Home Health & Hospice Week

Bounty hunter contract tempered with some protections.

If you're wondering just how much incentive Recovery Audit Contractor Performant has to deny your claims, wonder no longer.

RACs are paid solely on a contingency fee basis, earning a percentage of the recoveries they produce from their reviews. They do get paid for underpayments they find as well as overpayments, however, notes National Association for Home Care & Hospice President William Dombi.

For Performant's work as the home health, hospice, and DME RAC, it receives an 8 percent contingency fee, a CMS spokesperson tells Eli. That rate was disclosed when CMS announced the contract for Region 5, which covers the entire nation, in 2016.

But Performant can earn an even higher fee than 8 percent, the CMS source notes.

How? The Statement of Work for Region 5 specifies that for every point a RAC comes in under the 10 percent appeal overturn cap, it will earn a 0.1 percent increase to its contingency fee (see box, p. 51). Thus, Performant can earn an 8.1 percent fee if its overturn rate is 9 percent, an 8.2 percent fee if its overturn rate is 8 percent, and so on. Theoretically, if the RAC had a 0 percent overturn rate, it would receive a 9 percent fee. Of course, a 0 percent rate is pretty much impossible.

Presumably to counteract the bounty hunter incentives to the contingency fee contract, CMS does impose some adverse actions if Performant exceeds the 10 percent overturn rate. Those consequences range from reducing the number of Additional Development Requests the RAC may issue to terminating its contract (see box, p. 51).

Will Hospice Claims Be In The RAC Crosshairs?

A contingency fee payment structure incentivizes the RAC to seek out the highest-dollar claims with problems for review, notes consultant Pam Warmack with Clinic Connections in Ruston, Louisiana. Denials of those high-payment-level claims will result in the highest payments to Performant.

"Audit requests might be made for claims with multiple disciplines involved in the claim," Warmack predicts. "It would be more potentially profitable for a RAC to review an episode of care with skilled nursing, home health aide, and therapist involved in the care. Since the RAC is paid on a contingency basis, it would make sense that they target the multiple discipline cases and episodes with higher reimbursement."

High-therapy claims have been a favorite medical review target of HHH Medicare Administrative Contractors for some time under the Home Health Prospective Payment System, with corresponding high denial results.

However: Unlike the MACs, Performant would be motivated to seek out denials of a claim's entire payment amount to maximize its reimbursement, experts say. In contract, MACs often deny just certain therapy visits to downcode a claim.

To secure a total instead of partial denial, it's likely the RAC will focus on issues that knock out the whole episode, such as medical necessity, eligibility, Face-to-Face requirements, orders errors, etc. In fact, Performant already announced documentation and medical necessity as its first home health topic for review (see Eli's HCW, Vol. XXVI, No. 6).

In addition to rendering the entire claim an overpayment, a medical necessity denial is fairly low hanging fruit because the concept is very difficult to document and defend, Warmack judges.

Another tempting target may be hospice claims, suggests finance expert Tom Boyd with Simione Healthcare Consultants in Rohnert Park, California. That's due to the dollar amount of the average hospice claim versus HHA claim, Boyd says.

The good news is that the 10 percent cap on successful appeals should help temper Performant's zeal for denying claims. "Limits on incorrect decisions [are] a good thing for agencies," says Judy Adams with Adams Home Care Consulting in Durham, North Carolina. "It should mean a decrease in nit-picking denials."

Warmack agrees, saying "it is encouraging to know that they are held to a performance indicator."

Note: Performant's website, which includes links to resources such as the approved topic list and ADR submission instructions, is at https://performantrac.com/region-5.