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More audits are coming, how do we stay compliant?

We have been saying it but now it is happening. More audits are coming your way. One of the two CMS Recovery Audit Contractors seems to have taken on a business expansion plan. It appears they are contacting payers of all types and sizes and trying to sign them up for their services. What do they do? It appears they have two business models. In their traditional one, they take old claims, already processed and paid by the payer, and audit them for “accuracy.” They then report errors to the payer for recoupment. That is what I will call the traditional model. Then they offer what some payers are calling an enhanced payment integrity model where after a payer processes claims, they send the claims to the RAC who run their algorithms and find errors the payer missed before the claim is even paid. There are of course no details on how this RAC is paid by these payers, but their model for the CMS RAC program is based on a contingency fee so that may be applicable here. And while CMS has put in place accuracy standards for the Medicare RAC program, there is no indication of what standards are in place for these audits. Could the RAC just deny liberally as we saw with the short stay CMS audits, collect their contingency fee, and hope few appeal or object to their methods? It is not outside the realm of possibilities.

Just last week a RAC Relief user reported her hospital received medical record requests for a VA claim from 2018 that was being audited and wondered if there was a rule on the lookback time frame. Sure enough, the VA has enlisted this RAC to audit claims as far back as 2017! Aside from the fact that they are going back five years, there is absolutely no payment for preparing and sending the medical records and there is no way to submit the records electronically.

The VA depends on community providers to fill in the care gaps of the VA health system. As they note on their website, “Community providers are a vital part of VA’s high-performing health care network, ensuring eligible Veterans and their beneficiaries get the timely, high-quality health care they need.” A five-year audit lookback with no payment for chart preparation is perhaps not the best way to reward those providers who are helping the VA. I am sure readers would agree that the VA may want to reconsider this program. No one objects to stopping fraud and abuse but everyone has a limit to their willingness to pitch in and help with the reward in a punitive audit like this.

Next, a big thanks to Dr. Edward Hu at the University of North Carolina Health. A few weeks ago, he discovered that CMS released a treasure trove of appeal findings from the part C and part D appeals programs. The database can be found here.  Between parts C and D there are over 300,000 decisions. Now of course no one is going to read all of them, but it did not take me too long to find significant flaws in the posted decisions for 2022. To start, they refer to the case-by-case exception for an inpatient admission as a rare and unusual occurrence. That is not true, and CMS makes that very clear in its publications including the Federal Register at 80 FR 70541 (be sure to come back after you search that out and bookmark it for every single denial of a one-day inpatient admission!). Second, Medicare allows certification of inpatient days if an accepting skilled nursing facility cannot be found yet they denied payment to a hospital for such a circumstance without explanation, and finally, they denied payment for LTACH care stating the patient was already receiving inpatient care at the acute care hospital. That logic is hard to understand. Of course, the caveat is that these are short summaries and there may be case-specific details that were omitted.

Finally, for the past 8 years, several Medicare Advantage payers have improperly referred to CMS rules about “care that can only be provided on an inpatient basis” as a reason to deny inpatient admission. That concept of inpatient care as a level of care was eliminated with the Two-Midnight rule yet still referenced by these payers because CMS missed one manual that still had that phrase. Well, I was able to get CMS to agree to revise that one section of that one obscure manual which, by the way, had nothing to do with the Medicare Advantage program and was never applicable in the first place, so that unjustified reason to deny an inpatient admission will soon be gone. The fight goes on…


Ronald Hirsch, MD, FACP, CHCQM, CHRI

Ronald Hirsch, MD, is vice president of the Regulations and Education Group at R1 Physician Advisory Services. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute-care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the Advisory Board of the American College of Physician Advisors, a member of the American Case Management Association, and a Fellow of the American College of Physicians. Dr. Hirsch is a member of the RACmonitor editorial board and is regular panelist on Monitor Mondays. The opinions expressed are those of the author and do not necessarily reflect the views, policies, or opinions of R1 RCM, Inc. or R1 Physician Advisory Services (R1 PAS).

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