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Managing Payor Audits and Denials Jackie Poliseno, Director Consulting & Appeals

Craneware, Inc.

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• Industry Trends

• Medicare Audits

• Commercial Payor Audits

• Managing the Process, Gaining Control

• Success Stories

Agenda

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Industry Trends

• RAC “slow down” about to end

• CMS working to expand RAC program to include Medicare Advantage Plans

• BFCC-QIO Short Stay Inpatient Audits resume

• Commercial Audits on the rise − Concurrent

− Retrospective

• Increasing administrative burden for Providers

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Recovery Audit Contractors

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RAC’s – New Contracts Awarded October 31, 2016

• Region 1 – Performant Recovery, Inc.

• Region 2 – Cotiviti, LLC

• Region 3 – Cotiviti, LLC

• Region 4 – HMS Federal Solutions

• Region 5 – Performant Recovery, Inc.

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Improper Payments Included in the SOW

• Incorrect payment amounts

• Non-covered services

• Incorrectly coded services (including DRG miscoding)

• Duplicate services

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Provider Types:

• Inpatient hospitals

• Outpatient hospitals

• Physician/Non-physician practitioners

• Laboratory

• Ambulance

• Skilled Nursing Facility

• Inpatient Rehabilitation Facility

• Critical Access Hospitals

• Long Term Care Hospitals

• Ambulatory Surgical Centers

• Other (i.e. Comprehensive Outpatient Rehabilitation Facilities, Rural Health Clinics, and Independent Diagnostic Testing Facilities)

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ADR Limits

• Provider type specific

• Baseline ADR limit for Acute Inpatient Hospital: 0.5% of a hospital’s paid Medicare claims from the previous 12 month period

• ADR letters sent on a 45 day cycle Annual baseline ADR level divided by 8 to establish the Cycle limit

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ADR Limits Adjusted Based on Denial Rates After (3) 45 day cycles

Low denial rate lower ADR limits

High denial rate higher ADR limits

Denial Rate (Range)

Adjusted ADR Limit (% of Total Paid Claims)

91 - 100% 5.00%

71 - 90% 4.00%

51 - 70% 3.00%

36 - 50% 1.50%

21 - 35% 1.00%

10 - 20% 0.05%

4 - 9% 0.25%

0 - 3% No Reviews x 3 Cycles

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Recovery Audit Contractor – Targets DRG Validation

• Coding • Principal diagnosis incorrect

• 2nd Dx codes not supported

• Coding CC/MCC

• Targeted Diagnoses • Sepsis/Unspecified Septicemia

• Acute Respiratory Failure/Other Pulmonary Insufficiency

• Acute Kidney Failure

• Severe Protein Calorie Malnutrition

• Pancreatitis

Medical Necessity • Joint Replacement Surgery

• ESA

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Performant Recovery – Automated Reviews Issue Name Provider Type State(s) Impacted Date Posted

Inappropriate billing of Home Health E&M codes during Inpatient Professional Services (physician/non Physician practitioner) Region 1 2/1/2017

Automated Zoledronic Acid Billed units > 4. (Note: 1 unit = 1mg of medication) Outpatient Hospital; Critical Access Hospital Region 1 2/1/2017

Regadenoson (Lexiscan) billed with Units Greater Than 4 Outpatient Hospital; Critical Access Hospital Region 1 2/1/2017

Automated Cataract Surgery Once in a Lifetime Outpatient Hospital, CAH, ASC Region 1 2/1/2017

Automated Inpatient Psych Billed without Source of Admission Equal to “D” Inpatient Hospital, Inpatient Psychiatric Facility Region 1 2/9/2017

Trastuzumab (Herceptin), J9355 - Multi-Dose Vial Wastage Billed with JW modifier

Physician; Outpatient hospital; Professional services (physician/non-physician practitioner); Ambulatory surgical center; Critical Access Hospitals Region 1 2/21/2017

Visits to Patients in Swing Beds Physician; Professional Services Region 1 2/23/2017

Excessive Units of Hospital Services Professional Services (physician/non- physician practitioner) Region 1 2/23/2017

Automated Nebulizers Not in Accordance with Billing Requirements DME by Supplier, DME by Physician Region 5 2/2/2017

Automated CPM Billed without Total Knee Replacement DME by Supplier, DME by Physician Region 5 2/2/2017

Automated DME Billed While Inpatient DME by Supplier DME by Physician Region 5 2/21/2017

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Performant Recovery – Complex Reviews

Issue Name Provider Type State(s) Impacted Date Posted

Trastuzumab (Herceptin), J9355 - Multi-Dose Vial Wastage, Dose vs. Units Billed Physician; Outpatient hospital; Professional services (physician/non-physician practitioner) Region 1 2/21/2017

Complex Medical Necessity Sacral Neurostimulation Inpatient hospital-acute care; physician; Outpatient Hospital; professional services (physician/non-physician practitioner); ASC Region 1 2/17/2017

Complex Medical Necessity Cardiac PET Scans Outpatient Hospital; Physician Region 1 2/1/2017

Complex Inpatient Hospital MS-DRG Coding Validation Inpatient Hospital Region 1 2/1/2017

Complex Medical Necessity Bariatric Surgery Outpatient Hospital Region 1 2/1/2017

Complex Comprehensive Cataract Removal Ambulatory Surgery Center (ASC); Outpatient Hospital Region 1, Excludes MI + IN 2/7/2017

Complex Review Osteogenesis Stimulators DME by Supplier, DME by physician Region 5 2/14/2017

Complex Group 2 Support Surfaces Without Correct Diagnosis of Condition DME by supplier; DME by physician Region 5 2/15/2017

Complex Medical Necessity Tracheotomy Suction Catheters, Suction Pumps, Catheters and Other Related Supplies/Equipment. DME by Supplier; DME by physician Region 5 2/8/2017

Complex Medical Necessity Chest Wall Oscillation Devices DME by Supplier; DME by physician Region 5 2/8/2017

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QIO – Short Stay Inpatient Audits

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QIO Short Stay Inpatient Audits

• QIO audits resume (September 12, 2016)

• Sample Size: − 10 Claims average-sized hospital

− 25 Claims large-sized hospital

• Provider Types: − Acute Care Hospitals

− Long-Term Acute Care Hospitals

− Inpatient Psychiatric Hospitals

− Excluded: CAH and inpatient Rehabilitation Hospitals

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QIO Audit Timelines

• One audit every six months

• Lookback period previous six months

• Providers have 45 days to submit records following a request – a reminder will be generated at day 15

• BFCC-QIOs have 45 days to review and render a decision

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• Excluded Claims: − Inpatient-Only procedures

− Discharge Disposition Codes: 07 (AMA); 20 (Expired); 02 (Discharged/ Transfer)

− IME, Medicare Advantage, or Medicare Secondary Payor (MSP) claims

− Other “Do Not Pursue” claims, not further identified

• Records Submission – esMD, encrypted CD, fax transmission, hard copy

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Review Criteria/Considerations:

• Valid IP Order − Must specify admission for inpatient status

− For admissions in which the MD expects the patient’s “medically reasonable hospital services” to span at least two midnights

• Two-Midnight Benchmark − Reviewers will consider a patient’s total cumulative time in the hospital.

− Admissions spanning less than two midnights will generally be regarded as not medically necessary but;

− Admissions less than two midnights may be appropriate on a case-by-case basis.

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Review Criteria/Considerations continued:

• No need for attestation of expected LOS, will be inferred from the medical record

• Reasonableness of the inpatient admission will be based upon the information known to the ordering physician at the time of decision to admit

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Audit Results

• Minor Concern – less than or equal to 10% denial rate

• Moderate Concern – greater than 10%, less than 20% denial rate

• Major Concern – greater than 20% denial rate

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Audit Results - Actions

• Provider outreach and education to be completed within 90 days of audit completion

• CMS may participate in education sessions

• Noncompliant claims and missing medical record denials will be forwarded to the MAC for adjudication;

• Noncompliant providers will be referred to the Recovery Auditors (RA) − QIOs continued to work with CMS to define:

• “patterns of noncompliance and denial”

• thresholds for referral to RA for provider-specific audits

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Commercial Health Plan Audit Practices

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Commercial Audit Differences

• Timelines − Audits can occur much closer to patient encounter

− Audits typically come announced

• Auditor may be onsite

• Pre-approval process

• Denial confusion

• Unclear Appeal process

• Withhold payment vs retrospective takebacks

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Commercial Audit Challenges

• Rules not widely publicized, not consistent

• Harder to track, understand, and monitor

• Harder to quantify

• Harder to assess risk and exposure

• Difficult to gain insight into what’s being denied, and appeal success rates

• Recurring errors lead to ongoing denials and result in delayed or lost revenue

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Concurrent Audits

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Concurrent Audits

• Authorization − Notification of patient admission and supporting documentation within 24 hours

− Clinical documentation for subsequent days

− Entire stay could be denied

• Patient Status − Denials driven by UM guidelines

− Outpatient vs Inpatient

− Least costly setting (Hospital, Rehab, SNF, Home)

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Concurrent Audits continued…

• Throughput − Efficiency of care

− Ensuring care is specific to reason for admission • Could result in denial

• Lost revenue

• Discharge Planning − Preparing early

− Parallel plans of care

− Could result in denial or reimbursement reductions

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Retrospective Audits

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Retrospective Audits

• Patient Status − Outpatient vs Inpatient

• Inpatient Orders − Written, Signed, Dated

• Readmissions

• Bioengineered Skin Substitutes

• Medical Necessity − Joint Replacement

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Failed non-surgical treatments (tried for at least 3 months)

NSAID/COXIB Medication Trial ☐Yes ☐No ☐Contraindicated for the patient

Weight Loss

Current BMI Click here to enter text.

☐Yes ☐No ☐Contraindicated for the patient

Physical Therapy ( ≥ 12 visits)

DOS Click here to enter text.

☐Yes ☐No DOS ☐Contraindicated for the patient

Intra-articular injection

DOS Click here to enter text.

☐Yes ☐No DOS ☐Contraindicated for the patient

Braces, orthotics or assistive devices ☐Yes ☐No ☐Contraindicated for the patient

Other (specify) Click here to enter text.

Notes Click here to enter text.

Radiology Indications for Replacement

(need 2 or more):

☐ Subchondral cysts

☐ Subchondral sclerosis

☐ Periarticular osteophytes

☐ Joint Subluxation

☐ Joint Space Narrowing

☐ Bone on Bone articulation


Highest Level of Walking Support (for the affected joint that the

patient currently uses to carry out activities, e.g., work, leisure)

☐ None / Orthotics

☐ Brace / Cane

☐ Crutches / Walker

☐ Wheelchair


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Select all that Apply None Mild Moderate Severe

Pain at rest (e.g., while sitting, lying down or causing sleep disturbance ☐ ☐ ☐ ☐

Pain when weight bearing (e.g., walking, bending) ☐ ☐ ☐ ☐

Pain with passive ROM ☐ ☐ ☐ ☐

Pain related ADL limitation (e.g., putting on shoes, managing stairs, bathing, or cooking) ☐ ☐ ☐ ☐

Abnormal findings on physical exam related to most severely affected join (e.g., deformity, instability, antalgic

gait) ☐ ☐ ☐ ☐

Aggravating Factors (list): ☐ ☐ ☐ ☐


Ability to walk without significant pain

☐ Over 5 blocks ☐ 1-5 blocks ☐ Less than 1 block ☐ Household ambulatory

Safety Issues (e.g., falls): Click here to enter text.


The patient’s current medication regimen is controlling their joint pain:

☐ No ☐ Yes

Types of medications

☐ Narcotics ☐ NSAID/COXIB

☐ Over-the-counter

Other (specify)


Pain History

Physical Exam (describe if present)

☐ Deformity Click here to enter text.

☐ Crepitus Click here to enter text.

☐ Effusion Click here to enter text.

☐ Tenderness Click here to enter text.

Range of Motion: Click here to enter text.

Gait description: (specify

with / without mobility aides)

Click here to enter text.

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Retrospective Audits continued…

• DRG Validation − Coding

• Coding CC/MCC

• Principal diagnosis incorrect

• 2nd Dx codes not supported

• Procedure codes, Modifier issues

• Targeted Diagnoses • Sepsis/Unspecified Septicemia

• Acute Respiratory Failure/Other Pulmonary Insufficiency

• Acute Kidney Failure

• Severe Protein Calorie Malnutrition

• Pancreatitis

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Retrospective Audits continued…

• Outpatient units > 1 or >2

• CCI Edits

• Modifier issues

• MUE’s

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Managing the Process, Gaining Control

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Discover • Collect and aggregate data

• Implement Audit tracking software

• Track all audits in one place

• Visibility − Dollars at risk

− Deadlines

− What’s in process

− Appeal/No Appeal rates

− Denial overturn rates

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Convert • Interdepartmental Team

− Compliance

− Medical Director

− Case Management

− Billing Office

− Coding

• Clearly define accountability for analysis and goals

• Hold payors accountable

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Convert continued…

• Communicate with payors

• Automate to support efficiency

• Work denied claims, No missed deadlines

− Identify owner

− Distribute claims to owners

− Embed knowledge in your process to assist staff

− Denial letter, Due date, where/how to send

− Track and report on un-worked

− Track worked-not-closed

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Optimize • Set Benchmarks

− Deadlines

− Appeal percentages

− Win rates

• Best Practice Benchmarks − Missed Appeal Deadlines 0%

− Appeal Rate >90%

− Appeal Success Rate 85%

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Optimize continued… • Provide education

• Achieve accurate coding and charging − Focus on DRG’s with high denial rates

• Prevent future audits − Trend significant issues by denial reason

− Perform root cause analysis

− Develop corrective action plans

• Monitor

• Leverage audit data − Negotiate response times

− Future contractual language

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Client Hospital Story #1

RAC Denials: Erythropoiesis Stimulating Agents (ESA)

Maritime Healthcare Appeal Response

Denials No

Appeal Appeal Favorable Unfavorable Open

Hospital A 142 17 125 101 20 4

Hospital B 12 3 9 9 0 0

Total 154 20 134 110 20 4

0

10

20

30

40

50

60

Jan -16 Feb -16 Mar -16 Apr -16 May -16 Jun -16 Jul -16 Aug -16 Sep -16 Oct -16 Nov -16

ESA Audit

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Client Hospital Story #2

RAC Denials: Secondary Diagnosis Code Eliminated (82) Severe Protein Calorie Malnutrition (40)

• Data mining…

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In Summary

• Be sure staff are well prepared to make level of care determinations that are justifiable.

• Ensure physicians understand admission order and documentation requirements.

• Drive care to be provided in the most efficient possible way.

• Check your contracts to be sure processes are aligned with payor expectations.

• Communicate well with your payors

• Have a way to track and trend concurrent denials, audits, and appeals.

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Jackie Poliseno

[email protected]

615-869-4088

mailto:[email protected]

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