Our Blog

Post Acute Recovery Audit Study Guide

Posted by Danielle on February 17, 2015

magnifying glass clipartNashville based healthcare research and analyst firm, Obsidian Research Group, says post-acute providers need to study up on CMS’s Recovery Audit program. It’s an audit program that recouped $488 million from healthcare providers 2011.

emily evans

While RAC attacks were an issue reserved mostly for acute providers, CMS has now created a RAC region focused solely on home health and hospice.

Here’s part 2 of Obsidian founder and analyst, Emily Evans’ RAC post-acute study guide. (If you missed part one, catch up here.)

Get Ready for Your Own RAC Attack - It’s Not All Bad News

The Recovery Audit program at CMS has heretofore left the home health and hospice industries in relative peace. Medicare payment recoveries from home health and hospice have been small since the program’s inception in 2009. But, with CMS’s December 14’s award of the nationwide Region 5 Recovery Audit Contract to Connolly Consulting, that’s about to change. Connolly’s contract kicks in sometime in the latter part of 2015’s first quarter.

Because home health and hospice providers may have less familiarity with the RACs, they should spend the coming months familiarizing themselves with the program. A good place to start is with previously approved audit issues. There are 21 unique issues previously approved by CMS for audit.

Additionally, CMS has identified other areas of interest in rulemaking and via the Office of the Inspector General’s (OIG) planned and current work. Likely issues for audit include:

  • Face-to-Face requirement – CMS has made it easier to comply by eliminating the physician’s narrative component of the documentation. CMS indicated in recent sub-regulatory guidance that physician claims for the visit in which the face-to-face encounter took place will be denied if the associated home health claim is denied due to incomplete documentation. Physicians who demonstrate a pattern of noncompliance may be subjected to heightened review. We would anticipate that the RACs will look closely at both providers’ claims to ensure compliance.
  • Hospice in Assisted Living Centers (ALC) – Auditors have spent some time on CMS’s long standing concern about the delivery of hospice care in SNFs. Based on recent OIG report, CMS will extend that concern to ALCs.
  • General Inpatient and Continuous (Crisis) Care use – In years past CMS has expressed concerns about the use of General Inpatient Care (GIP). GIP is intended for patients whose needs cannot be met with in-home hospice care. Overuse of GIP by a provider, according to CMS, raises concerns about the provider’s clinical abilities such that they must rely on a hospital for care. The use of GIP also may indicate a desire by the hospice provider to avoid costly care. Heavy use of Continuous Hospice Care will also be scrutinized for medical necessity.

(*To ensure you’re identifying the right patients for hospice care at the right time, use Medalogix Bridge.)

For most provider types, RAC audits generally mean recoupment of overpayments by CMS. Indeed, underpayments make up a small percentage of all payment corrections for most claims types except home health. In 2013, the last full year of auditing, underpayments made up almost 40 percent of Medicare payment corrections for home health providers.

The other good news for home health is the limited role medical necessity plays in improper payment determinations. According to the most recent CERT report, 90.4 percent of home health’s improper payment rate was caused by no or incomplete documentation. Medical necessity contributed 8.9 percent. The majority of these medical necessity errors are likely due to the eligibility standard for home health, which has undergone some re-interpretation the last couple of years. In contrast, medical necessity errors in inpatient claims accounted for 50.6 percent of the CERT calculated improper payment rate. Interestingly, hospice (nonhospital based) has a low improper payment rate of just 3.8 percent but 27.5 percent of that relates to medical necessity.

Get ready for your RAC attack by making sure your agency has the right systems in place for proper documentation of clinical decision making and being familiar with audit issues.


Topics: Healthcare Industry


Recent Posts