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CMS Outlines Improvements in RAC Audit Processes

In the face of complaints from hospitals about backlogs, time-consuming procedures, and lengthy appeals processes involving Medicare Recovery Audit Contractor audits, the Centers for Medicare & Medicaid Services recently outlined changes it has implemented in the RAC audit process to address these and other concerns.  They are (in CMS’s own words):

Better Oversight of RACs

  • We are holding RACs accountable for performance by requiring them to maintain a 95% accuracy score. RACs that fail to maintain this rate will receive a progressive reduction in the number of claims they are allowed to review.
  • We also require RACs to maintain an overturn rate of less than 10%. Failure to maintain such a rate, will also result in a progressive reduction in the number of claims the RAC can review.
  • RACs will not receive a contingency fee until after the second level of appeal is exhausted. Previously, RACs were paid immediately upon denial and recoupment of the claim. This delay in payment helps assure providers that the RAC’s decision was correct before they are paid.

 

Reducing Provider Burden and Appeals

  • We are making RAC audits more fair to providers. Previously, RACs could select a certain type of claim to audit. Now, they must audit proportionately to the types of claims a provider submits.
  • We changed how we identify whom to audit. Instead of treating all providers the same, we conduct fewer audits for providers with low claims denial rates.
    We gave providers more time to submit additional documentation before needing to repay a claim. This 30-day discussion period, after an improper payment is identified, means that providers do not have to choose between initiating a discussion and filing an appeal. CMS expects this will continue to reduce the number of appeals.

 

Increasing Program Transparency

  • We are regularly seeking public comment on newly proposed RAC areas for review, before the reviews begin. This allows providers to voice concerns regarding potentially unclear policies that will be part of the review. Posting these topics also allows providers to better prepare for RAC reviews before they begin.
  • We required RACs to enhance their provider portals to make it easier to understand the status of claims.

Learn more in this CMS news release.

Court to Hear RAC Audit Suit

A federal appeals court has overturned a lower court decision and ordered that court to consider a lawsuit against the U.S. Department of Health and Human Services over its nearly two-year backlog in hearing appeals of Medicare Recovery Audit Contractor decisions.

gavelUnder HHS procedures, hospitals that disagree with RAC audit findings may appeal those findings through various administrative processes. So many hospitals were appealing those findings, though, that HHS suspended approving requests for hearings until it could address the backlog. As of February 15, decisions on those appeals were backlogged an average of 572 days.

To learn more about the appeals court’s decision and its implications for hospitals wishing to appeal RAC audit findings, see this article in Becker’s Hospital CFO.

NAUH Comments on Proposed Medicare Regulation (Part 4 of 4)

On April 30, the Centers for Medicare & Medicaid Services (CMS) published a 1500-page draft regulation detailing how it proposed paying hospitals for the inpatient care they provide to their Medicare patients in FY 2016 and invited comment on its proposal from stakeholders and interested parties.

On June 12, the National Association of Urban Hospitals provided its written comments in a letter to CMS. This week NAUH presents those comments in this space:

  • Monday: Medicare DSH
  • Tuesday: Hospital inpatient rates
  • Yesterday: the hospital readmissions reduction program
  • Today: short hospital stays and outliers

Short Hospital Stays

NAUH appreciates the recent actions both CMS and Congress have taken to protect hospitals from punitive actions by Recovery Audit Contractors. We also appreciate that CMS’s actions were taken in part in response to the views providers submitted last year after CMS solicited comments and suggestions in the proposed FY 2015 inpatient prospective payment system regulation. We recognize that this has been a controversial area and appreciate the agency’s willingness to audit hospitals’ performance and educate them while it works to develop a satisfactory policy for reimbursing hospitals for such care.

A revised policy governing Medicare reimbursement for short hospital stays, the proposed FY 2016 suggests, will be included in the proposed FY 2016 hospital outpatient prospective payment system rule, to be published in draft form in the near future, and will presumably reflect the considerable input offered by providers, MedPAC, and others. For this reason, NAUH wishes to take this opportunity to reiterate our perspective on the basic concepts we believe a short hospital stay policy should embrace.

NAUH LogoIn NAUH’s view, a Medicare hospital stay begins with a physician’s initial diagnosis that a patient needs to be admitted to the hospital as an inpatient and is expected to remain at least two midnights or more. Then, when the patient’s stay is ultimately shorter, NAUH believes that stay should be classified as a short stay for Medicare payment purposes. A short stay should be reimbursed by Medicare based on Medicare transfer reimbursement policy – that is, for this day, Medicare should pay the hospital twice the per diem rate for the applicable DRG’s average length of stay. This perspective is based on the generally accepted view that the greatest investment of resources for patient care occurs during the very beginning of a patient’s stay in the hospital and that even in a short stay, a hospital is expending comparable resources on patient care during that first day or two as it does when a patient stays longer. This is the basis for current Medicare transfer payment policy and NAUH believes it should be the basis for Medicare short hospital stay payment policy as well. Further, hospitals that serve large numbers of low-income patients and have medical education programs should not be put at a disadvantage when patients just have short stays, so NAUH believes they should receive Medicare DSH and medical education payments for these short stays as well.

NAUH urges CMS to consider this perspective in developing its short stay policy. It also urges CMS to protect hospitals from arbitrary rulings by RAC auditors; to limit how far back RAC auditors can go in evaluating past hospital efforts; to ensure that RAC audits are completed in a timely manner and that appeals are addressed swiftly; and to ensure that future short stay policy, first and foremost, reflects the best interests of the patients hospitals serve and does not impose needless penalties on the hospitals that serve them.

Outliers

The proposed rule calls for reducing the Medicare outlier threshold from the current $24,626 to $24,485 in FY 2016. While NAUH appreciates the proposal to reduce the outlier threshold, we believe it should be reduced even further because Medicare’s spending for outlier cases this year is on target to fall below five percent – the minimum level established by Congress. For this reason, NAUH suggests that CMS consider recalculating the proposed threshold with a target of 5.5 percent of inpatient spending to ensure that the final total does not fall short and instead falls within the statutory range of five to six percent in FY 2016.

 

Senate Takes Testimony on Medicare Observation Status

The Senate Special Committee on Aging recently heard testimony about the challenges posed by the “observation status” designation conferred on some Medicare patients in hospitals.

Among the concerns raised at the hearing were the financial vulnerability of some seniors hospitalized only under observation and not as inpatients; the possibility that some hospitals may be using observation status to avoid Medicare penalties for readmitting recently discharged payments; the punitive actions of Medicare recovery audit contractors (RAC auditors); and more. Intertwined with this is Medicare’s two-midnight rule and the challenges the program has faced attempting to implement this rule.

Testifying before the committee were representatives of the Medicare Payment Advisory Commission (MedPAC), the Centers for Medicare & Medicaid Services (CMS), the American Hospital Association, and others.

For a closer look at the hearing, a link to a video of the hearing, and copies of some of the testimony, see this Fierce Healthcare article.

MedPAC Calls for End of “Two-Midnight Rule”

The independent agency that advises Congress on Medicare payment issues has recommended that Medicare eliminate its controversial two-midnight rule.

new medpacAt its recent meeting in Washington, D.C., the Medicare Payment Advisory Commission (MedPAC) also recommended that Medicare focus RAC (Recovery Audit Contractor) audits on hospitals with the highest numbers of short inpatient stays, shorten the look-back period for audits, modify the three-day rule for skilled nursing facility coverage, and require hospitals to inform patients when their stay has been classified as observation status rather than inpatient status.

Learn more about MedPAC’s recommendation in this Fierce Healthcare news report and go here to see the MedPAC presentation of the recommendations the agency’s board approved.

MedPAC Recommends Changes in Medicare Short Stay Policies

The independent agency that advises Congress on Medicare payment issues has recommended that Congress call on Medicare to revise its policies governing short hospital stays for Medicare patients.

At its March 5 meeting in Washington, D.C., staff of the Medicare Payment Advisory Commission (MedPAC) made a presentation on Medicare hospital short stay policy to MedPAC commissioners.

medpagBased on the presentation and member deliberations, MedPAC is recommending to Congress that Medicare include observation status when determining whether newly discharged patients are eligible for skilled nursing care; that hospitals be required to notify hospitalized patients if they are under observation only and also inform them of the cost-sharing responsibilities of that status; and that Medicare pay hospitals for self-administered drugs for patients in observation status through Medicare’s outpatient payment system.

MedPAC also offered recommendations on changes Medicare’s Recovery Audit Contractors program (RAC audits).

See the MedPAC presentation on short stay policy here and learn more about MedPAC’s recommendations in this MedPageToday article.

MedPAC Looks at Short-Stay Issues

The agency that advises Congress on Medicare payment issues is preparing to suggest changes in how Medicare approaches paying for short hospital stays.

At last week’s meeting of the Medicare Payment Advisory Commission (MedPAC), commissioners received a staff presentation on issues surrounding Medicare payments for short hospital stays and discussed possible recommendations for changes in how Medicare pays for those short hospital stays.

Among the possibilities discussed at the recent MedPAC meeting are revising how Medicare’s recovery audit contractors program (RAC audits) looks at short hospital stays; revising the three-day-stay requirement for Medicare to cover post-discharge skilled nursing care; penalizing hospitals found to have unusually large numbers of short stays; and shortening the time-frame during which individual cases are subject to RAC audits.

See the presentation made to MedPAC members here.   Also, see this CQ HealthBeat report presented by the Commonwealth Fund on the MedPAC meeting at which this issue was discussed.

 

MedPAC Looks at Short Hospital Stays

At its public meeting last week, the Medicare Payment Advisory Commission (MedPAC) looked at challenges surrounding payments to providers for short hospital stays.
new medpacA presentation delivered by MedPAC’s staff looked at the profitability and growing frequency of one-night admissions; the impact of Recovery Audit Contractor (RAC audit) activities; Medicare beneficiary financial liabilities associated with observation stays; the controversial two-midnight rule; and possible ways to address these continuing problems.

MedPAC did not offer any formal recommendations during the meeting.

When the Centers for Medicare & Medicaid Services (CMS) proposed this year’s Medicare inpatient prospective payment system regulation in May, it invited interested parties to offer suggestions on how to address the short-stay issue.  In a letter that addressed a wide range of subjects, the National Association of Urban Hospitals (NAUH) offered the following recommendations on Medicare hospital short stay payment policy.

In NAUH’s view, a Medicare short stay begins with a physician’s initial diagnosis that a patient needs to be admitted to the hospital as an inpatient and is expected to remain at least two midnights or more.  Then, when the patient’s stay is ultimately shorter, NAUH believes that stay should be classified as a short stay for Medicare payment purposes.  A short stay should be reimbursed by Medicare based on Medicare transfer reimbursement policy – that is, for this day, Medicare should pay the hospital twice the per diem rate for the applicable DRG’s average length of stay.  This proposal is based on the generally accepted view that the greatest investment of resources for patient care occurs during the very beginning of a patient’s stay in the hospital and that even in a short stay, a hospital is expending comparable resources on patient care during that first day or two as it does when a patient stays longer.  This is the basis for current Medicare transfer payment policy and NAUH believes it should be the basis for Medicare short hospital stay payment policy as well.  Further, hospitals that serve large numbers of low-income patients and have medical education programs should not be put at a disadvantage when patients just have short stays, so NAUH further proposes that they receive Medicare DSH and medical education payments for these short stays as well.

NAUH’s entire letter to CMS can be found here.

See the MedPAC presentation “Hospital Short Stay Policy Issues” here.