First and foremost, important, health care news:
The Medicare Administrative Contractors (MACs) have full authority to renew post-payments reviews of dates of service (DOS) during the COVID pandemic. The COVID pause is entirely off. It is going to be a mess to wade through the thousands of exceptions. RAC audits of COVID DOS will be, at best, placing a finger on a piece of mercury. I hope that the auditors remember that everyone was scrambling to do their best during the past year and a half. In the upcoming weeks, I will keep you posted.
I am especially excited today. Last week, I won a permanent injunction for a health care facility that but for this injunction, the facility would be closed, its 300 staff unemployed, and its 600 Medicare and Medicaid consumers without access to their mental health and substance abuse providers, their primary care physicians, and the Suboxone clinic. The Judge’s clerk emailed us on Friday. The email was terse although the clerk signified that the email was important by clicking the little, red, exclamation point. It simply stated: After speaking with Judge X, she is dismissing the government’s MTD and granting Petitioner’s permanent injunction. Petitioner’s counsel can send a proposed decision within 10 days. Such a simple email affected so many lives!
We hear Ellen Fink-Samnick MSW, ACSW, LCSW, CCM, CRP, speak about social determinants of health (SDoH) on RACMonitor. Well, this company is minority-owned and the mass percentage of staff and consumers are minorities.
Why was this company on the brink of closing down? The managed care organization (MCO) terminated the company’s Medicaid contract. Medicaid comprised the majority of its revenue. The MCO’s reason was that the company violated 42 CFR §455.106, which states:
“Information that must be disclosed. Before the Medicaid agency enters into or renews a provider agreement, or at any time upon written request by the Medicaid agency, the provider must disclose to the Medicaid agency the identity of any person who:
The former CEO – for years – he relied on professional tax accountants for the company’s taxes and his own personal family’s taxes. His wife, who is a physician, relied on her husband to do their personal taxes as one of his “honey-do” tasks. CEO relied on a sub-par accountant for a couple years and pled guilty to failing to pay personal taxes for two years. The plea ended up in the newspaper and the MCO terminated the facility.
We argued that the company, as an entity, was bigger than just the CEO. Quickly, we filed for a TRO to keep the company open. Concurrently, we transitioned the company from the CEO to Dr. wife. Dr became CEO in a seamless transition. A long-time executive stepped up as HR management.
Yet, according to testimony, the MCO terminated the company’s contract when the newspaper published the article about CEO’s guilty plea. The article was published in a local paper on April 9 and the termination notice was sent out April 19th. It was a quick decision.
We argued that 42 CFR §455.106 didn’t apply because CEO’s guilty plea was:
- Personal and not related to Medicare or Medicaid; and
- Not a conviction but a voluntary plea agreement.
The Judge agreed. We won the TRO for immediate relief. After a four-day hearing and 22 witnesses for Petitioner, we won the preliminary injunction. At this point, the MCO hired outside counsel with our tax dollars, which I did bring up in the final hearing on the merits.
New outside counsel was super excited to be involved. He immediately propounded a ton of discovery asking for things that he already had and for criminal documents that we had no access to because, by law, the government has possession of and CEO never had. Well, new lawyer was really excited, so he filed motions to compel us to produce these unobtainable documents. He filed for sanctions. We filed for sanctions back.
It grew more litigious as the final hearing on the merits approached.
Finally, we presented our case for a permanent injunction, emphasizing the importance of the company and the smooth transition to the new, Dr. CEO. We won! Because we won, the company is open and providing medically necessary services to our most needy population.
And…I get to draft the proposed decision.
2020 was an odd year for recovery audit contractor (“RAC”) and Medicare Administrative Contractors (“MAC”) audits. Well, it was an odd year for everyone. After trying five virtual trials, each one with up to 23 witnesses, it seems that, slowly but surely, we are getting back to normalcy. A tell-tale sign of fresh normalcy is an in-person defense of health care regulatory audits. I am defending a RAC audit of pediatric facility in Georgia in a couple weeks and the clerk of court said – “The hearing is in person.” Well, that’s new. Even when we specifically requested a virtual trial, we were denied with the explanation that GA is open now. The virtual trials are cheaper and more convenient; clients don’t have to pay for hotels and airlines.
In-person hearings are back – at least in most states. We have similar players and new restrictions.
On March 16, 2021, CMS announced that it will temporarily restrict audits to March 1, 2020, and before. Medicare audits are not yet dipping its metaphoric toes into the shark infested waters of auditing claims with dates of service (“DOS”) March 1 – today. This leaves a year and half time period untouched. Once the temporary hold is lifted, audits of 2020 DOS will be abound. March 26, 2021, CMS awarded Performant Recovery, Inc., the incumbent, the new RAC Region 1 contract.
RAC’s review claims on a post-payment and/or pre-payment basis. (FYI – You would rather a post payment review rather than a pre – I promise).
The RACs were created to detect fraud, waste, and abuse (“FWA”) by reviewing medical records. Any health care provider – not matter how big or small – are subject to audits at the whim of the government. CMS, RACs, MCOs, MACs, TPEs, UPICs, and every other auditing company can implement actions that will prevent future improper payments, as well. As we all know, RACs are paid on a contingency basis. Approximately, 13%. When the RACs were first created, the RACs were compensated based on accusations of overpayments, not the amounts that were truly owed after an independent tribunal. As any human could surmise, the contingency payment creates an overzealousness that can only be demonstrated by my favorite case in my 21 years – in New Mexico against Public Consulting Group (“PCG”). A behavioral health care (“BH”) provider was accused of over $12 million overpayment. After we presented before the administrative law judge (“ALJ”) in NM Administrative Court, the ALJ determined that we owed $896.35. The 99.23% reduction was because of the following:
- Faulty Extrapolation: NM HSD’s contractor PCG reviewed approximately 150 claims out of 15,000 claims between 2009 and 2013. Once the error rate was defined as high as 92%, the base error equaled $9,812.08; however the extrapolated amount equaled over $12 million. Our expert statistician rebutted the error rate being so high. Once the extrapolation is thrown out, we are now dealing with much more reasonable amounts – only $9k
- Attack the Clinical Denials: The underlying, alleged overpayment of $9,812.08 was based on 150 claims. We walked through the 150 claims that PCG claimed were denials and proved PCG wrong. Examples of their errors include denials based on lack of staff credentialing, when in reality, the auditor could not read the signature. Other denials were erroneously denied based the application of the wrong policy year.
The upshot is that we convinced the judge that PCG was wrong in almost every denial PCG made. In the end, the Judge found we owed $896.35, not $12 million. Little bit of a difference! We appealed.
The RACs are on attack! The “COVID Pause Button” on RAC audits has been lifted. The COVID Pause Button has been lifted since August 2020. But never have I ever seen CMS spew out so many new RAC topics in one month of a new year. Happy 2021.
Recovery audit contractors (“RACs”) will soon be auditing positron emission tomography (PET) scans for initial treatment strategy in oncologic conditions for compliance with medical necessity and documentation requirements.
Positron emission tomography (“PET”) scans detect early signs of cancer, heart disease and brain disorders. An injectable radioactive tracer detects diseased cells. A combination PET-CT scan produces 3D images for a more accurate diagnosis.
According to CMS’ RAC audit topics, “(PET) for Initial Treatment Strategy in Oncologic Conditions: Medical Necessity and Documentation Requirements,” will be reviewed as of January 5, 2021. The PET scan audits will be for outpatient hospital and professional service reviews. CMS added additional 2021 audit targets to the approved list:
- Air Ambulance: Medical Necessity and Documentation Requirements,. This complex review will be examining rotatory wing (helicopter) aircraft claims to determine if air ambulance transport was reasonable and medically necessary as well as whether or not documentation requirements have been met.
- Hospice Continuous Home Care: Medical Necessity and Documentation Requirements, and
- Ambulance Transport Subject to SNF Consolidated Billing.
Upcoming HHS secretary Xavier Becerra plans to get his new tenure underway quickly.
In False Claims Act (“FCA”) news, Medicare audits of P-Stim have ramped up across the country. A Spinal Clinic in Texas agreed to pay $330,898 to settle FCA allegations for allegedly billing Medicare improperly for electro-acupuncture device neurostimulators. CMS claims that “Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.”
Finally, is your staff getting medical records to consumers requesting their records quickly enough? Right to access to health records is yet another potential risk for all providers, especially hospitals due to their size. A hospital system agreed to pay $200,000 to settle potential violations of the HIPAA Privacy Rule’s right of access standard. This is HHS Office for Civil Rights’ 14th settlement under its Right of Access Initiative. The first person alleged that she requested medical records in December 2017 and did not receive them until May 2018. In the second complaint, the person asked for an electronic copy of his records in September 2019, and they were not sent until February 2020.
Beware of slow document production as slow document production can lead to penalties. And be on the lookout for the next RAC Report.
Remember, never accept the results of a Medicare or Medicaid audit. It is always too high. Believe me, after 21 years of my legal practice, I have yet to agree with the findings if a Tentative notice of Overpayment by any governmental contracted auditor, whether it is PCG, NGS, the MACs, MCOs, or Program Integrity – in any of our 50 States. That is quite a statement about the general, quality of work of auditors. Remember Teambuilders? How did $12 million become $896.35? See blog.
1 CMS, “0200-Air Ambulance: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/35Jx1co.
2 CMS, “0201-Hospice Continuous Home Care: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/3oRUyiY.
3 CMS, “0202- Ambulance Transport Subject to SNF Consolidated Billing,” proposed RAC topic, January 5, 2021, http://go.cms.gov/2LOMEbw.
Even though the public health emergency (“PHE”) for the COVID pandemic is scheduled to expire July 24, 2020, all evidence indicates that the PHE will be renewed. I cannot imagine a scenario in which the PHE is not extended, especially with the sudden uptick of COVID.
Center for Medicare and Medicaid Services (CMS) has given guidance that the voluminous number of exceptions that CMS has granted during this period of the PHE may be extended to Dec. 1, 2020. However, there is no indication of the RAC, and MAC audits being suspended until December 2020. In fact, we expect the audits to begin again any day. There will be confusion when audits resume and COVID exceptions are revoked on a rolling basis.
Remember the emergency-room physician whom I spoke about on the June 29 on Monitor Mondays? The physician whose Medicare enrollment was revoked due to a computer error or an error on the part of CMS. What normally would have been an easy fix, because of COVID, became more difficult. Because of COVID, he was unable to work for three months. He is back up and running now. The point is that COVID really messed up so many aspects of our lives.
The extension of PHE, technically, has no bearing on RAC and MAC audits coming back. Word on the street is that RAC and MAC audits are returning August 2020.
This month, July 2020, CMS released, “Coronavirus Disease 2019 (COVID-19) Provider Burden Relief Frequently Asked Questions (FAQs).” (herein afterward referred as “CMS July 2020 FAQs”).
The question was posed to CMS: “Is CMS suspending most Medicare-Fee-for-Service (FFS) medical review during the PHE for the COVID-19 pandemic? The answer is, according to CMS, “As states reopen, and given the importance of medical review activities to CMS’ program integrity efforts, CMS expects to discontinue exercising enforcement discretion beginning on Aug. 3, 2020, regardless of the status of the public health emergency. If selected for review, providers should discuss with their contractor any COVID-19-related hardships they are experiencing that could affect audit response timeliness. CMS notes that all reviews will be conducted in accordance with statutory and regulatory provisions, as well as related billing and coding requirements. Waivers and flexibilities in place at the time of the dates of service of any claims potentially selected for review will also be applied.” See CMS July 2020 FAQs.
Monday, July 13, 2020, we began our fourth “COVID-virtual trial.” The Judges with whom I have had interaction have taken a hard stance to not “force” someone to appear in person. It appears, at least to me, that virtual trials are the wave of the future. This is the guidance that conveys to me that RAC and MAC audits will begin again in August. Virtual audits may even be the best thing that ever happened to RAC and MAC audits. Maybe now the auditors will actually read the documents that the provider gives them.
Another specific issue addressed in the CMS’ July 2020 FAQs is that given the nature of the pandemic and the inability to collect signatures during this time, CMS will not be enforcing the signature requirement. Typically, Part B drugs and certain Durable Medical Equipment (DME) covered by Medicare require proof of delivery and/or a beneficiary’s signature. Suppliers should document in the medical record the appropriate date of delivery and that a signature was not able to be obtained because of COVID-19. This exception may or may not extend until Dec. 31, 2020.
The upshot is that no one really knows how the next few months will unfold in the healthcare industry. Some hospitals and healthcare systems are going under due to COVID. Big and small hospital systems are in financial despair. A RAC or MAC audit hitting in the wake of the COVID pandemic could cripple most providers. I will reiterate my recommendation: In the re-arranged words of Roosevelt, “Speak loudly, and carry a big stick.”
Programming Note: Knicole Emanuel is a permanent panelist on Monitor Mondays. Listen to her live reporting every Monday at 10 a.m. EST.
Last week on Monitor Mondays, Knicole Emanuel, Esq. reported on the case of Commonwealth v. Pediatric Specialist, PLLC, wherein the Recovery Audit Contractors’ (RACs’) experts were prohibited from testifying because they were paid on contingency. This means that the auditor (or the company for which they work) is paid some percentage of the overpayment findings it reports.
In this case, as in most nowadays, the overpayment estimate was based upon extrapolation, which means that the auditor extended the overpayment amount found in the sample to that of all claims within the universe from which the sample was drawn. I have written about this process before, but basically, it can turn a $1,500 overpayment on the sample into a $1.5 million overpayment demand.
The key to an effective extrapolation is that the statistical process is appropriate, proper, and accurate. In many audits, this is not the case, and so what happens is, if the provider believes that the extrapolation is not appropriate, they may choose to challenge the results in their appeal. Many times, this is when they will hire a statistician, like me, to review the statistical sampling and overpayment estimate (SSOE), including data and documentation to assist with the appeal. I have worked on hundreds of these post-audit extrapolation mitigation appeals over the years, and even though I am employed by the provider, I maintain a position as an independent fact-finder. My reports are based on facts and figures, and my opinion is based on those findings. Period.
So, what is it that allows me to remain independent? To perform my job without undue influence or bias? Is it my incredibly high ethical standards? Check! My commitment to upholding the standards of my industry? Check! Maybe my good looks? Well, not check! It is the fact that my fees are fixed, and are not contingent on the outcome. I mean, it would be great if I could do what the RACs do and cash in on the outcomes of a case, but alas, no such luck.
In one large class-action case in which I was the statistical expert, the defendant settled for $122 million. The law firm got something like a quarter or a third of that, and the class members all received some remuneration as well. Me? I got my hourly rate, and after the case was done, a bottle of Maker’s Mark whiskey as a thank you. And I’m not even sure that was appropriate, so I sent it back. I would love to be paid a percentage of what I am able to save a client in this type of appeal. I worked on a case a couple of years ago for which we were able to get the extrapolation thrown out, which reduced the payment demand from $5.9 million to $3,300. Imagine if I got paid even 2 percent of that; it would be nearly $120,000. But that can’t happen, because the moment my work product is tied to the results, I am no longer independent, nor unbiased. I don’t care how honest or ethical you are, contingency deals change the landscape – and that is as true for me, as an expert, as it is for the auditor.
In the pediatric case referenced above, the RAC that performed the audit is paid on a contingency, although I like to refer to it as a “bounty.” As such, the judge ruled, as Ms. Emanuel reported, that their experts could not testify on behalf of the RAC. Why not? Because the judge, unlike the RAC, is an independent arbiter, and having no skin in the game, is unbiased in their adjudication. But you can’t say that about the RAC. If they are being paid a “bounty” (something like 10 percent), then how in the world could they be considered independent and unbiased?
The short answer is, they can’t. And this isn’t just based on standards of statistical practice; it is steeped in common sense. Look at the appeal statistics; some 50 percent of all RAC findings are eventually reversed in favor of the provider. If that isn’t evidence of an overzealous, biased, bounty-hunting process, I don’t know what is. Basically, as Knicole reported, having their experts prohibited from testifying, the RAC was unable to contest the provider’s arguments, and the judge ruled in favor of the provider.
But, in my opinion, it should not stop here. This is one of those cases that exemplifies the “fruit of the poisonous tree” defense, meaning that if this case passes muster, then every other case for which the RAC did testify and the extrapolation held should be challenged and overturned. Heck, I wouldn’t be surprised if there was a class-action lawsuit filed on behalf of all of those affected by RAC extrapolated audits. And if there is one, I would love to be the statistical expert – but for a flat fee, of course, and not contingent upon the outcome.
And that’s the world according to Frank.
Frank Cohen is a frequent panelist with me on RACMonitor. I love his perspective on expert statistician witnesses. He drafted based off a Monitor Monday report of mine. Do not miss both Frank and me on RACMonitor, every Monday.
Oct. 1, 2019 marks the beginning of a new era of billing for skilled nursing facilities (SNFs).
Say goodbye to RUG-IV, and hello to the Patient-Driven Payment Model (PDPM).
This is a daunting task, not for the faint of heart. Under PDPM, reimbursement for Medicare Part A patients in SNFs will be driven by patient condition, rather than by therapy minutes provided. Documentation is crucial to a successful Recovery Audit Contractor (RAC) audit.
In the past, therapy documentation has been the focus of RAC audits. Now, nursing documentation is front and center. Do not try to maximize case mix index (CMI). But remember, certain documentation can easily lead to higher reimbursement. For example, if you document when a patient is morbidly obese, suffering from diabetes, and taking intravenous medication, this can lead to three times the reimbursement over the first three days. This article will explore the intricacies of RAC audits and how to maximize reimbursement while successfully maneuvering through the process.
Here is the million-dollar question: how will PDPM affect your business?
The answer is four-fold, for the purposes of this article, although this list is not exhaustive.
- Managing care: Unlike RUG-IV, which incentivizes ultra-high volumes of therapy to capture maximum payment, PDPM requires you to carefully manage how you deliver services in order to provide the right level of care for each patient. This begs the question of whether you’re getting paid to over-deliver services (or practice “defensive medicine”), or you’re getting audits and recoupments for under-delivering due to poor patient outcomes. For this reason, it can seem like you are getting pulled in two directions.
- Financial: PDPM is designed to be budget-neutral. Your reimbursements will decrease. SNFs will be able to offset the loss in therapy reimbursement with higher reimbursement for services already being provided.
- Staffing: There is less demand for therapists in a SNF setting. But you will be able to retain the best therapy sources.
- Billing: Under PDPM, you will bill using the Health Insurance Prospective Payment System (HIPPS) code that is generated from assessments with ARD. You will still be using a five-digit code, as you did with RUG-IV. But the characters signify different things. For example, under RUG-IV, the first three characters represented the patient’s RUG classification, and the last two were an assessment indicator. With PDPM, the first character represents the patient’s physical therapy (PT) and occupational therapy (OT) component. The second is the patient’s speech language therapy (SLP) component. The third is the nursing component classification. The fourth is the NTA component classification, while the fifth is an AI code.
The upshot to this is that different clinical categories can result in significant reimbursement differences. For example, consider the major joint replacement or spinal surgery clinical category. That clinical category is a major medical service, which can translate to a $42-a-day increase in reimbursement. For a 20-day stay, that clinical category would increase reimbursement by $840. You want to pick up on this type of surgery.
I received a question after a recent program segment asking whether swing beds will be affected by PDPM. In most hospitals, the answer is yes. The exception is critical access hospitals (CAHs), which will remain cost-based for their swing beds.
Final Rule: “Accordingly, all non-CAH swing-bed rural hospitals have now come under the SNF PPS. Therefore, all rates and wage indexes outlined in earlier sections of this final rule for the SNF PPS also apply to all non-CAH swing- bed rural hospitals.”
The latest changes in the MDS for swing-bed rural hospitals appear on the SNF PPS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html
Listen to healthcare attorney Knicole Emanuel every Monday on Monitor Monday, 10-10:30 a.m. EST.
Biggest RACs Changes Are Here: Learn to Avoid Denied Claims
Part II continues to explain the nuances in the changes made by CMS to its statistical sampling methodology. Originally published on RACMonitor.
The Centers for Medicare & Medicaid Services (CMS) recently made significant changes in its statistical sampling methodology for overpayment estimation. Effective Jan. 2, 2019, CMS radically changed its guidance on the use of extrapolation in audits by Recovery Audit Contractors (RACs), Medicare Administrative Contractors (MACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SMRC).
The RAC program was created through the Medicare Modernization Act of 2003 (MMA) to identify and recover improper Medicare payments paid to healthcare providers under fee-for-service (FFS) Medicare plans. The RAC auditors review a small sample of claims, usually 150, and determine an error rate. That error rate is attributed to the universe, which is normally three years, and extrapolated to that universe. Extrapolation is similar to political polls – in that a Gallup poll will ask the opinions of 1-2 percent of the U.S. population, yet will extrapolate those opinions to the entire country.
First, I would like to address a listener’s question regarding the dollar amount’s factor in extrapolation cases. I recently wrote, “for example, if 500 claims are reviewed and one is found to be noncompliant for a total of $100, then the error rate is set at 20 percent.”
I need to explain that the math here is not “straight math.” The dollar amount of the alleged noncompliant claims factors into the extrapolation amount. If the dollar amount did not factor into the extrapolation, then a review of 500 claims with one non-compliant claim is 0.2 percent. The fact that, in my hypothetical, the one claim’s dollar amount equals $100 changes the error rate from 0.2 percent to 20 percent.
Secondly, the new rule includes provisions implementing the additional Medicare Advantage telehealth benefit added by the Bipartisan Budget Act of 2018. Prior to the new rule, audits were limited in the telehealth services they could include in their basic benefit packages because they could only cover the telehealth services available under the FFS Medicare program. Under the new rule, telehealth becomes more prominent in basic services. Telehealth is now able to be included in the basic benefit packages for any Part B benefit that the plan identifies as “clinically appropriate,” to be furnished electronically by a remote physician or practitioner.
The pre-Jan. 2, 2019 approach to extrapolation employed by RACs was inconsistent, and often statistically invalid. This often resulted in drastically overstated overpayment findings that could bankrupt a physician practice. The method of extrapolation is often a major issue in appeals, and the, new rules address many providers’ frustrations and complaints about the extrapolation process. This is not to say that the post-Jan. 2, 2019 extrapolation approach is perfect…far from it. But the more detailed guidance by CMS just provides more ways to defend against an extrapolation if the RAC auditor veers from instruction.
Thirdly, hiring an expert is a key component in debunking an extrapolation. Your attorney should have a relationship with a statistical expert. Keep in mind the following factors when choosing an expert:
- Price (more expensive is not always better, but expect the hourly rate to increase for trial testimony).
- Intelligence (his/her CV should tout a prestigious educational background).
- Report (even though he/she drafts a report, the report is not a substitute for testimony).
- Clusters (watch out for a sample that has a significant number of higher reimbursed claims. For example, if you generally use three CPT codes at an equal rate and the sample has an abnormal amount of the higher reimbursed claim, then you have an argument that the sample is an invalid example of your claims.
- Sample (the sample must be random and must not contain claims not paid by Medicaid).
- Oral skills (can he/she make statistics understandable to the average person?)
Fourthly, the new revised rule redefines the universe. In the past, suppliers have argued that some of the claims (or claim lines) included in the universe were improperly used for purposes of extrapolation. However, the pre-Jan. 2, 2019 Medicare Manual provided little to no additional guidance regarding the inclusion or exclusion of claims when conducting the statistical analysis. By contrast, the revised Medicare Manual specifically states:
“The universe includes all claim lines that meet the selection criteria. The sampling frame is the listing of sample units, derived from the universe, from which the sample is selected. However, in some cases, the universe may include items that are not utilized in the construction of the sample frame. This can happen for a number of reasons, including but not limited to:
- Some claims/claim lines are discovered to have been subject to a prior review;
- The definitions of the sample unit necessitate eliminating some claims/claim lines; or
- Some claims/claim lines are attributed to sample units for which there was no payment.”
By providing detailed criteria with which contractors should exclude certain claims from the universe or sample frame, the revised Medicare Manual will also provide suppliers another means to argue against the validity of the extrapolation.
Lastly, the revised rules explicitly instruct the auditors to retain an expert statistician when changes occur due to appeals and legal arguments.
As a challenge to an extrapolated overpayment determination works its way through the administrative appeals process, often, a certain number of claims may be reversed from the initial claim determination. When this happens, the statistical extrapolation must be revised, and the extrapolated overpayment amount must be adjusted. This requirement remains unchanged in the revised PIM; however, the Medicare contractors will now be required to consult with a statistical expert in reviewing the methodology and adjusting the extrapolated overpayment amount.
Between my first article on extrapolation, “CMS Revises and Details Extrapolation Rules,” and this follow-up, you should have a decent understanding of the revised extrapolation rules that became effective Jan. 2, 2019. But my two articles are not exhaustive. Please, click here for Change Request 10067 for the full and comprehensive revisions.
Here is an article that I wrote that was first published on RACMonitor on March 15, 2018:
All audits are questionable, contends the author, so appeal all audit results.
Providers ask me all the time – how will you legally prove that an alleged overpayment is erroneous? When I explain some examples of mistakes that Recovery Audit Contractors (RACs) and other health care auditors make, they ask, how do these auditors get it so wrong?
First, let’s debunk the notion that the government is always right. In my experience, the government is rarely right. Auditors are not always healthcare providers. Some have gone to college. Many have not. I googled the education criteria for a clinical compliance reviewer. The job application requires the clinical reviewer to “understand Medicare and Medicaid regulations,” but the education requirement was to have an RN. Another company required a college degree…in anything.
Let’s go over the most common mistakes auditors make that I have seen. I call them “oops, I did it again.” And I am not a fan of reruns.
- Using the Wrong Clinical Coverage Policy/Manual/Regulation
Before an on-site visit, auditors are given a checklist, which, theoretically, is based on the pertinent rules and regulations germane to the type of healthcare service being audited. The checklists are written by a government employee who most likely is not an attorney. There is no formal mechanism in place to compare the Medicare policies, rules, and manuals to the checklist. If the checklist is erroneous, then the audit results are erroneous. The Centers for Medicare & Medicaid Services (CMS) frequently revises final rules, changing requirements for certain healthcare services. State agencies amend small technicalities in the Medicaid policies constantly. These audit checklists are not updated every time CMS issues a new final rule or a state agency revises a clinical coverage policy.
For example, for hospital-based services, there is a different reimbursement rate depending on whether the patient is an inpatient or outpatient. Over the last few years there have been many modifications to the benchmarks for inpatient services. Another example is in behavioral outpatient therapy; while many states allow 32 unmanaged visits, others have decreased the number of unmanaged visits to 16, or, in some places, eight. Over and over, I have seen auditors apply the wrong policy or regulation. They apply the Medicare Manual from 2018 for dates of service performed in 2016, for example. In many cases, the more recent policies are more stringent that those of two or three years ago.
- A Flawed Sample Equals a Flawed Extrapolation
The second common blunder auditors often make is producing a flawed sample. Two common mishaps in creating a sample are: a) including non-government paid claims in the sample and b) failing to pick the sample randomly. Both common mistakes can render a sample invalid, and therefore, the extrapolation invalid. Auditors try to throw out their metaphoric fishing nets wide in order to collect multiple types of services. The auditors accidentally include dates of service of claims that were paid by third-party payors instead of Medicare/Medicaid. You’ve heard of the “fruit of the poisonous tree?” This makes the audit the fruit of the poisonous audit. The same argument goes for samples that are not random, as required by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG). A nonrandom sample is not acceptable and would also render any extrapolation invalid.
- A Simple Misunderstanding
A third common blooper found with RAC auditors is simple misunderstandings based on lack of communication between the auditor and provider. Say an auditor asks for a chart for date of service X. The provider gives the auditor the chart for date of service X, but what the auditor is really looking for is the physician’s order or prescription that was dated the day prior. The provider did not give the auditor the pertinent document because the auditor did not request it. These issues cause complications later, because inevitably, the auditor will argue that if the provider had the document all along, then why was the document not presented? Sometimes inaccurate accusations of fraud and fabrication are averred.
- The Erroneous Extrapolation
Auditors use a computer program called RAT-STATS to extrapolate the sample error rate across a universe of claims. There are so many variables that can render an extrapolation invalid. Auditors can have too low a confidence level. The OIG requires a 90 percent confidence level at 25 percent precision for the “point estimate.” The size and validity of the sample matters to the validity of the extrapolation. The RAT-STATS outcome must be reviewed by a statistician or a person with equal expertise. An appropriate statistical formula for variable sampling must be used. Any deviations from these directives and other mandates render the extrapolation invalid. (This is not an exhaustive list of requirements for extrapolations).
- That Darn Purple Ink!
A fifth reason that auditors get it wrong is because of nitpicky, nonsensical reasons such as using purple ink instead of blue. Yes, this actually happened to one of my clients. Or if the amount of time with the patient is not denoted on the medical record, but the duration is either not relevant or the duration is defined in the CPT code. Electronic signatures, when printed, sometimes are left off – but the document was signed. A date on the service note is transposed. Because there is little communication between the auditor and the provider, mistakes happen.
The moral of the story — appeal all audit results.