Home Health & Hospice Week

New audit contractor may be ready to pounce after lull.

While you're keeping one eye on Targeted Probe & Educate medical review from your HHH Medicare Administrative Contractor, you need to keep the other on another looming medical review threat - Recovery Audit Contractor Performant's first approved home health topic.

Performant, which covers all home health agencies nationwide under its Region 5 RAC contract, announced that the Centers for Medicare & Medicaid Services approved its first home health audit topic Jan. 10 (see Eli's HCW, Vol. XXVII, No. 5). The topic is "Complex Home Health Review: Documentation and Medical Necessity."

"Performant has been waiting more than a year for approval for a home health audit topic," observes Judy Adams with Adams Home Care Consulting in Durham, North Carolina.

"I think this will be a major problem for the home health care industry," warns finance expert Tom Boyd with Simione Healthcare Consultants in Rohnert Park, California. In the past, RACs haven't given too much attention to home health agencies because the amounts recovered per claim paled in comparison to providers like hospitals, and the RACs were paid on contingency. That's likely why CMS decided to award one national RAC contract for home health, hospice and durable medical equipment.

"I fear there could be a considerable number of audits as a result of this newly approved RAC and newly approved focus for review," says consultant Pam Warmack with Clinic Connections in Ruston, Louisiana. After not seeing "a great deal of RAC activity in the past year," demand may be pent up.

Adams expects to see initial Additional Development Requests for 10 to 20 claims, she tells Eli. But "most audits begin with a relatively small sample of total claims for review and then expand the sample size or number of claims, if warranted by the audit results," Adams notes. "Since Performant has waited so long to have an audit topic approved by CMS for home health, [the] overall claim sample may be fairly large" in the end.

The RAC topic won't just be a problem for providers with high denial rates, adds consultant Cindy Krafft with Kornetti & Krafft Healthcare Solutions. Gathering all requested materials and submitting them within the RAC's 45-day timeline will translate into serious "resource consumption," Krafft says.

But when you add denial recoveries on top of the cost of responding to ADRs appropriately, "financial implications could be high," Krafft warns.

"Everybody needs to be concerned" about these audits, urges finance expert Dave Macke with VonLehman & Co. in Ft. Mitchell, Kentucky.

Watch out: An even deadlier reimbursement blow may be in the offing as well. Performant assures providers in a Frequently Asked Question set on its website that "currently Performant is not using extrapolation." However, the RAC adds that "we have been approved to perform this method of analytics." Performant does promise it will furnish "appropriate communication" on its website "when we plan to perform this process."

Extrapolation Could Be Waiting In The Wings

But in its Region 5 Statement of Work, CMS goes into more detail that indicates it may consider extrapolation a good fit for home care claims, at least eventually. "The Recovery Auditor is encouraged to use extrapolation for some claim types when all requirements are met," the SOW reads. "Extrapolation may be cost effective for low-dollar claims that require complex review and have a history of having a high error rate."

That statement may describe home health agency claims for medical necessity to a T, experts worry.

However, Performant will have to secure CMS approval for extrapolation on an issue-by-issue basis, the SOW indicates.

The other reason this new topic is so dangerous is due to its vague nature, experts agree. "This is a classic medical necessity audit of home health services," Adams says. "It has been well established over the past several years that insufficient documentation has been a resounding theme within the denials of home health claims."

Medical necessity "is one of the most difficult areas of practice to defend and often to document," Warmack laments. And reviewers' determinations can be very subjective in this area at times, she has found.

Often home health claims are denied not because the services were truly unnecessary, but because clinicians failed to document them properly, Macke notes. This is particularly true for this topic. "Providers are plagued with documentation difficulties no matter how much we educate our clinicians," Warmack says. (For pointers on combatting that problem, see story, this page).

Anticipate These Targets

It's unclear how many and which agencies Performant will target for this topic. But Boyd expects that HHAs in states with high average utilization and high episodes per patient may be at the top of the list. "I would look to Texas, Oklahoma, Florida, Louisiana, and Michigan to be first in the order of the reviews," he tells Eli.

Performant also may be interested in targeting home health claims with multiple disciplines - particularly therapy - because they will correspond to the highest dollar amounts, Warmack expects.

Exception: There will be some providers immune to RAC review, however. Agencies in the "demonstration" states of Delaware, District of Columbia, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia, and West Virginia will not be included, Performant says on its website.

"Agencies that have been reviewed as part of the Probe & Educate audits will probably be exempted from the sample for this audit" as well, Warmack predicts.

Stay tuned: HHAs can expect CMS to approve more home health topics for RAC review now that this first one is in place, Krafft predicts.

Along with RAC reviews, expect to see appeals of RAC determinations pile up, Boyd offers. However, CMS does note in its Statement of Work that is expects a 95 percent "accuracy rate" in RAC reviews, and that it expects fewer than 10 percent of determinations to be overturned at appeal.

As an added incentive, CMS says it will add 0.1 percent to a RAC's contingency fee for every point under 10 percent it scores for appeals. For example, a RAC with a 9 percent appeal overturn rate and a 15 percent contingency fee would receive a 15.1 percent contingency fee.

Slow Start - For Now

Many of the details remain fuzzy about the RAC's home health activities, says National Association for Home Care & Hospice President William Dombi. But Performant has told NAHC that it plans "a relatively small audit of around 200 claims," Dombi tells Eli. Also, the audit "may not start for several months," RAC officials indicate.

But don't be surprised to see the program pick up steam if it nets significant overpayment rates, expert warn.

Note: See the Region 5 SOW at www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Recovery-Audit-Program/Downloads/New_RAC-SOW-Region-5-clean.pdf.