The Changing

CMS Landscape

Managing Medicare and Other Payer Audits

Presenter: Carol Endahl Product Manager

HFMA ANI June, 2010

Medicare and Other Payer Audits

Objectives» Audit Landscape» Types of CMS Audits» Comparison RACs vs MICs» Medicaid Integrity Contractor (MIC) Process Overview» Audit Management Modules for Other Payer Audits» Consulting Services

Audit Landscape

The government continues to pass laws and implement policies to recoup past and prevent future improperly paid claims. » Health Care Reform passed in March paves the way for additional

CMS reviews designed to reduce fraud and abuse:

Expands RACs to Medicaid and Medicare Parts C (Medicare HMO, Medicare Advantage Plans) and D (Prescription Drug Program)

Repealed sec. 1874A(h) of the SSA which placed limitations on MAC prepayment medical reviews.

For Medicare and Medicaid, the HHS estimates improper payments for fiscal year 2008 to represent¹:» $10.4 billion in Medicare Fee-for-Service» $6.8 billion in Medicare Advantage» $18.6 billion for the Federal share of Medicaid expenditures » $14.1 billion for the State share of Medicaid expenditures

Audit Landscape

Multiple audit entities make a complex process even more complex» Providers can be audited by multiple entities simultaneously

Different programs (e.g., Medicaid versus Medicare)

Different audit issues (e.g., one-day stays versus post-mortem payments) or

Different audit periods

Other payers plan to institute similar reviews» National Health Care Anti-Fraud Association states that for every $2

invested in fighting fraud produces $17.3 in recoveries and court- ordered judgments, plus there are the claims that are not paid.

In today’s financial environment, government agencies want to stretch dollars and shore up program funding. What is better than recovering dollars that have already been spent?

Audit Landscape – RAC Update

As of June 3, 2010, over 351 new issues have been approved by CMS and posted to RAC web-sites» Most target DRG validation (complex - medical record requests)

CMS RAC 101 Calls (April-May)» Physician Audits – CMS project officer reports that physician

complex reviews have not started

Pending the establishment of medical record request (ADR) limits

» Medical Necessity Reviews – Providers might see medical necessity reviews “within the next month or so,” per Scott Wakefield of CMS. “We don’t have a specific timeframe for it but it will begin soon.”

Audit Landscape – Other Medicare

FI/MAC – Medicare Administrative ContractorsRAC/MAC duo creates “a bigger tool box for assuring correct Medicare claims payments”¹» 15 A/B MAC Jurisdictions (9 MACs implemented and processing

65% of national claims volume)» Perform probe reviews (often announced in newsletters),

targeted probes, ADR letters, prepayment reviews» Audit Process: Providers must respond to MRR within 30 days;

denial occurs day 45» Appeals Process: Same for all Medicare

Some of our Audit Management customers have seen an up- tick in the number of ADR requests from MAC/FIs

Audit Landscape – Other Medicare

CERT – Comprehensive Error Rate Testing contractor» Purpose: To improve the processing and medical decision

making involved with payment by intermediary» Audit Process: Providers receive medical record request letter

and up to 3 reminders (75 day deadline to respond)» Appeals Process: Same for all Medicare

ZPIC – Zone Program Integrity Contractor (formerly PSC)» Purpose: To look at billing trends and patterns and refer cases

to OIG» Aligned with MACs» Only Zones 4, 5, & 7 have been awarded contracts –

concentrated in Texas and Plains states, Southeast, Florida» Audit Process: Unknown» Appeals Process: Same for all Medicare

Audit Landscape – MICs

Medicaid Integrity Contractors (MICs)» MICs were created via the Deficit Reduction Act of 2005

GAO estimated that 2008 improper Medicaid payments to exceed $32.7 billion

• $18.6 billion in federal monies• $14.1 billion in state monies

» Program is managed by CMS but executed by the MICs» MICs are paid a fee for services rendered (not a contingency

fee)

Other Payer Audits - MICs

Provider Review MICs» Conduct claims data analysis of historical claims to identify

billing vulnerabilities & aberrant claims» Review MICs identify high risk areas and provide leads to Audit

MICs

Audit MICs» Conduct post-payment audits to identify overpayments

Field audits (medical records requested for on-site review)

Desk audits (medical records requested for off-site review)» Targets: Physicians, Home Health, SNF, Hospice, Hospital,

DME, Ambulance, Lab/X-Ray, Pharmacy, Renal Dialysis

Other Payer Audits - MICs

Audit MICs» Audit MICs are organized by Region

Regions I/II (New York, NJ, New England): IPRO

Regions III/IV (Mid-Atlantic/Southeast): Health Integrity

Regions V/VII (Midwest): Health Integrity

Regions VI/VIII (TX, Mountain States): HMS

Regions IX/X (West Coast, HI, AK): HMS» As of December 2009, audits were underway in 31 States;

Audits in remaining States were to begin no sooner than January 2010.

Exception: TN to begin June 2010

The majority of audits are hospitals

One-third of audits are long term care facilities

RACs MICsProvider outreach mandatory Provider outreach not mandatory

Formal process for establishing/ consolidating provider contacts

No formal process for establishing/ consolidating provider contacts

Look-back period set Look-back period varies by State

Time to produce medical records - set at 45 days (with possible extensions)

Time to produce medical records - generally shorter (with possible extensions) but based on State law

Limits established for the number of medical record requests

No limits established for medical record requests

Copy costs reimbursed No reimbursement for copy costsCannot audit the same claim under review by another entity

Can duplicate other claim audits

Discussion/Rebuttal Period (timelines defined)

Comment Period (timeline not defined)

Appeals process – 5 Levels of Appeal consistent across Medicare program

Appeals process – mirrors state Medicaid appeal process [varies]

Summary of RACs vs MICs

Audit ManagementOther Payer Audit ModuleConfiguring Master Files

Other Payer Audit Module

Master Files» Almost entirely configurable by the user» Intended to provide users with ability to add, edit and delete

various data elements that drive the audit process

Other Payer Audit Module

Master Files – Reason for Audit – Other Payer» This is entirely configurable by the user and should reflect the

primary reasons claims are being audited by the MICs or other payers.

Other Payer Audit Module

Master Files – Other Payer Maintenance » This is entirely configurable by the user. This tool is used to add,

edit, and delete Other Payer entities. It populates the “Audit Initiated By” menu on the Manage Audit Case Screen.

MIC Audit & Appeals Process Overview

SubmitMed Recs

FileExtension

Minimum of 15

days

IntakeQuestionnaire

How it Works: MIC Review Process

Demand letterFrom

Medicaid

SubmitMed Recs

FileExtension

Minimum of 15

days

Exit Conference

(Audit Findings)

Entrance C

onference

Draft Report Issued

Comments on

Report

2nd DraftReport Issued

State Reviews 2nd Draft

CMS Issues Final

State Notifies Provider

State Recoups

From ProviderState

Appeal Process

NotificationLetter Request for

Med Recs

Deadline varies by State

Deadline varies by State

No Limits

No Stated Timelines

Desk or

Field Audit

Other Payer Audits - MICs

Audit MIC – Audit Process Overview» Once identified by the Review MIC, the provider is referred to the

Audit MIC» Audit MIC sends the provider a Notification Letter identifying the

records being requested for audit

Provider must respond to requests within stated timeframes in the letter

Notification Letter also includes Intake Questionnaire.» Audit MIC sets up Entrance Conference with provider, usually by

telephone

Providers have 2 weeks prior to the start of an audit to prepare documents

Other Payer Audits - MICs

Audit MIC – Audit Process Overview» Intake Questionnaire

Provider must complete Questionnaire and return to the MIC Representative at the Entrance conference or by mail following the Entrance Conference

Questionnaire is lengthy and asks for details related to:• Provider’s legal name• Medicaid provider agreement – Where is it located?• Pharmacy and radiology services • Medicaid recipient volume, revenue & reimbursement, • Billing procedures, if ever audited or had to pay back an

overpayment

Other Payer Audits - MICs

Audit MIC – Audit Findings Process Overview» Audit occurs» Audit MIC shares initial draft report with State Medicaid for

review and comment» Audit MIC prepares draft audit report of findings and conclusions

and shares with provider for review and comment

Provider is given 30 days to comment and submit additional information

» CMS prepares second draft incorporating any changes resulting from comments

Draft report issued to State

Other Payer Audits - MICs

Audit MIC – Audit Findings Process Overview» State reviews revised draft report and makes additional

comments.» CMS issues final audit report (with overpayment specified) and

submits to the State» State notifies the provider of overpayments

Appeal period begins» Audit MICs do not recoup overpayments

Federal government collects its portion directly from State Medicaid

State Medicaid recoups its portion from the provider

Other Payer Audits - MICs

Audit MIC – Appeal Process Overview» Provider appeals of MIC audit determinations are handled based

on State law» Claims appeals processes differ from Medicare appeals process

Some are governed by State’s administrative procedures or other specific regulations

Some provide opportunity for a Fair Hearing before an ALJ

Some provide for review of written record

Some must be challenged in State court» Audit MICs support the State during the appeals process

Audit ManagementOther Payer Audit ModuleManaging an Audit Case

Other Payer Audit Module

Manage Audit Case» Selection of “Other Payer

Audits” will open the Search Selection screen

» The “Work Claims” option provides worklists based on the audit process and appeal steps.

Other Payer Audit Module

Manage Audit Case – Audit Case Screen

Complete the audit case to see how the Menus and Deadline Dates are populated with user- configured data elements

The Audit Initiated By menu provides the list of Other Payers set up from your Master File.

Other Payer Audit Module

Manage Audit Case – Audit Case Screen

Select the Audit Initiated Date and enter the date of the Notification Letter.

Enter the Letter Receipt Date so you can see how many days it takes for you to receive the Letter.

Deadline Dates are automatically populated based on Master File configuration

Other Payer Audit Module

Manage Audit Case – Appeal

Deadline days from the Payer Maintenan ce Tool drive the deadline date on the Appeal tab.

Audit Management - Summary

Helps you manage institutional audit cases and appeals initiated by the MICs, Other Medicaid, Medicare Advantage, Commercial plans

Audit & Appeals Management tools include:» Worklists» Audit Case Information and Tracking

Audit cases linked to claims & payments for net payment impact calculation:

• Manual or Automated backload of 837s/835s » Appeal Tracking & Information» Payment Information» Attachments

A Comprehensive Audit Solution

In addition to the Audit Management solution, Ingenix Consulting provides Audit Support Programs to save you valuable time and resources in the audit and appeal processes.

They include:» Audit Process Mapping and Gap Analysis helps ensure that

software and workflow are maximized» Risk Assessment of coding and compliance issues help you take

proactive steps to prevent losses» Other Audit Services

Defense Audit Reviews

Mock Audits, Shadow Audits

Appeals Support

Audit Management

Audit Management SolutionContact Information:

Carol EndahlProduct Manager, IngenixEmail: carol.endahl@ingenix.comPhone: 571-521-7650

Audit Support ProgramsContact Information:

Don P. PerriniConsulting Sales, IngenixEmail: donald.perrini@ingenix.comPhone: 770-642-0287

Visit http://www.caremedic.com/Events_List.aspx for a list of upcoming Audit Management Webinars