Washington & West Resources

Written by Linda Fotheringill, Esq.

The RACs certainly have our attention. However, the MACs (e.g., Fiscal Intermediaries, Carriers and Medicare Administrative Contractors) deserve equally as much or even more of our attention. Consider this:

The CMS June 2008 Program Evaluation of the RAC Demonstration reported $992.7 million in overpayments collected from providers. But additionally, in a similar time period, the Medicare claims processing contractors (i.e., the MACs) in New York, Florida, and California corrected over $13 million in improper payments and prevented an additional $1.8 billion in alleged improper payments by denying claims before they were paid. Unlike RACs, which perform revisions only after a claim has been paid, Medicare claims processing contractors may automatically review claims or choose claims for medical review before they are paid. The $1.8 billion figure includes both automated and complex prepay review.

The math alone indicates that the MACs may be of more concern to Providers than the RACs. Additionally, the MACs can impose “severe administrative action” such as 100 percent prepayment review, payment suspension, and use of statistical sampling for overpayment estimation of claims.

Despite the evidence of the significant financial impact of MAC activity, Providers appear to be less reactive to the MACs as compared to the RACs. For instance, CMS has reported that providers chose to appeal only 14% of the Claim RAC determinations with 4.6% overturned on appeal.[1] By comparison, from FY 2005 to FY 2007, the Medicare claims processing contractors in all States denied 312 million claims and Providers chose to appeal only 4 % of those determinations (12.2 million claims). Only 2.3 percent (7.2 million claims) were overturned on appeal.

Query: Are MACs more capable than RACs of determining alleged improper payments, or are Providers more complacent with respect to MAC denials and/or unprepared to respond to MAC denials?

So what is a Provider to do?

I suggest that if you have not done so already, convert your “RAC Team” into a “Medicare Team” to expand the scope of your preparedness and prevention activities. Further, a “RAC Tracking Tool” is probably not sufficient. Optimally, all Medicare denials should be tracked on one platform.

One task on your Medicare Team’s agenda should be reviewing the Medicare Program Integrity Manual, which will provide information on the various Medical Review (MR) programs.

CMS contracts with carriers, fiscal intermediaries (FIs), Zone Program Integrity Contractors (ZPICS – formerly Program Safeguard Contractors), and Medicare Administrative Contractors (MAC) to analyze data, write local coverage determinations (LCD), review claims, and educate providers. All of these entities are referred to by CMS as Medicare “contractors.”

Contractors may perform medical review functions for all claims appropriately submitted to a Medicare fiscal intermediary, Medicare carrier, Part A and B Medicare administrative contractor (A/B MAC), and durable medical equipment Medicare administrative contractor (DME MAC).

The goal of the Medical Review program is to identify and address billing errors concerning coverage and coding made by providers.

With respect to “errors”, CMS acknowledges that most errors do not represent fraud since most errors are not acts that were committed “knowingly, willfully, and intentionally”. However, CMS states that in situations where a provider has repeatedly submitted claims in error, the MR unit shall take additional action. Examples of additional actions include the following:

•  Provider notification or feedback and reevaluation after notification,
•  100 percent prepayment review,
• Payment suspension, and
•  Use of statistical sampling for overpayment estimation of claims.

Obviously, it is of critical importance for your “Medicare Team” to implement a process that ensures claims are not repeatedly submitted in “error”. Hence the need to

A) Vigorously defend and appeal all wrongfully denied claims, and

B) To track all Medicare denials on one platform for feedback purposes.

A Few MAC Facts to Consider:

1) MACs can request documentation from a third party if the MAC simultaneously solicits the same information from the billing provider or supplier. Some examples of third parties are a physician’s office (e.g., if claim is for lab, x-ray, or Part A service requiring medical documentation), or a hospital (e.g., if claim is for physician’s inpatient services). (Beneficiaries are not third parties.)

But here is the problem:

If information is requested from both the billing provider or supplier and a third party (i.e., a Physician’s office) and no response is received from either within 45 days after the date of the request (or extension), the contractor will deny the claim, in full or in part, as not reasonable and necessary.

If information requested from both the billing provider or supplier and a third party and a response is received from one or both, but the information fails to support the medical necessity of the service, the contractor shall deny the claim, in full or in part, using appropriate denial codes.

Therefore, payment of a hospital’s inpatient Part A Claim could depend upon a physicians’ office supplying requested documentation in a timely manner. Since so much is at stake with a simultaneous request for documentation, the Medicare Team should consider implementing a process to follow up with the other party to ensure compliance with the documentation request.

2) MACs may choose to deny claims without reviewing attached or simultaneously submitted documentation “(1) when clear policy serves as the basis for denial, and (2) in instances of medical impossibility.” It is concerning that CMS defines “clear policy” as follows:

“The term “clear policy” means a statute, regulation, NCD, coverage provision in an interpretive manual, or LCD that specifies the circumstances under which a service will always be considered non-covered or incorrectly coded. Clear policy that will be used as the basis for frequency denials must contain utilization guidelines that the contractor considers acceptable for coverage.”

In my experience, utilization guidelines, LCDs and even NCDs are often subjective and open to interpretation. If MACs choose to decline review of “simultaneously submitted documentation”, it appears that even a Provider appeal may not be reviewed. Accordingly, an appealed claim may not receive any type of fair consideration until the Administrative Law Judge level.

In conclusion, our plates are full with RAC preparedness, but there is every reason to expand the scope of our efforts to comply with the challenges presented by other Medicare contractors.

About the Author

Linda Fotheringill, Esq., is a founding member of Washington West, LLC, and is a nationally recognized expert on denial and appeals management. Ms. Fotheringill successfully assists hospitals across the country, overturning “hopeless” denials and generating millions of dollars in otherwise lost revenue.

Contact the Author:  l.fotheringill@washingtonwest.com