Presentation to
Tennessee Hospital Association
D E N N I S J . G A R V E Y, J D
DI R EC TOR , OFFI C E OF P ROG R A M I N TEG R ITY
BUR EAU OF TEN N C A R E
What is “RAC”?
 “RAC” stands for Recovery Agent Contractor
 Pursuant to the Affordable Health Care Act, the State has
established a program under which it will contract with one
(or more) recovery audit contractors (RACs). This contract
is for the purpose of identifying underpayments and
overpayments of Medicaid claims under both the State
plan and under any waiver of the State plan.
Our Authority to Perform Recovery




Department of Health & Human Services
Centers for Medicare & Medicaid Services
61 Forsyth St., Suite 4T20
Atlanta, Georgia 30303-8909

February 3, 2012





Mr. Darin J. Gordon, Director
Department of Finance and Administration
Bureau of TennCare
310 Great Circle Rd
Nashville, 1N 37243

Re: Tennessee Title XIX State Plan Amendment, Transmittal #11-012

Dear Mr. Gordon:






We have reviewed Tennessee State Plan Amendment (SPA) 11-012, which was submitted to the
Atlanta Regional Office on November 7, 2011. This amendment requested an exemption to the
required three (3) year look-back period by the Medicaid Recovery Audit Contractor (RAC).
Due to Tennessee's Medicaid program being operated as a managed care delivery system and to
allow the Managed Care Contractors time to complete their internal claims processing and
program integrity operations, CMS approves an exemption with a five (5) year look-back period.



Based on the information provided, the Medicaid State Plan Amendment 1N 11-012 was
approved on February 3, 2012. The effective date of this SPA is November 15,2011. The
signed HCFA-179 and the approved plan pages are enclosed.


If you have any questions regarding this amendment, please contact Kenni Howard at
(404) 562-7413.



Jackie Glaze ~by David Kimble
Associate Regional Administrator
Division of Medicaid & Children's Health Operations

Enclosures
Look-back Period
CMS has granted approval for TennCare
to look-back five (5) years
from the date of a paid claim.
TennCare RAC Facts
 Tennessee currently contracts with HMS to perform RAC
recoveries.
 HMS has a three-year contract with TennCare; from
February 1, 2011 through January 31, 2014; with
two allowable one-year contract extensions through
January 31, 2016. .
 HMS is the RAC contractor for twenty-six (26) states.
What does RAC cover?
 All TennCare Providers
 All TennCare claims (Fee-for-service, Encounter and Capitation)
 All improper payments, including, but not limited to:








Incorrect payments
Non-covered services
Incorrectly coded services
Duplicate services
Services not rendered
Excessive Reimbursements
Reimbursement Errors
Coverage or Eligibility Errors
Types of RAC Audits
 Automated Audits
Data Matching
 Data Mining
 Desk Audits

 Complex
On-site Audits
Financial
 Clinical

Additional RAC requirements
 The contractor shall refer any and all suspected fraud
cases to the Bureau of TennCare.
 TennCare will coordinate the payment integrity efforts
of the MCOs, the PBM and DBM and remove them from
HMS reviews as appropriate.
Scenario Development
 The RAC request shall document the overpayment scenario,
explaining the methodology used to identify the finding
and citing state and federal regulations to establish good
cause for the review of the claim.
 RAC contractor is required to present two new scenarios
per quarter for approval, but are currently delivering two
new scenarios each month.
Records Request
 There is a maximum limit of three-hundred (300) record
requests per provider for any 45-day period.
 A statistically valid random sample (SVRS) may be used
for providers to decrease the amount of records needed
for a suitable sample.
 HMS does not and shall not pay for copying medical
records.
Audit Findings
 A Preliminary Recovery Findings letter will be sent
to a designated contact person at each provider.
It contains:
 Summary of provider’s response options
 Audit Report - containing a listing of each claim
 Evidence supporting the determination
 Information and instructions for requesting a
reconsideration and/or appeal.
Review Audit Personnel
 Medical Director



Relevant Medicaid experience in a role that involves
developing coverage or medical necessity policies and
guidelines
Good standing with the relevant State licensing authorities
and has relevant work and educational experience
Board-certification in a medical specialty and at least three
(3) years of medical practice as a board-certified physician
 Professional Nursing and Coding Staff
RAC Questions
Answers to Frequently Asked Questions
about the RAC may be found at:
www.tn.gov/tenncare/forms/RACFAQ.pdf
What is an “overpayment”?
 “(B) OVERPAYMENT—The term ‘‘overpayment’’ means
any funds that a person receives or retains under title
XVIII (Medicare) or XIX (Medicaid) to which the person,
after applicable reconciliation, is not entitled under such
title.”
 Important distinction: “funds”, not “benefit”
Some Reasons for Overpayments
 Payment exceeds the usual, customary, or reasonable charge for







the service
Duplicate payments of the same service(s)
Incorrect provider payee
Incorrect claim assignment resulting in incorrect payee
Payment for non-covered, non-medically necessary services
Services not actually rendered
Payment made by a primary insurance
Payment for services rendered during a period of
non-entitlement (patient's responsibility)
More Reasons for Overpayments
 Failure to refund credit balances
 Excluded ordering or servicing person
 Patient deceased
 Servicing person lacked required license or certification
 Billing system error
 Service induced by false statement of ordering provider
 Service inconsistent with physician order or treatment plan
 Service not documented as required by regulation
 No order for service
 Service by an provider who is not enrolled that is “billing
through” an enrolled provider
False Claims
 Section 6402(g):
 In
addition to the penalties provided for in
6402,
a claim that includes seeking
reimbursement for provision of items or
services that violate this section constitutes a
false or fraudulent claim for purposes of
Subchapter III of Chapter 37 of Title 31 USC.
False Claims Act (FCA)

Expands FCA liability to indirect recipients of federal funds

Expands FCA liability for the retention of overpayments, even
where there is no false claim

Adds a materiality requirement to the FCA, defining it broadly

Expands protections for whistleblowers

Expands the statute of limitations

Provides relators with access to documents obtained by
government
Reporting and returning of overpayments:
Section
 Adds
6402(a)
Section 1128J(d)(1)(A) to the Social Security Act
 Reporting
and returning of overpayments:
“In general, if a person has received an overpayment, the
person shall:
1.
(A) report and return the overpayment to the Secretary,
the State, an intermediary, a carrier, or a contractor, as
appropriate, at the correct address; and
2.
(B) notify the Secretary, State, intermediary, carrier, or
contractor to whom the overpayment was returned in
writing of the reason for the overpayment.”
PPACA Section 6402
Medicare & Medicaid Program Integrity Provisions
‘‘(d) REPORTING AND RETURNING OF OVERPAYMENTS—
(1) IN GENERAL — If a person has received an overpayment, the
person shall—
(A) report and return the overpayment to the
Secretary, the State, an intermediary, a carrier, or
a contractor, as appropriate, at the correct
address; and
(B) notify the Secretary, State, intermediary, carrier,
or contractor to whom the overpayment was
returned in writing of the reason for the
overpayment.”
What Are Funds “Not Entitled”?
 Kickback
 STARK
 Eligibility
 Conditions of payment
Violation without Intention
 Section 6402(f)(2):
 Adds new subsection 1128B(g) of the Social
Security Act
 Amends the federal health care program antikickback statute by adding a provision to
clarify that “a person need not have actual
knowledge of this section or specific intent to
commit a violation of this section.”
Who must return the overpayment?
 A “person” (which includes corporations and
partnerships) who has either “received” or “retained”
the overpayment
 Focus on “receipt”; payment need not come directly
from Medicaid; if “person” “retains” overpayment due
the program, violation occurs
 A “person” includes a managed care plan or an
individual program enrollee, as well as a program
provider or supplier
When is an overpayment “identified”?
 “Identified” for an organization means that the fact of an
overpayment, not the amount of the overpayment, has been
identified. (e.g., patient was dead at time service was allegedly
rendered, APG claim includes service not rendered, charge
master had code crosswalk error)
 Compare with language from CMS proposed 42 CFR 401.310
overpayment regulation 67 FR 3665 (1/25/02 draft later
withdrawn)

“If a provider, supplier, or individual identifies a Medicare payment
received in excess of amounts payable under the Medicare statute
and regulations, the provider, supplier, or individual must, within 60
days of identifying or learning of the excess payment, return the
overpayment to the appropriate intermediary or carrier.”
When is an overpayment “identified”?
 Employee or contractor identifies overpayment in hotline





call or email
Patient advises that service not received
RAC advises that dual eligible Medicare overpayment
has been found
TennCare sends letter re: deceased patient, unlicensed
or excluded employee or ordering physician
Qui tam or government lawsuit allegations
Criminal indictment or information
Government is Using Data to Detect Overpayments
 Excluded persons
 Deceased enrollees
 Deceased providers
 Credit balances
Overpayment Identification in Error
An employee, contractor, patient or State may make
a mistake.
 That is the reason why the statute gives providers
60 days to report after the identification
 Need for internal review and assessment
 No obligation to report allegation if your
investigation shows that it is inaccurate
 BUT - risk is on provider who decides not to report
Reduced Protection From Limitations Periods
What is effect on statute of limitations?
Under federal and state false claims acts, statute of
limitations runs from 60 days after date of
identification, not date of claim or date of payment.
Credible Allegation of Fraud
 State agency makes determination of credible
allegation of fraud that has “indicia of reliability”
 Can come from any source:
 Complaint
made by former employee
 Fraud hotline
 Claims data mining
 Patterns identified through:
 Audits
 Civil
false claims
 Investigations
Important Points
 TennCare is required to review evidence and
carefully consider the totality of facts and
circumstances.
 Suspension or even partial suspension is an
extraordinary action, not a routine matter.
 This
action is reserved only for cases where there
are pending investigations of credible allegations of
fraud.
What is a “Good Cause Exception”?
 CMS regulations allow for discretion in cases
where the best interest of law enforcement or the
Medicaid program come into play as a result of
an allegation of fraud.
 These are called “good cause exceptions”.
Law Enforcement Good Cause
There are valid law enforcement-related
reasons to not suspend payments to
providers, such as where:
 There are requests by law enforcement.
 Suspension of payments might give a
“heads up” to a perpetrator, or expose
undercover investigators, whistleblowers or
confidential sources.
Other Reasons for Good Cause
Certain other Good Cause exceptions may be
invoked, such as in cases where:
 Suspension is not in the best interest of the
Medicaid program; and/or
 Access to necessary items or services may be
jeopardized.
 This
situation involves working with other
regulating agencies on access to care.
More Reasons for Good Cause
 Examples could fall into either category depending
on context, such as where:


Other available remedies could more effectively or
quickly protect Medicaid funds than would
implementing (or continuing) a payment suspension;
and/or
There is immediate enjoinment of potentially
unlawful conduct.
Suspension Process Notes
 The suspension process must be documented and
maintained by TennCare.
 The 6402(h) suspension process will be
coordinated with TennCare and the TBI Medicaid
Fraud Control Unit.
 TennCare and MCOs may be required to work
with providers to accommodate patients who
need care.
Questions?
RAC
Overpayments
Credible Allegations of Fraud
Reporting Allegations To TennCare
PHONE
Fraud Hotline
1-800-433-3982
Fax: 615-256-3852
EMAIL
MAIL
Go to:
www.tncarefraud.tennessee.
gov
or email us at:
Programintegrity.TennCare
@tn.gov
Bureau of TennCare
Office of Program Integrity
310 Great Circle Road
Nashville, TN 37243