospitals will be included or excluded so prospective payment system (PPS) hospitals and critical access hospitals (CAH) should monitor the roll out of this project.

2. With all of the clarifications surrounding physician supervision in 2012, what are some areas to which providers should be paying particular attention?

Over the last four years, CMS has made major changes and provided numerous clarifications on physician supervision for hospital outpatient services. PPS hospitals that must follow the three-day payment window regulations and who “wholly own and operate” freestanding physician clinics  must create a method to identify and bundle services in those clinics that meet the requirement. This includes billing the professional fees on the 1500 claim form with the –PD modifier when certain criteria have been met.

This is probably the biggest change for PPS hospitals that came out in 2012 and unfortunately CMS has not provided clear guidance to the hospitals about how to comply with this regulation so they should monitor CMS for further clarification. CMS provided CAHs and small rural hospitals one more year of non-enforcement for 2012, but they should be thinking ahead now about how they will meet physician supervision requirements, including the current nonsurgical extended duration services list. CMS has invited several members from the rural provider community to help identify services that may require a lower level of supervision after the initiation of care under direct supervision. CAHs should monitor this process and provide their comments and/or suggestions for additional services that may be unique to their setting and staffing requirements.

3. Do you anticipate a change in the way hospitals utilize the discussion period as a result of the new guidelines in the RAP statement of work (SOW)?

I am not sure if any hospital (PPS or CAH) will change how it uses the discussion period because most, if not all, RAs had moved to a paper-driven discussion period anyway. The biggest change to the discussion period under the new SOW is that if the hospital files an appeal at any point when the discussion period is allowed (days 1-40 after the demand letter), then that discussion period ends. Basically you can’t be discussing the RA’s determination trying to convince it to reverse its decision and file an appeal at the same time. If a facility has reviewed the determination and disagrees with it and has every intention of appealing, it might be best to pay back the overpayment by day 30 to prevent interest from accruing and move ahead with the appeals process rather than spending time and energy trying to convince the RA otherwise.  

4. What is one bit of advice you can give to hospitals and CAHs for preparing for recovery auditors in 2012?

Be proactive rather than reactive. Use the information that is currently available from various reviewers to help guide your own internal auditing plans. MACs/FIs have come a long way in disclosing their pre-payment and post-payment reviews on their websites as well as listserv notices. These reviews are developed based on their claims data, so pay close attention to what they are reviewing and read between the lines. CERT and RA reviews are also telltale signs of problems based on claims data and can be easily accessed for current focus areas. PEPPER reports are a great way to compare your facility to others to see if you are standing out there in left field all by yourself waving a bright red flag. In addition, the OIG publishes numerous audits weekly that include not only the topic of their investigation but the method and the findings. Once the OIG comes knocking, you have certainly gone too far and the financial and public relations impacts can be far reaching.  

5. RAs aside, if you had to choose one thing that hospitals and CAHs should identify as a top focus issue for 2012, what would it be?

The buzz words that continue to come to my mind are “medically necessary” care and how hospitals bill or don’t bill for the services when the definition is not met. This topic is very broad for most hospitals and the short list of some areas to consider would be:

  • Outpatient services where hospitals are required to issue a mandatory ABN and do not
  • Proper use of observation and appropriate billing of hours
  • Clear admission orders for acute care and clear referral orders for observation or extended recovery
  • Admissions for acute care where the service could have been provided on an outpatient basis
  • Admissions for acute care where a hospital-issued notice of non-coverage(HINN) would be appropriate before, during, or after the care is completed and it is not issued

CMS recently published the quarterly report on the successes of the RAP comparing October – December for 2009, 2010, and 2011. I have always been hopeful that we will start to see a large decrease in the amount of money recouped and I was pleasantly surprised and very encouraged in light of the increases in RA approved issues between 2010 and 2011.

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