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Medicare RAC Auditors Expand Coding, MS-DRG assurance and Medical Necessity Reviews.  CMS Targets Providers Nationwide With Expanded Medicare Recovery Audits (RAC Audits)

In an effort to move-the-bar and collect on perceived overpayments to providers, The Centers for Medicare and Medicare Services (CMS) is taking aggressive strides to accelerate the acceptance of evidence-based health care and lighten the load of a strained national budget.  After spending the past 30 years collecting and analyzing outcomes data from internal programs (CERTs, HPMPs, QIOs, etc.), both Congress and CMS have committed unprecedented resources to enforce evidence-based coverage policies and stop Medicare fraud.

In addition to the highly touted and widely publicized RAC Audits - Medicare ZPIC audits, OIG audits, DOJ audits, Medicaid Integrity Contractor audits and the Medicare One PI system are all just samples of the latest initiatives focused on provider payments.  However, CMS is adopting a new approach to Medicare audits - RAC audits - as the first real tangible effort to push hospitals, physicians and other healthcare providers down a path of revolutionizing the clinical practice of medicine.  Using a classic "carrot and stick" approach, CMS has combined clinical pay-for-performance (P4P) incentives and value-based purchasing initiatives (the carrot) with the strong arm of RAC medical collection agencies (the stick) to insure providers are doing their part to facilitate a more nationalized, evidence-based healthcare structure.

"If it's not documented, it’s not done” - this has been the mantra of every hospital HIM department head, Case Management professional and compliance officer for the past 20 years.  Now both Medicare & Medicaid are adopting clearly defined coverage criteria and evidence-based coverage policies, defining clinical payment criteria, replacing QIOs with RACs, forcing the issue of evidence-based outcomes, verifying supporting medical documentation and insuring claim payment levels.  CMS has hired Recovery Audit Contractors (RACs) to lead the way and they are paying 9% - 12.5% contingency fees to guarantee the outcome.

A Little RAC History - The Demonstration Project

From 2005 - 2007, the Centers for Medicare and Medicaid Services (CMS) undertook the RAC demonstration project in Florida, New York, California (South Carolina, Massachusetts & Arizona were added late in 2007) while preparing for a nationwide roll out.  In addition to an initial $36.2M in FY 2005, the RAC audits recovered $332.9M in FY 2006 and a staggering $610.9M in FY 2007 in overpayments to providers in the demonstration states.  In addition to ramping up additional Medicare auditing efforts and law enforcement initiatives to stop Medicare fraud, CMS estimates billions of dollars in overpayments for patient services will be identified with the national Medicare RAC audit focus.

                o  Medicare RAC Audits - 2006 Status Report
                o  Medicare RAC Audits - 2007 Status Report
                o  Medicare RAC Audits - 2008 Summary Status Report
                o  Medicare RAC Audits - National Expansion Schedule
                o  Recovery Audit Program Overview - Legislation & Regulation

Based upon outcomes from the demonstration project and the Statement of Work for the nationwide audit program, RAC auditors are clearly leveraging the prior work of their peers.  Quality Improvement Organizations (QIOs), Comprehensive Error Rate Tests (CERTs) and the Hospital Payment Monitoring Program (HPMPs) all have played a vital role in guiding the initial stages of the RAC audit process.  As a result, over 95% of Medicare RAC audit identified overpayments have been directly related to CMS payment criteria, Medicare coverage criteria, ICD-9 coding assignments, evaluations of "medical necessity" and/or a need to meet Medicare Conditions of Participation documentation requirements (these are similar outcomes to other previous CMS audits).

It is critical that providers realize that Recovery Audit Contractors have the ability to analyze claims with payment dates reaching as far back as October 1, 2007.  Providers should also be very aware of the potential Medicare fraud & abuse ramifications and consider that a wide range of whistleblower suits have been brought in RAC audit related focus areas.

RAC auditors are initially focusing on picking the low-hanging-fruit and reaching deep into the pockets of hospitals, inpatient rehabilitation facilities and physician practices.  These are areas such as "inappropriate" chest pain admissions (MS-DRG 312 & MS-DRG 313) where CMS and Medicare coverage criteria have been codified and in place for several years.  However, RAC auditors and CMS are also dedicated to implementing a systematic methodology to insure absolute and ongoing provider adherence to Medicare coverage criteria as defined by CMS manuals, National Coverage Determinations, Local Coverage Determinations, QIO guidelines, etc..

Under the program, RAC audits will focus on established CMS payment criteria / Medicare coverage criteria and consist of both automated claims history reviews from the CMS database as well as complex clinical reviews of patient medical records.  Specific areas of concentration include those similar to other Medicare audits - such as Medicare ZPIC audits - "not medically necessary services" (or those not meeting CMS evidence-based coverage criteria), non-covered services, incorrectly coded claims, duplicate services and incorrect payment amounts.

2011 Medicare Audits & Medicare Appeals - Self Audit Tools

Jackson Davis HealthCare (JDH) has invested thousands of hours in the documentation of CMS payment criteria, Medicare coverage criteria & development of Medicare audit templates for each RAC focus area.  These RAC self-audit templates are backed by over 10,000 CMS and CMS contractor documents and provide the nation's most comprehensive resource for the evaluation of Medicare audit focus areas and the preparation of Medicare appeals.

Jackson Davis HealthCare self-audit templates and Medicare audit defense supporting documentation are now available for purchase by healthcare providers and healthcare attorneys nationwide.  These are the perfect solution to proactively preparing for Medicare RAC audits, Medicare ZPIC audits, Medicaid Integrity Contractor audits and a wide range of other CMS audit initiatives!

The Medicare audit & Medicare appeals templates are perfect for use by internal auditors and compliance professionals in proactively reviewing potential RAC audit cases and when considering the filing RAC appeals.  The following is a small sample of RAC audit focused templates that are available for purchase by healthcare providers:

                Short Stays - Chest Pain and Chest Pain Related Diagnoses 
                Extensive O.R. Procedures Unrelated to Primary Diagnosis
                IV Hydration & IV Infusion Therapy
                Blood Transfusions
                Bronchoscopy
                Once in a Lifetime Procedures
                Neulasta J2505
                PCI / ICD Surgical Procedures in Wrong Setting
                Inpatient Rehabilitation Facility Admissions
                Respiratory Diagnosis Sequencing
                Excisional Debridement Documentation
                ER Visits & Use of Modifier 25
                Skilled Nursing Facility Stays and Rehab RUGs
                Hospice Admissions
                SNF Admissions & 3-Day Acute Care Stays
                Outpatient Physical Therapy Visits
                Physician E&M Visits and Procedures