Getting Ready for RACs
By Crystal Conde Texas Medicine August 2009

Medicare Begins Auditing Physician Payments

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Practice Management Feature - August 2009  

Tex Med . 2009;105(8):49-52.  

By  Crystal Conde
Associate Editor  

If Connolly Healthcare comes calling on Abilene Cardiology Consultants, its physicians and management staff will be ready.

Connolly is the company the Centers for Medicare & Medicaid Services (CMS) hired to audit Medicare payments to Texas physicians.

Abilene Cardiology is a 10-physician and three-physician extender practice with a 68-percent Medicare patient base. The group reviews its billing and coding daily and works to avoid scrutiny of its billing by having on-staff certified coders randomly review charges for office visits.

"We look for patterns and make sure the coding is accurate," said Diane Cook, CMPE, chief executive officer. "The coders meet with the doctors, review the coding, and provide education if necessary or let them know they're on track."

Ms. Cook says Abilene Cardiology Consultants will maintain its internal review measures to prevent an audit under the recovery audit contractor (RAC) program CMS will have in place nationwide by Jan. 1.

Other Texas medical practices would be well served to follow the Abilene practice's example. They need to understand an audit's repercussions, how to appeal an audit's outcome, and how to make sure their coding and billing processes are in line to help prevent scrutiny in the first place.

Under the RAC program, any entity or individual that bills Medicare is fair game for an audit. The RACs will examine Medicare Part A and Part B claims to identify both underpayments and overpayments.

RACs work on a contingency-fee basis and receive a percentage of the overpayments they recover. Therefore, they're more likely to subject physicians to recoupment of overpayments. They have a financial incentive to examine high-cost services and abnormal billing patterns to find instances in which physicians have been overpaid.

During a three-year RAC demonstration project in Florida, California, New York, Arizona, South Carolina, and Massachusetts, according to CMS, RACs succeeded in correcting more than $1.03 billion of improper Medicare payments. But they collected far more money in overpayments than they repaid. According to September 2008 CMS data, overpayments recouped totaled $992.7 million, while underpayments amounted to just $37.8 million.

The majority of payment errors were due to medically unnecessary procedures (40 percent), followed by incorrect coding (35 percent), other errors (17 percent), and no/insufficient documentation (8 percent). (See " Identified Payment Errors by Type .")

The American Academy of Professional Coders (AAPC) stresses that a RAC audit can have serious ramifications for a physician's status with Medicare and could place his or her medical license in jeopardy or possibly expose him or her to civil liability.


Unwanted Attention  

Due in part to the RAC program's focus on recouping overpayments from health care professionals, it has a large faction of critics. The Texas Medical Association, the American Medical Association, and almost 100 other national and state medical associations outlined their concerns in a letter to Charlene Frizzera, CMS acting administrator, in March.

"The best way to reduce common billing and coding mistakes is through targeted education and outreach, rather than onerous audits performed by outside contractors with incentives to deny claims. Thus far, we have been extremely disappointed by the focus on punitive measures instead of physician education and communication," the groups said.    

CMS is moving forward with the program despite the objections, and physicians who treat Medicare patients need to be aware of how RACs determine whom they audit.

The RACs look for "outliers," or practitioners whose billings for Medicare services are higher or lower than the majority of their peers in the community. Outliers come to the attention of RACs through a process known as data mining.

Medicare uses data banks to scour claims data to identify the most frequently billed codes and to compare that information across specialty areas. The data banks then generate physician profiles based on that information. At that point, Medicare can see who stands out in terms of overpayment and underpayment.

Before conducting an audit, Medicare may notify outliers in writing. AAPC says those physicians should begin an internal review of their coding practices to ensure they'll withstand close inspection by an auditor.

According to the Medical Group Management Association (MGMA), once the RACs determine an audit is necessary due to overpayment, they typically send the practice a letter that includes:

  • The coverage, coding, or payment policy in violation;
  • The reason for the review;
  • A description of the overpayment;
  • Recommended corrective actions;
  • An explanation of the physician's right to submit a rebuttal statement prior to recoupment of any overpayment;
  • An explanation of the procedures for recovery of overpayments;
  • Notification of the physician's right to request an extended repayment schedule; and
  • Information on the physician's right to appeal.

To conduct the audit, RACs will request patients' medical records from physicians. RACs link the number of records they request from a practice to its national provider identifier (NPI) number. For example, in a practice with two to five physicians, RACs can examine 20 records per billing NPI, per 45-day period. RACs limit record requests from solo practitioners to 10 records per 45-day period.

CMS guidelines permit RACs to review physicians' evaluation and management (E&M) coding and documentation for up to three years past the date of the initial payment. The rules prohibit audits on claims filed before Oct. 1, 2007.

When responding to a RAC audit, AAPC says, a practice should make note of the deadline for submitting records and ask for an extension if it cannot respond by the date specified. (See " Six Tips for Responding to an Audit .")

In addition, TMA advises physicians to call Connolly Healthcare at (866) 360-2507 to verify it has received the records. Physicians also may call the number to address simple errors, such as forgetting to send in a page of the medical records.

TMA urges physicians to watch for any correspondence from Connolly and respond quickly to requests for medical records. TMA also suggests physicians send in a  contact information form  [ PDF ] to make sure medical record requests and recoupment letters don't go to the wrong address.

According to MGMA, Connolly will list the issues, vulnerabilities, and codes it plans to target on its  Web site . At press time, Connolly hadn't published the list.


Take Time to Appeal  

The financial implications of overpayment recoupment can be significant for a medical practice. For example, if a RAC finds the average overpayment of audited claims amounts to $25 per claim for 10,000 Medicare patient visits, the practice would owe $250,000 plus interest.

Physicians can appeal an overpayment request if they think there is a mistake in the audit. If the physician wins the appeal, the RACs must return the contingency fee awarded from that particular audit to CMS.

AAPC warns that simply requesting an appeal doesn't mean physicians don't have to pay the alleged overpayments within the stipulated time. Overpayments must be returned to CMS before exhausting the appeals process.

CMS has established five levels of appeals. The first level is called redetermination and gives a physician 120 days to appeal in writing. Physicians will receive a decision within 60 days of Medicare receiving the redetermination request.

More information on the appeals process and timeline is available from the CMS publication MLN Matters  [ PDF ].

Troy Tippett II, MD, past president of the Florida Medical Association, says the appeals process during the three-year demonstration project proved to be a hassle for busy physicians in his state.

"It was easier for a doctor to just let Medicare deduct the amount owed from future billings. Our [Florida Medical Association] finding was that physicians just didn't fight it for the most part because it wasn't worth their time," said Dr. Tippett. "That bothered us because every time a doctor just paid, Medicare claimed the doctor's behavior constituted fraud and abuse of the system. In fact, many times the physicians didn't want to hassle with the appeals process."

Dr. Tippett urges Texas physicians to take the time to go through the appeals process.

"Even though it is an inconvenience to go through the appeals process, the information should be accurately reflected to show that physicians aren't the criminals Medicare implies," he said.

Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by e-mail at  Crystal Conde .  



TMA Can Ease Audit Pain

The Texas Medical Association encourages physicians and their staff to be proactive in preventing an audit and can help medical practices avoid nightmares if they occur.

TMA Practice Consulting offers evaluation and management (E&M) coding and documentation reviews that include a claims coding and medical record documentation analysis of 10 records per physician. An abbreviated checkup and a full review are available.

TMA Practice Consulting also can conduct a coding and documentation quarterly review to determine whether a medical practice is following payers' guidelines for appropriate billing year-round.

And TMA offers a training program for practices that need help understanding documentation guidelines or identifying inappropriate or inaccurate coding and weaknesses in medical record documentation. The two-hour session covers a review of 1995 and 1997 E&M documentation guidelines, time-based coding, modifiers, and audit triggers, among other topics. Services are available for a fee based on a practice's needs.

To get an idea of your practice's coding pattern, call TMA Practice Consulting at (800) 523-8776 or email  TMA Practice Consulting .

TMA also published TMA Practice E-Tips Greatest Hits, Vol. 3: Coding . The PDF, available free of charge on the TMA Web site, has helpful information and resources for ensuring correct coding. An excerpt from the publication is available at the end of this article. (See " Avoiding E&M Documentation Errors .")

TMA developed a training session on the recovery audit contractor program for physicians, available as a prerecorded discussion and as a PowerPoint presentation on its  Web site . With input from the Centers for Medicare & Medicaid Services and Connolly Healthcare, the session will cover the RAC review and collection processes, appeal time frames, documentation request limits, preparation tips for physicians, and other helpful topics.

TMA also makes available to members on its Web site an  updated report  from TrailBlazer Health Enterprises, the Texas Medicare carrier, which details the frequency of E&M coding by specialty.



Six Tips for Responding to an Audit

The American Academy of Professional Coders has six helpful tips for physicians who find themselves the subject of a recovery audit contractor (RAC) program audit:

  1. Send in as much documentation as you have, but keep photocopies for yourself.
  2. Never alter any charts or records you submit.
  3. Send records back to the auditor promptly; you have only 30 calendar days to respond.
  4. Try to figure out what the auditor may be concerned about.
  5. To accompany the files you send, write a thorough cover letter that includes a description of your practice, your practitioners, and their credentials, as well as information about the patient's condition, procedures, and ongoing care.
  6. Send all documents by certified mail, receipt required.

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Aug 09 Pract Mgmnt Chart  

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Avoiding E&M Documentation Errors

Evaluation and management (E&M) services are the most common type of services billed to Medicare Part B, accounting for about 40 percent of the total services paid by TrailBlazer Health Enterprises, the Texas Medicare carrier.

Unfortunately, E&M documentation can be confusing. Medicare has identified the following common E&M documentation errors involving Current Procedural Terminology (CPT) code series 99211-99215 (established patient, office, or other outpatient visit) and 99231-99233 (subsequent hospital care):

  • The documentation did not support the level of service billed (upcoding of services).
  • The documentation did not support medical necessity.
  • The physician did not submit the documentation Medicare requested.
  • There was inappropriate billing of modifier 25 with E&M services.
  • There was incomplete or insufficient documentation.
  • Services were rendered by one physician and billed by another.
  • Conflicting information was noted in the documentation, e.g., the date of service in the documentation was different from the date of service billed, or the diagnosis on the claim was not consistent with the diagnosis in the medical record.
  • Dates of service were altered.
  • Handwriting was illegible and/or copy quality poor.
  • Incident-to services were billed incorrectly.
  • Code 99211 was billed incorrectly for calls to the pharmacy to fill prescriptions; no face-to-face encounter or E&M service was provided.
  • Most interval histories were documented at a problem-focused level for subsequent hospital visits.
  • The documentation failed to specify the topic and/or issues discussed when using counseling and coordination time for CPT code selection.

Remember, for all services billed, your documentation must show that the services performed and billed to Medicare are medically necessary, meet Medicare coverage criteria, are actually rendered and documented in the patient's record, and meet CPT code criteria.

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Last Updated On

January 27, 2016

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