Medicare Advantage Audits
July 14, 2010
Blue Cross Blue Shield of Michigan is a nonprofit corporation and independent licensee of the Blue Cross and Blue Shield Association.
Why audit MA utilization?
• Implicit expectation in CMS Fraud, Waste and Abuse
guidelines
• No other review of billing accuracy prior to this audit
engagement
• In 2007 and 2008 precertification and pre-note were
optional
• Terms and Conditions allow retrospective audits
Terms and Conditions 2007-2008
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Private fee-for-service product
No contracts between BCBSM and hospitals
Hospitals were considered “deemed”
Deemed provider requirements described in T&C
– Hospitals must comply with all Medicare and other
federal health care program laws, regulations and
program instructions that apply to the services
furnished to members, including inspections and
audits.
• Refer to BCBSM website for Terms and Conditions
www.bcbsm.com/ma/terms_and_conditions.shtml
Why outsource?
• To gain industry expertise
• Limit ramp up time
• Selected Health Data Insights because they were the
premier audit vendor for the CMS Recovery Audit
Contractor (RAC) demonstration project.
– HDI also selected for RACs in the western region
– Handle the Payment Error Rate Measures (PERM)
nationwide for Medicaid
– Audit vendor for Humana and other commercials
What’s happened so far…
• Two complex audit categories established
– DRG validation
– Short stay hospitalizations
• Through June 2010, HDI has requested over 14,000
medical charts
– Monthly requests to minimize resource impacts at hospitals
– Volume of chart request varies by facility-averages 14.5% of annual
inpatient admissions
– Initial findings are consistent with RAC demonstration project findings
• Facilities not providing medical records will receive a
Technical Denial letter which denies the entire stay
When hospitals disagree with the
findings
• Appeals Process
– 1st level-internal to HDI
– 2nd level-external to Peer Review Organization of Michigan (PROM)
• BCBSM tested the initial short stay results
– 22 randomly selected medical records were reviewed independently
by a BCBSM Medical Consultant.
– Our findings were consistent with HDI
• BCBSM found that IS/SI not met
• Level of care was not as an inpatient but at the “observation or outpatient”
level.
Concerns Voiced by Hospitals
• Increased audit activity by all payers
• High volume of medical chart requests
• Confusion about InterQual vs. CMS guidelines
• Want more rationale for findings on HDI reports
• Prefer batch response to continuous updates
• Process is different from RAC and other BCBSM
audits
Understanding the differences
• RAC audits versus this one
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Timelines are different
Appeals – PROM versus CMS designated entities
Recoveries done after appeals not before
Not charging hospitals interest
• Both follow CMS reimbursement policies
HDI Audit Timelines
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Medical Record Requests – submit within 45 days
HDI Findings – within 90 days
Hospitals may appeal 1st level – within 50 days
HDI response – within 45 days
Hospitals may appeal 2nd level within 20 days
HDI response - within 45 days
Outpatient Re-bill
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When inpatient care is denied, hospitals can bill for ancillary
services
Must generate a new outpatient paper claim
Follow CMS guidelines regarding services that can be re-billed
(http://www.cms.hhs.gov/manuals/Downloads/bp102c06.pdf)
Observation services and surgical procedures are not payable
ancillary services
Reference the claim number of the short stay denial in the
remarks section of the outpatient re-bill
Give paper copy re-bills to your provider consultant for
processing
Submission of an electronic re-bill outside the timely filing limits
will reject
Follow the CMS Limitation on Liability provisions for member
liability