PAYMENT DENIAL UPDATE By: Rebecca Corzine Tarr RN, MBA, CPA Executive Vice President and COO MedPerformance, LLC (813) 786-8974 Agenda Introduction Today’s Focus is on RACs, MACs, PROBEs And Denials Underpayments & Take Backs Appeals 2 RAC Update CMS recovery audits on hold as contractors deal with huge backlog. CMS is winding down its recovery audit program with its current contractors, placing the program effectively on hold, perhaps for several months, while it awards new contracts. CMS has extended its contracts with its current four vendors until Dec. 31, 2015, for “administrative and transition activities.” The contracts were to end on Feb. 7. This time period, while hospitals are not getting any (ADRs), could still be audited in the future. The program currently has a three-year look-back period. 3 RAC Update – Continued The deadline has passed for RACs to send a post-payment ADRs. Medicare Administrative Contractors can no longer send a pre- payment ADRs to the Recovery Audit Prepayment Review Demonstration. June 1st is the last day for auditors to send improper payment files to Medicare Administrative Contractors for adjustment. The appeals process has become so overloaded that HHS' Office of Medicare Hearings and Appeals recently began notifying hospitals that it won't be able to accept new appeals until the backlog clears. Sixty-five administrative law judges are now receiving 15,000 claims per week, when they're only equipped to handle 2,000. That has meant a collective backlog topping 350,000 appeals. Don’t let your guard down. 4 MAC vs. RAC Statistics MAC conducted four widespread probes on the below MS-DRGs in response to medical record review findings identified by the recovery auditor (RA). MS-DRG 074 Cranial & peripheral nerve disorders w/o MCC RA error rate was 89.87 percent MAC error rate was 7.77 percent MS-DRG 092 Other disorders of nervous system w/CC RA error rate was 14.29 percent MAC error rate was 6.49 percent MS-DRG 419 Laparoscopic cholecystectomy w/o C.D.E. w/o CC/MCC RA error rate was 91.55 percent MAC error rate was 2.74 percent MS-DRG 491 Back & neck procedure except spinal fusion w/o CC/MCC RA error rate was 91.98 percent MAC error rate was 23 percent 5 New Rules – Be Careful CMS communications are sometimes misleading and confusing. Be careful interpreting current guidelines. RAC may be on hold, but CMS, MAC, & Probe are not! Focus today on what you need to do to get paid Medical Necessity Etc… 6 Two Midnight rule – “CMS-1599 F” CMS-1599 F = Requirements for Inpatient Admission Admission Order Physician Certification Medical Necessity Expectation of a Two-midnight Stay 7 Two Midnight rule – “CMS-1599 F” While CMS is saying to just have physician sign inpatient orders for 2 midnights, you still need to ensure medical necessity. You must ensure that y0u have sufficient documentation. You must have a consistent and 100% compliant method to get the CMS approved inpatient order, whether in CPOE or on paper. You should audit to minimize your risk of future denials. 8 Two Midnight rule Denial Results MAC Most Current Data Results 27% Denial Rate Denial Reasons 37% missing, unsigned, invalid order 63% failed to document 2 midnight expectation PROBE Results 30-60% based on sample size of 10 9 Results of Original Research Study Observation & Inpatient Status: Clinical Impact of the 2 Midnight Rule Retrospective descriptive study of all observation and IP encounters between 1/1/12 and 2/28/13 at Midwestern academic medical center N = 36,193 Net loss of IP = 14.9% Estimated revenue loss per case ~ $4,000 Same outcome even when IP only surgeries included CMS’s claim that more patients will be IP not found to be correct 10 Not Just for Acute Care Providers Denials are affecting all organizations along the continuum of care Hospice Home Health DME Inpatient Rehab LTAC 11 Best Practices Centralized Function Multi-Disciplinary Team Consisting of: RN/Case Managers Physician Advisors Coders Billers Revenue Integrity Clerical Systematic Methodology to approach appeal process 12 Best Practices - Continued Flow charted process Role Clarity State of the Art Software System Easy to use Has powerful reporting capabilities Alerts to ensure deadlines are met Dollars at risk vs. dollars lost Focus should be on determining the root cause and putting preventative measures in place Requires support at highest level and process changes in many facets of the organization 13 Change Physician Behavior Physicians are scientists Provide hard facts and data Evidenced based Medicine Physicians do not like to be outliers Leave emotion and finances out of discussions 14 The Appeal Process Appeal process Intentionally complex and deceptive process…. Hard deadlines Labor intensive Allow recoupment or risk interest 15 Questions/Comments? Rebecca Corzine Tarr RN, CPA Executive Vice President and COO MedPerformance LLC 813-786-8974 beckytarr@me.com 16