January 13, 2014 - Drill Down: RAC 2014 Forecast

 January 13, 2014

Drill Down: RAC 2014 Forecast

Some of my predictions for issues in regards to RAC activities for 2014 are as follows:

·         DME will be a focus – a newly created national contractor for Durable Medical Equipment (DME) and Home Health/Hospice per the Centers for Medicare & Medicaid Services’ (CMS) May, 2013 Request for Quote (RFQ).

·         New audit contracts – however this may not mean any current contractor changes.

·         Still another change to the RAC program is that CMS is requiring recovery auditors to support the agency throughout the entire appeals process, including at the administrative law judge (ALJ) level according to its 2013 Statement of Work (SOW).

·         Two Midnight rule will affect RAC contractor abilities to recover payments.

·         RAC activities will impact patients.

Why DME will remain a continued audit focus?

Not only would a single DME/HH/H contractor provide a continuous audit focus but during the RAC demonstration program, many DME claims were denied because the items were supplied during a beneficiary's inpatient admission or Skilled Nursing Facility (SNF) stay. This has remained an area of scrutiny among the permanent RAC reviewers and other CMS contractors. In the RAC permanent program, CMS continues to focus on DME - looking at various issues, such as multiple DME rentals in a one month period, billing for DME after the date of death, DME received while in hospice and incorrect payments of maintenance and servicing for capped DME rentals.

Other CMS areas of focus for DME suppliers include, but are not limited to, the following:

·         Payments for disposable supplies for beneficiaries receiving Home Health Agency ("HHA") services;

·         Medicare Part B payments for home blood glucose testing supplies;

·         Appropriateness of reimbursement for pressure-reducing support surfaces; and

·         Appropriateness of reimbursement for power wheelchairs.

The 2 midnight rule may hurt Medicare RAC recoveries.

Medicare patients should be admitted as “inpatients” when they require a stay that lasts more than one day, or if they require inpatient only treatment. Hospital stays that last less than 2 midnights should be billed and treated as outpatient services.  CMS instructed Medicare RACs not to review claims for stays spanning two midnights after admission to determine appropriateness. CMS initially suspended reviews of short stay inpatient hospital claims until January 1, 2014, but extended the suspension until March 31, 2014. These suspended reviews will cost the RAC improper payment recovery in the billions. The cost to the patient could run up from hundreds to thousands of dollars. 

RAC activities will impact patients.

On the Thursday, January 9, 2014, broadcast of Nightly News with Brian Williams segment titled Paying the Price, it was reported that hospitals are now afraid to label patients as inpatients even though they spend the qualifying time in a hospital to meet the inpatient status. An American Hospital Association representative stated that hospitals are now afraid of being closely scrutinized and audited going years back and having to pay back money to CMS for such stays. Patients are now the ones having to pay out of pocket for costly rehab services after a hospital stay that was deemed “observation” only.  A patient could spend a day or three in a hospital bed, be assessed, monitored and treated by doctors and nurse and never be formally admitted to the hospital. More costly is rehab or skilled nursing that Medicare will pay for after 3 days of inpatient care but patients with the outpatient observation status do not qualify for and could be out of pocket for 5 figures or more. In the Nightly News with Brian Williams segment, it was suggested that Medicare patients check their own hospital status or they may be left having to cover costly after-care services themselves.