RAC Recovery: What a Difference a Fiscal Year Makes

Recently, the Centers for Medicare and Medicaid Services (CMS) released FY 2011 numbers for the Recovery Audit Contractor (RAC) collections. Total corrections amounted to $939.4 million with $797.4 million in overpayments and $141.9 million in underpayments. (American Health Lawyers Association, Medicare RACs Recover $797 Million in Overpayments in FY 2011, CMS Reports (Dec. 2, 2011)).

Compared to FY 2010, $939.4 is staggering. In FY 2010, combined over and under payments amounted to $92.3 million. In October 2009, all four regional RACs began reviewing claims. (http://www.cms.gov/Recovery-Audit-Program/Downloads/FY2010ReportCongress.pdf). These numbers will only increase as RAC expands to Medicaid in January 2012.

Therefore, providers should assess their clinical documentation. And, consider implementing a physician-to-physician clinical documentation improvement program to ensure that physicians are educated on appropriate documentation, and appreciate the liability associated with RAC audits.

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The Reality of Medicaid and Medicare Cuts Sets In

Hospitals nationwide "are bracing for an automatic two percent cut in Medicare reimbursements if a joint committee of Congress fails to agree on at least $1.2 trillion in deficit cuts over 10 years." (Getahn Ward, Medicaid Cuts in Texas Hurt Local Hospital Chains, The Tennessean (Nov. 19, 2011)). One Nashville-based health system, Vanguard Health, is preparing for the reductions in Medicare and Medicaid reimbursement by downsizing its corporate and regional health system workforce.

Vanguard’s five-hospital Baptist Health System in San Antonio is reducing its workforce by 118 employees in the wake of the uncertainty surrounding government reimbursement and the economy. In Texas, Medicaid cuts of about $2 billion over two years were implemented September 1, 2011. (Kelley Shannon, Texas Braces for Medicaid Cuts (Oct. 7, 2011)). This, coupled with the federal cuts, will have a significant impact on providers.

According to Frank Morgan, an analyst with RBC Capital Markets, “It’s an unfortunate by-product of a very difficult reimbursement environment for government payers – both Medicare and Medicaid.” (Ward (Nov. 19, 2011)). HCA, Community Health Systems and Essent also expressed concern over the reductions.

In light of cuts to reimbursement, providers are constantly forced to do more with less. This atmosphere only highlights the need for clinical documentation improvement programs in order to mitigate an even greater adverse impact on the revenue cycle.

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HIPAA Alert: increased fines, audits and criminal indictments

With the transition to electronic health records, a great deal of attention is being placed on privacy breaches. One criminal case, which reflects more aggressive efforts by the government, may amplify legal risks for doctors and other “covered entities” for employee violations.

In the Eastern District of Arkansas, a former Northeast Arkansas Clinic employee recently plead guilty to “wrongfully disclosing a patient’s protected health information and using malicious intent.” (Amy Lynn Sorrel, Criminal HIPAA case targets employee, not clinic for breach, amednews.com). A U.S. Attorney, Jane W. Duke indicated, “[w]hat every HIPAA-covered entity needs to realize and reinforce to its employees is that the privacy provisions of HIPAA are serious and have significant consequences if they are violated.” Ibid. This extends to physicians, hospitals, insurers and employees.

Along similar lines, in a civil action, the federal government recently “assessed a multi-million dollar civil monetary penalty and entered into multiple resolution agreements with several covered entities for alleged HIPAA violations.” (HIPAA Enforcement Heats Up: Fines, Audits, Indictments and More Regulations (Nov. 15, 2011)). As set forth in the HITECH Act, the penalties now range from “$50,000 per day of violation and a $1.5 million annual cap for the same violation.”  Ibid.

For providers, this means educating everyone on the legal and monetary ramifications of breaching HIPAA privacy standards and accessing medical records.  The Health and Human Services -Office for Civil Rights is stepping up enforcement of HIPAA compliance and the penalties are significant. Therefore, entities need to review their compliance programs and integrity of medical records.

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Fraud Enforcement Cases Highlight the Importance of Accurate Documentation

It is common knowledge that a major focus of The Department of Health and Human Services (HHS) is to prevent and enforce current anti-fraud laws around the country. (www.hhs.gov/news/press (Jan. 24, 2011)). There are many programs that assist with this effort and include: the Health Care Fraud Prevention & Enforcement Action Team (HEAT), Recovery Audit Contracts (RACs), Zone Program Integrity Contractors (ZPICs) and qui tam or whistle blower law suits.  The common thread is that they all rely on the documentation to substantiate their claims.

Last month, the Justice Department accused Kernan Hospital of fraud, “alleging in a civil complaint that it falsely labeled patients as kwashiorkor victims to inflate bills paid by government health programs and insurance companies.” (Jay Hancock, Malnutrition Diagnoses at Kernan Were Fraud, Feds Say, Baltimore Sun (Nov. 7, 2011). Kwashiorkor is common in Africa and other developing nations and is usually seen in children. Labeling “patients as simultaneously suffering from kwashiorkor or other malnutrition increased the amount Kernan was able to bill.” Ibid. While there are many instances where malnutrition may be appropriate, this was not one of them and there was nothing in the medical record to substantiate this condition.

In Houston, a physician was sentenced in Federal Court to 135 months in federal prison for “health care fraud conspiracy that federal officials charged resulted in false billings to Medicare and Texas Medicaid programs for $45,039,230 over a 2 ½ year period.” (SLP Health Care Risk Management & Operations Group News, Houston Doctor Gets 135 Month Health Care Fraud Sentence).

Likewise, in NY, a family-practice physician was indicted by a federal grand jury for allegedly submitting more than $13 million of false claims to Medicare. (John Carreyrou, Doctor Is Indicted in Medicare Case, Wall Street Journal (Nov. 5, 2011)).

In light of this recent activity, providers should assess their clinical documentation improvement and compliance programs. Reviewing documentation for accuracy, specificity and proper code assignment can assist in rebutting a claim for fraud.

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Texting – Another Potential Way to Violate HIPAA

Promulgated in 1996, the Health Insurance Portability and Accountability Act (HIPAA) set standards for protected health information (PHI). PHI includes written, electronic and verbal communications, which encompass: any information that can be used to identify the patient, the patient’s medical conditions and treatments, and billing and payment records. Texting is considered an electronic, written communication and, therefore, falls under the purview of HIPAA. (74 Fed. Reg. 42740 (Aug. 24, 2009)).

According to an American Medical Association article, “physicians who text other doctors could be exposing themselves to privacy and security violations of the Health Insurance Portability and Accountability Act.” Although texting may be more expedient than traditional paging, it also increases liability.
http://www.ama-assn.org/amednews/2011/10/31/bica1031.htm (Oct. 31, 2011).

In addition to federal law, state laws may also apply. "In May of 2011, Texas passed House Bill 300, which amends the Texas Health and Safety Code and contains privacy requirements that are more stringent than the federal privacy requirements of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). In particular, the new Texas law imposes requirements regarding (i) training; (ii) electronic health records access; (iii) sales of protected health information; (iv)notice and authorization for electronic disclosures; (v) enforcement and disciplinary actions; and (vi) audits of covered entities. This new Texas law is effective on September 1, 2012." (http://www.winstead.com/NewsEvents/PublicationsSpeeches?find=49904)

Using an encrypted texting network such as Tiger Text, implementing autolock and remote wiping, and best practices are all ways to mitigate liability. (Ibid.) Other items to consider are: making sure the text is sent to the intended recipient, reading or sending a text in the presence of unauthorized individuals, and implementing training policies. Implementing these suggestions will enable physicians to capitalize on more efficient technology while maintaining the integrity of patient information.

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Two Initiatives Impacting Current Reimbursement and Bundled Payments

Two significant federal government initiatives that impact payment and relate to clinical documentation come into affect in either October 2012 or October 2013. These two items are: value based purchasing (including quality-of-care measures) and hospital acquired conditions.

In May 2011, the federal government issued final regulations for its value based purchasing (VBP) program, which includes a quality of care model for reimbursement. Beginning in FY 2013, an incentive pool will be established and those hospitals that meet or exceed the standards will gain the benefits. Unfortunately, it is funded through a 1% reduction of participating hospitals’ base operating DRG payments. The quality of care domain component, which includes a patient score that measures care quality, patient safety and patient satisfaction, and comes into effect FY 2013, includes two domains. The clinical process of care domain is weighted 70% and patient satisfaction is weighted 30%. In 2014, an outcomes domain is added. And, those hospitals that do not meet the standards, do not receive any payment. (76 Fed. Reg. 26490 (May 6, 2011)). ‣ Read more...

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