Audit 101:
Making sense of government audits
Jennifer Ogden
Audit Solutions Manager
Agenda
 Recovery Audit Contractors
 Auditor Overview
 Audit Process
 Data Analysis
 Upcoming changes
Why is it important to you?
 Volume of Medical Records Requests
 Technical denials
 Response time
 Lengthy and Costly Appeals Process
 How many requests are in appeals?
 Denials cost the facility both time and money
 Identifying Compliance Issues
 What are your denial reasons?
 Financial Implications to the Facility
 How much is the program costing the facility in time and resources?
 How are audits impacting cash flow?
 How are audits impacting the facilities bottom line?
Reality Check
Facts from Recent AHA RACTrac Survey

57% of record requests did not contain an overpayment

50% reported having a denial reversed through the discussion period

Hospitals are appealing 50% of all denials*

66% overall success rate on appeals

63% of appealed claims are stuck in the appeals process
RACTrac Q1 2014 survey
6
Financial Impact - RACs
251 requests/year
(50-200 beds)
= $1,430,951
470 requests/year
(200-400 beds)
= $2,679,470
772 requests/year
(500-600 beds)
= $4,401,172
Current Recovery Audit Contractor Regions
Region A –
Diversified Collection
Services
Region B – CGI
Region C –
Connolly Consulting
Region D - HDI
Who’s Who???
–
Medicare Recovery Audit Contractors – Improper
Payments – goal is to recover money for medicare
–
Fiscal Intermediary/ Medicare Administrative Contractor
(FI/MAC) – administer payments, do probe audits to
correct and educate
CERT
–
Comprehensive Error Rate Testing (CERT) – Measures
Improper Rate for payments made by the MAC
Probe
Audits
–
Probe Audits – MACs will do testing on claims to see if
providers are implementing billing guidelines correctly
–
Zone Program Integrity Contractors (ZPICs)-also known
as UPIC (Unified Program Integrity Contractors)
Investigate Fraudulent activity
RAC
MAC
ZPIC
Who’s Who???
Medicaid RAC
MIC
PERM
QIO
Commercial
Audits
–
Medicaid Recovery Audit Contractors (RAC) – Identify
Improper Payments
–
Medicaid Integrity Contractor (MIC)- Fraudulent patterns;
appropriate utilization of Medicaid
–
Payment Error Measurement Testing (PERM) – Establish
Improper payment rate made by state Medicaid – once
every 3 years per state
–
Quality Improvement Organizations (QIO)- Investigate
Quality of Care, DRG’s and Medical Necessity complaints
–
Commercial Audits – Identify Improper payments, establish
quality data
U.S.
Department
of Justice
STATE AND FEDERAL AUDITORS
U.S. Department of
Health & Human Services
CMS
Centers for Medicare
& Medicaid Services
OIG
Office of
Inspector
General
Medicare
RAC
Recovery
Audit
Contractor
MAC
Medicare
Administrative
Contractor
CERT
Comprehensive
Error Rate
Testing
Medicaid
Prepayment
Probe
(targeted
reviews)
MEDICAID
RAC
Medicaid
Recovery
Audit
Contractor
MIC
Medicaid
Integrity
Contractor
PERM
Payment
Error Rate
Measurement
ZPIC
Zone
Program
Integrity
Contractors
Pop quiz
Audit Reviews/Request
 Types of Reviews:
 Prepayment: Claim submitted not yet paid
 Post payment: Claim submitted and paid
 Types of Requests
 Complex: Records requested ( ADR, ROI) (reimbursable)
 Automated: Denial and Demand all-in-one – no record requested – usually a
known error
 Informational/Semi-Automated: Like an automated request but requires
records to defend (records are not part of maximum RAC limits- not
reimbursable)
 If records are not received, it is considered a technical denial and the
claim is denied.
Lifecycle of
an Audit
Payor review identified
Final exchange of
payment based on
appeal outcome
ADR request
issued
Appeal Decision
communicated
Record submitted
for review
Appeal initiated/
Re-bill initiated
Result /Findings
communicated
Repayment
requested
(Demand)
CMS Overpayment Collection Timeline
Adapted from http://www.cms.gov/Outreach-and-Education/MedicareLearning-NetworkMLN/MLNProducts/downloads/overpaymentbrochure508-09.pdf
30 days
if
appeal
before
recoup
60 days
if
appeal
before
recoup
Currently a 24
month
suspension on
assigning to an
ALJ
Interest starts accumulating on day 31 and
every 30 day after until repaid or overturned
What can hospitals do to lessen the impact?
 Review denials
 Cases that are NOT appealed
 Automated denials
 Monitor RAC websites for targeted issues
 Weigh the results of appealing vs rebilling
 Follow up on repayments for successful appeals
 Improve Physician Documentation
 Have a system to track audits/appeals
 Lessons learned from the first 5 years of RAC program
Top 10 Mistakes in Audit Management
•
Mistake #1: Not centralizing your audit management program
– Reduce the number involved, increase their involvement, review processes
•
Mistake #2: Not understanding who the auditors are
– Know auditors procedures and educate audit team
•
Mistake #3: Not following up on key audit trends
– Demonstration projects, probe audits, PEPPER reports
•
Mistake #4: Not controlling costs
– Audit software, electronic delivery, centralizing
•
Mistake #5: Ignoring the lampposts
– Analyze data, improve current coding/documentation
Top 10 Mistakes in Audit Management
•
Mistake #6: Failing to respond to denials timely
– No technical denials, utilize discussion, monitor appeals
•
Mistake #7: Excluding billing and revenue cycle
– Electronic ADR notifications, recoupments, repayments, Rebills
•
Mistake #8: Becoming e-mail dependent
– Lost/unread emails, email overload, no reminders for deadlines
•
Mistake #9: Too many dabblers
– Standard consistent process, subject matter experts, more efficient
•
Mistake #10: Not Taking Ownership
– Analyze data and coordinate entire process
Data Analysis
•
According to AHA RAC Trac Q1 2014
– Only 43% percent of all records requested last quarter were denied
•
What should you be reviewing in your data?
– Requests and denials
– Patient type
– Audit type
– Diagnosis
•
What is your denial rate per volume requested?
•
Compare your reasons for denials.
– Drill down to root causes
Source: AHA. (June 2014). RACTrac Survey
Shift in focus – Are you ready?
 What are your top DRG denials?
 Are you reviewing your coding denials?
 What are your denial rates for the RAC Prepayment DRGs?





MS-DRG 312 Syncope & Collapse
MS-SRG 069 Transient Ischemia
MS-DRG 377-379 G.I. Hemorrhage
MC-DRG 637-639 Diabetes
MS-DRG 252-254 Other Vascular Procedures
Basics of data analysis
•
•
•
GIGO -Garbage in- garbage out rule
Your analysis is only as good as your data
Do you trust your data?
Garbage in vs Clean data
•
Standard definitions and protocols are key to clean data
•
Too many cooks can ruin the stew
– How many people do you have entering ADR requests? Results letters?
Appeals?
– Validate staff understanding of the process and the auditors language on denials
– Examples:
** services in an inpatient setting were medically unnecessary and could have been
provided in an outpatient/observation setting?
–
Short Stay Medically Unnecessary?
–
Medically Unnecessary?
**Documentation does not support the necessity for the procedure
–
Short Stay Medically Unnecessary?
–
Medically Unnecessary?
Mount Sinai Health System
•
•
•
ACA – contains provision for Medicaid and Medicare overpayments be
returned to the program within 60 days of being identified
Failing to comply with the 60 days results in sanctions under the False
Claims Act
Penalties of up to $11,000 per “fraudulently delayed” claim - multiplied by
three
– Two hospitals with Continuum Health Partners submitted improper Medicaid
claims in 2009 and 2010 due to electronic coding errors
– An internal audit identified 900 claims in early 2011 which resulted in about $1
million incorrectly paid to the hospitals
– Money was repaid but not within the 60 day window
– Potential cost to system is about $30 million
Upcoming changes
RAC Reform
 New RAC contracts/territories – when?
 Contracts will include 5 changes (Discussion period,
contractor payment, ADR limits)
 Investigate the overturn rate at ALJ level
 August 2014 – extending contract for current RACs to restart some
reviews
Electronic appeal process
 ICD-10 - Effective 10/1/15
Two midnight rule

Effective 10/1/2013

Currently in a “Probe and educate” review process through 3/31/15

Based on reviews – provide education

MACs will conduct prepayment reviews

Assumption is that if a patient is in the hospital over the span of 2-midnights
they qualify as an inpatient

Documentation will be important!!

RACs are not allowed to audit these claims with admission dates between
10/1/13 and 3/31/15
ALJ Appeal process
Problem:
 24 month suspension on assigning claims to judges
 Over 357,000 claims waiting to be assigned
 72% overturn rate at ALJ
Proposed Solutions:
 OMHA- Appeal Demonstration Programs
 Settlement Conference Facilitation (SCF) Pilot
 Mediation for ALJ appeals filed in 2013
 Group all claims appealed for same issue

68% Hospital Settlement – one time offer
68% Hospital Settlement
•
Facility types ELIGIBLE to submit a settlement request
– Acute Care Hospitals, including those paid via Prospective Payment System
(PPS), Periodic Interim Payment (PIP), and Maryland waiver;
– Critical Access Hospitals (CAH)
•
Criteria for claims
– Claim pending appeal or within the timeframe to request appeal review
– Denial based on the appropriateness of the inpatient admission (patient status
review)
– Date of Admission prior to 10/1/2013
– Not previously withdrawn/ billed for Part B payment
•
Initial settlement requests are due to CMS on or before October 31,
2014
Settlement Process
•
•
If recoupment was taken and provider paid interest, interest is included in the net
payable amount and paid back at 68%
If recoupment has not occurred and interest is accrued, interest is waived
•
Website: http://go.cms.gov/InpatientHospitalReview
What have we learned?
 Audits are costly and constantly changing
 Monitor RAC websites for current activity
 RAC and other auditors are here to stay
 471 million recovered in 2nd quarter 2014
 Impacting Healthcare Facility’s cash flow and profitability
 Reviewing data, education and documentation are key
 Align clinical documentation with known targets/issues
 An audit management system is a necessity
 Be prepared!
Questions?
THANK YOU
Contact information: Jennifer.Ogden@HealthPort.com
Additional Information
Provider Relations Coordinator – Latesha Walker
RAC@cms.hhs.gov (for Recovery Auditor review process
concerns)
MedicareMedicalReview@cms.hhs.gov (for MAC review process
concerns)
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RAC Information
– http://www.cms.gov/Research-Statistics-Data-and-Systems/MonitoringPrograms/recovery-audit-program/index.html?redirect=/rac/
Contractors accepting esMD transmissions
– http://www.cms.gov/Research-Statistics-Data-and-Systems/Computer-Data-andSystems/ESMD/Review-Contractors.html
Medicare audit contractors by state
– http://www.cms.gov/Research-Statistics-Data-and-Systems/MonitoringPrograms/provider-compliance-interactive-map/
Medicaid audit contractors by state
– http://w2.dehpg.net/RACSS/Map.aspx
Medicare Administrative Contractor (MAC) map
– http://www.cms.gov/Medicare/MedicareContracting/MedicareContractingReform/JurisdictionMaps/Primary_AB_MAC_Jurisdictions_MAP.pdf