Home Health & Hospice Week

High therapy, multiple recerts top RAC's hit list.

After a lengthy delay, Medicare's bounty hunters have set their sights on home health agency services.

Region C Recovery Audit Contractor Con-nolly Healthcare has posted one Centers for Medi-care & Medicaid Services-approved HHA topic for review. And Region A RAC Diversified Collection Services appears to be investigating three HHA topics for CMS approval, reports the National Asso-ciation for Home Care & Hospice.

Background: RACs have a financial incentive to deny providers' Medicare claims because they receive a percentage of the recoveries on a contingency fee. (For RAC territories and fees, see box this page) However, they also receive the contingency fee on any underpayments they return to pro-viders, CMS noted in a report to Congress last year (see Eli's HCW, Vol. XX, No. 36, p. 284).

According to the RACs' 2012 Statement of Work, RACs can request 10 medical records for its test cases in the CMS audit topic approval process, NAHC notes. Then CMS can approve or deny the topic based on the results. Once approved, the RAC will post the topic to its website.

DCS seems to be "going fishing" with its HHA audit tests, notes financial consultant Tom Boyd with Boyd & Nicholas in Rohnert Park, Calif. But the dragnet may prove deadly for some HHAs.

"Like the audits of the 90s, [RAC audits] will drive down and out the smaller providers who don't have the resources or the knowledge to fight 'city hall,'" Boyd predicts. "The consolidation of the industry will continue."

HHAs had hoped to duck their heads and avoid RAC scrutiny for a while longer. "Home health claims were too small in dollar amount, compared to hospital and other provider types, to attract the RACs to home health, when we know they are compensated on a contingency fee basis for their error findings," notes financial consultant Mark Sharp with BKD in Springfield, Mo.

But in its 2012 RAC SOW, CMS requires RACs to address incorrect payments for all provider types or face financial penalties, NAHC points out.

It's "not surprising is that it took government intervention to force the RACs to give home health their attention," Sharp tells Eli. "CMS will impose penalties if they don't move on to home health and other provider types that have been left alone to this point."

HHAs' sole approved RAC audit topic at this time is "Incorrect billing of Home Health Partial Episode Payment claims." According to Connolly's website, the audit topic will address "incorrect billing of Home Health Partial Episode Payment (PEP) claims identified with a discharge status 06 and another home health claim was not billed within 60 days of the claim from date. Additionally, MCO effective dates are not within 60 days of the PEP claim."

In other words: "This review is intended to identify home health agency underpayments in cases where an 06 discharge status code was entered on a home health claim, resulting in an automatic PEP payment, without correction if a patient did not receive a subsequent episode of care during the same 60 day period," NAHC explains.

It's rather surprising to see the RAC start out with a topic that will generate repayments to providers instead of collection of overpayments, notes clinical consultant Pam Warmack with Clinic Connections in Ruston, La.

Two topics that DCS is testing make more sense, experts agree: high therapy episodes and high number of subsequent episodes. DCS is also testing a low utilization payment adjustment (LUPA) topic.

The therapy and recertification episode focus reflect what CMS has been doing with the prospective payment system case mix model, Sharp points out. "CMS has put its efforts in minimizing financial gain from abusive practices in their 2012 PPS case mix model refinements, where less weight is given on therapy utilization and less weight on 'Later' (3+) episodes," he says.

The two topics also reflect areas of focus for Zone Program Integrity Contractors, Warmack highlights. "We've already noticed a pattern of heightened ZPIC activity in areas where long length of stay or high recertification percentages is present."

The therapy and recert topics "are potential land mines," Warmack warns. "High therapy episodes are difficult to defend without exemplary documentation by the therapist, and this is not normally found."

Likewise, with the topic regarding a high number of subsequent episodes, "there must be excellent documentation to justify medical necessity for these episodes," Warmack stresses.

Boyd is surprised that RACs didn't start out targeting hospice topics, which could yield a higher overpayment amount ��" and thus contingency fee ��" based on the size of the claim, he says. Don't expect RACs to neglect this area for long, experts agree.

And RACs may use some of the simpler HHA reviews, such as the one for LUPAs, to examine clinical documentation more closely so "more damaging issues can be identified and further developed," Warmack suspects.

Best case scenario: If the home care audit topics prove relatively unprofitable for RACs, HHAs can hope that RACs will give the industry merely the minimal attention that CMS is requiring in their SOW, Sharp notes.

The government may find it more economical to use its other resources ��" ZPICs, Comprehen-sive Error Rate Testing (CERT) audits, fraud and abuse enforcement via HEAT strike forces, etc. ��" to produce savings in the industry, Boyd predicts. "RACs may be the wrong weapon for the government," he says.

Note: The HHA audit topic approved by Connolly is at http://www.connolly.com/healthcare/pages/ApprovedIssues.aspx.