Home Health & Hospice Week

The first wave of Recovery Audit Contractors began its rollout in March, noted Marie Casey with the Centers for Medicare & Medicaid Services at a recent trade group conference. The RACs for 24 states had the green light to conduct provider outreach, analyze claims, and send out requests for medical record review beginning last month, Casey noted at the National Association for Home Care & Hospice's March on Washington conference March 23.

Disappointment: But Casey had no details to share on whether any or all of the four RACs will target home care claims and if so, which ones.

RACs are the "800-pound gorilla" in Medicare right now, said one conference attendee in the session's question and answer period. Home health agencies are nervous about RACs second-guessing clinicians' clinical judgment and collecting a contingency fee for every claim they deny or downcode.

Good news: CMS has put some safeguards in place to combat the financial incentives to deny claims, Casey noted. For example, if a RAC loses at any level of appeal, it must return the contingency fee earned on the claim.

The next RAC wave in states like Illinois, Ohio, and Washington will begin Aug. 1, Casey noted (see box, p. 99, for when RAC reviews hit which states).

Home care will probably be among the first areas RACs target, expects financial consultant Pat Laff with Laff Associates in Hilton Head Island,S.C. That's because HHAs' documentation may have gotten sloppy under years of relatively lax audits and enforcement.

"Quality of documentation and support for what's billed may not be what it should be," Laff believes.

It's no coincidence that the first wave covers high-growth areas like Florida, Texas, and California,Laff tells Eli. "There is a definite perception within CMS that some of the growth in number of patients shouldn't be happening," Laff notes. While RACs won't be conducting any fraud or abuse-fightingactivities, they can address unnecessary services.

The problem: Legitimate agencies are more likely to be hurt by RAC scrutiny than those providers trying to scam Medicare, points out consultant Mark Sharp with BKD in Springfield, Mo.That's because fraudulent providers have false documentation requirements down pat while legit HHAs may neglect record-keeping.

CMS has instituted some changes from its RAC pilot project that should lighten the burden on providers, Casey noted in the session. RAC review will be limited to 10 percent of a provider's claims  and the "look-back" period was shortened from four years to three. And RACs can't review claims paid prior to Oct. 1, 2007.

Providers will also be able to take advantage of a "discussion period," which is like an informal appeals step before the official Medicare appeals process kicks in. During this time, the provider can "discuss the improper payment determination with the RAC" and the contractor can drop it if the provider is convincing, Casey explained.

That discussion period may be useful for providers because RAC auditors will surely be "very green" when it comes to home care, Laff predicts.Most RACs have little to no background in home care, he says.

But it will only be helpful if the auditors are receptive to provider explanations. Think of it like getting pulled over for a traffic violation, Laff offers. Some cops will let you go with a warning if your intentions were good, while others will throw the book at you no matter what. "It's subject to interpretation," he says.

Another opinion: Not everyone is convinced that RACs will target home care first, however. "I suspect that they will go after hospitals first for the bigger bucks," thanks to their contingency fee payments which will range from 9 to 12.5 percent, says consultant Tom Boyd with Boyd & Nicholas in Rohnert Park, Calif. "I do not look for RACs to go after home health care until 2011 or even 2012," he adds.

The RAC provider outreach schedule for the next few months mainly targets hospitals and physicians, according to the CMS Web Site.

Heads up: Instead, HHAs should be guarding themselves against activity by the new Zone Program Integrity Contractors (ZPICs), Boyd believes. The ZPICs, which are taking over program integrity functions from the Program Safeguard Contractors (PSCs), have begun operation in Zones 4 and 7 already (see Eli's HCW, Vol. XVII, No. 2, p. 14 and No. 10, p. 79). Those zones include high growth home health states like Texas, Oklahoma, and Florida, Boyd points out.