1. finance
2. accounting and auditing

Provider Audit
Charlotte Benson
CMS, Office of Financial Management,
Financial Services Group
June 18, 2014
Provider Audits
• Cost Report Audits
• HITECH Payment Audits
• HITECH Meaningful Use Audits
2
Medicare Cost Report Audit
• Cost Report Processes
– Provider files the Cost Report
– MAC –
• Acceptance Process
• Cost Report file sent to HCRIS
• Tentative Settlement
• Interim Rate Setting
• Amended Cost Reports follow similar process
3
Medicare Cost Report Audit
• Audit Processes
– Desk Review – established process to review cost
report data and determine issues for audit.
• Risk Assessment Tool
• Cost Report adjustments are made as part of this process
– Audit – review of specific cost report issues
•
•
•
•
•
DSH
GME/IME
Bad debts
Organ Acquisition
Cost (when applicable)
– Notice of Program Reimbursement (NPR) issued –
gives appeal rights
4
Medicare Cost Report Audit
• Upon Completion of Audit Work –
– Audit adjustments shared with provider for review
– Exit Conference
– NPR issued
– Payment made to provider, or demanded from provider
• Settlement timeframes - General
– If a cost report is settled without audit – NPR will be issued
with 12 months of cost report acceptance.
– If cost report is audited – NPR will be issued within 60 days
after the exit conference.
5
Medicare Cost Report Audit
• After Issuance of the NPR –
– Appeal - PRRB or MAC (depending on $$)
– Reopening – requested by provider, or initiated by the MAC
– Interim Rates –usually adjusted twice a year
6
Electronic Health Record (EHR)
Incentive Payments - HITECH
• Eligible Hospitals/CAHs
– Initial payments are calculated using the data entered by the
MACs into the HITECH system (National Level Repository)
– Final incentive payment is determined using data from the cost
report that begins during the HITECH payment year
• EHR Incentive Payments
– Separate contractor – HITECH incentive payment center
(NGS)
• Issue HITECH payment
• Issue and collect HITECH overpayments
7
Electronic Health Record (EHR)
Incentive Payments - HITECH
• Initial payments
– Subsection (d) Hospitals (acute care) – payment is based on a
formula - $2M base times Medicare share times transition factor.
• MACs enter data from latest filed cost report (data may
be adjusted by MAC if needed) including discharges,
days, charges, and charity care.
– Critical Access Hospitals (CAHs) – payment is based on
actual cost incurred for certified EHR technology
• MACs review documentation submitted by the CAH after
attestation, to determine payment amount. MACs enter
payment information into the system.
8
Electronic Health Record (EHR)
Incentive Payments - HITECH
• Final incentive payment
– MACs will review/audit the data used in the incentive payment.
– Generally completed as part of the “regular” cost report
audit process.
•
•
•
•
•
Medicare and Total days
Total charges
Charity care (charges attributable to charity care)
Total discharges (acute care hospitals)
Cost incurred for certified EHR technology (CAHs)
• NPR provides the appeal rights
9
Electronic Health Record (EHR)
Incentive Payments - HITECH
• Meaningful Use Audits
– Performed by – Figliozzi and Company
• Contractor audits the Meaningful Use attestation data to verify
the provider meets the criteria.
– System certification
– Security risk assessment
– Measures in attestation
• If provider does not meet MU criteria, the entire payment for
that year is forfeited/demanded.
• Meaningful Use determination letter provides appeal rights.
10
Update from the Provider Compliance Group
Melanie Combs-Dyer
Acting Director,
Provider Compliance Group
Office of Financial Management
Michael T. Handrigan, MD, FACEP
Medical Officer,
Provider Compliance Group
Office of Financial Management
June 18, 2014
Fee-for-Service Medicare
Recovery Audit Program
• The Recovery Auditors are CMS contractors who are
tasked with detecting and correcting improper payments
– Statute gives CMS the authority to pay the Recovery Auditors on
a contingency fee basis.
• Post-payment review
– Automated review (no review of medical record, just data
analysis)
– Complex review (decision after review of medical record)
– Semi Automated review (documentation reviewed only if
provider disagrees with the improper payment)
• Recovery Auditors are incentivized to focus on areas with
high CERT error rates and CMS referrals
12
Recovery Audit Program
FY 2012 Results
• Dollars
– Overpayments Collected - $2.3 billion
– Underpayments Restored - $109 million
– Total Program Corrections - $2.4 billion
• Number of Claims containing improper payments
– 1.6 million claims identified with improper payment
determinations
• Appeals
– Only 26.3% are appealed at any level
– Only 7% of identifications are overturned at any level of appeal
13
CMS Oversight
• Recovery Audit Validation Contractor provides annual
accuracy scores
– The combined accuracy rates for the Recovery Auditors are
consistently above 90 percent.
• CMS staff perform regular reviews to ensure
compliance with contract requirements
• If a Recovery Auditor exceeds the 60-day review
timeframe, they do not receive a contingency fee
14
Contract Transition
• CMS issued 5 Request for Quotes through the General
Services Administration (GSA)
– 4 A/B Recovery Auditors and 1 Durable Medical Equipment
&Home Health /Hospice Recovery Auditor
– Favorable GAO decision in response to multiple pre-award
protests on A/B Recovery Auditor now at Court of Federal
Claims
– Contract awards expected in Summer 2014
• CMS implemented a pause to help facilitate the transition
– No ADRs after February from “old” Recovery Auditors
– No reviews after June 1 from “old” Recovery Auditors
• Current Recovery Auditors will continue to support the
appeals process through 2016
15
Upcoming Program Improvements
Provider Concern
Upon notification of an appeal by a provider, the
Recovery Auditor is required to stop the discussion
period.
Program Improvement
Recovery Auditors must wait 30 days to allow for a discussion
before sending the claim to the MAC for adjustment. Providers
will not have to delay filing an appeal in order to initiate a
discussion period.
Providers must wait 60 days before being notified of Recovery Auditors will have 30 days to complete their complex
reviews and notify providers of their findings
the outcome of their complex reviews
Recovery Auditors are paid their contingency fee after
recoupment of improper payments, even if the provider
chooses to appeal.
Additional documentation request (ADR) limits are
based on the entire facility, without regard to the
differences in department within the facility.
ADR limits are the same for all providers of similar size
and are not adjusted based on a provider’s compliance
with Medicare rules.
Recovery Auditors must wait until the second level of appeal is
exhausted before they receive their contingency fee.
Providers are unsure of who to contact with their
complaints/concerns about the Recovery Audit
program.
CMS will establish a Provider Relations Coordinator to offer more
efficient resolutions to affected providers.
The CMS is establishing revised ADR limits that will be diversified
across different claim types (e.g., inpatient, outpatient).
CMS will require Recovery Auditors to adjust the ADR limits in
accordance with a provider’s denial rate. Providers with low
denial rates will have lower ADR limits while provider with high
denial rates will have higher ADR limits.
16
Next Steps: Inpatient vs. Outpatient
• Patient Status Reviews are conducted by Medicare
review contractors to determine the appropriateness
of an inpatient admission versus treatment on an
outpatient basis.
• Recovery Auditors will not conduct patient status
reviews with dates of admission from 10/1/133/31/15
• The MACs are conducting reviews under “probe and
educate”
17
Clarified and Modified Definition of
Inpatient: The “2- Midnight Rule”
• Medical Review Presumption (Claim Selection
Presumption)
– 2 or more midnights after formal inpatient admission begins
– Presume inpatient admission is appropriate (i.e., will not be the
focus of medical review absent evidence of systematic gaming
or fraud).
• 2-Midnight Benchmark (Medical Review Benchmark)
– Surgical procedures, diagnostic tests, and other treatments are
generally appropriate for inpatient hospital payment under
Medicare Part A when:
• The physician expects the patient to require a stay that crosses at least 2
midnights, and
• Admits the patient to the hospital based on that expectation
18
Unforeseen Circumstances
• Unforeseen circumstance may result in a shorter
beneficiary stay than the physician’s expectation (that
the beneficiary would require a stay greater than 2
midnights)
–
–
–
–
–
Death
Transfer
Departure against medical advice (AMA)
Unforeseen recovery
Election of hospice care
• Such claims may be considered appropriate for hospital
inpatient payment
• The physician’s expectation and any unforeseen
interruptions in care must be documented in the medical
record
19
Exceptions to the 2-Midnight Rule
• In certain cases, the physician may have an
expectation of a hospital stay lasting less than 2
midnights, yet inpatient admission may be
appropriate
• Includes:
– Medically Necessary Procedures on the Inpatient-Only List;
– Other Circumstances
• Approved by CMS and outlined in subregulatory guidance
• New Onset Mechanical Ventilation*
• Additional suggestions being accepted at
[email protected]
20
* NOTE: This exception does not apply to anticipated intubations related to minor surgical procedures or other treatment.
Updates: Prior Authorization
Currently in Place
• Power Mobility Devices Demonstration
– Implemented September 2012
– In 7 States (CA, FL, IL, MI, NY, NC, TX)
21
New Prior Authorization
Programs
• Expand PMD Demonstration to 12 additional states
– AZ, GZ, IN, KY, LA, MD, MO, NJ, OH, PA, TN, WA
• Prior Authorization for DMEPOS that is frequently
subject to unnecessary utilization
– Proposed Rule displayed May 22, 2014
• Model tests of Prior Authorization for certain nonemergent services
– Hyperbaric Oxygen Therapy
• IL, MI, NJ
– Repetitive Scheduled Ambulance Transport
• NJ, PA, SC
22
Pre esMD Paper Medical
Documentation Process
Doc’ n
Request
Letter
Review Contractor
Paper
Medical
Record
Provider
23
The Solution: Electronic Submission of
Medical Documentation (esMD)
Phase 1:
Doc’n
Request
Letter
Went live Sept 15, 2011
electronic
Phase 2:
electronic
Planned for Future Release
electronic
24
Providers Signed up with an esMD HIH
Unique Provider Count as of May 9, 2014: 60,258
More information: www.cms.gov/esmd
25
Thank You
Questions?
26