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Some set disclaimer thingy-----
Audit, Compliance, and Regulatory GuidelinesPresented by: Rae Jimenez, CPC, CPB, CPMA, CPPM, CPC-I, CCS
Some set disclaimer thingy-----
Federal RegulationsFraud and Abuse Regulations
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Fraud and Abuse
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Fraud
Making false statements or misrepresenting
facts to obtain an undeserved benefit or
payment from a federal health care
program.
Abuse
An action that results in unnecessary costs
to a federal health care program, either
directly or indirectly
Fraud and Abuse
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Fraud examples:
•Billing for services and/or supplies that you
know were not furnished or provided
•Altering claim forms and/or receipts to
receive a higher payment amount
•Billing a Medicare patient above the
allowed amount for their service
•Billing for services at a higher level than
provided or necessary
•Misrepresenting the diagnosis to justify
payment
Abuse examples:
•Misusing codes on a claim
•Charging excessively for services or
supplies
•Billing for services that were not medically
necessary
•Failure to maintain adequate medical or
financial records
•Improper billing practices
•Billing Medicare patients a higher fee
schedule than non-Medicare patients
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Federal RegulationsFraud and Abuse
Federal False
Claims Act
The False Claims Act
prohibits the submission
of false or fraudulent
claims to the Government.
Stark Law and
Anti-Kickback Law
The Stark Law Bans
referrals to entities for a
DHS. The Anti-Kickback
Law prevent providers
from receiving
remuneration for referrals.
The Exclusions
Statute
Under the Exclusions
Statute, a physician may
be banned from
participating in any
Federal or State health
care program by the OIG.
Civil Monetary
Penalties Law
The Civil Monetary
Penalties Law allows the
OIG to seek Civil
Monetary Penalties for a
wide variety of conduct.
Federal False Claims Act 31 U.S.C. §3729(a).1.
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Prohibits the submission of false or fraudulent claims to the Government
The FCA is not violated merely by submitting a false claim, but rather by submitting (or causing to be submitted) a false claim with knowledge that it is false. Section 3729 b.1 defines the terms “knowing” and “knowingly” such that a person must act in deliberate ignorance of the truth or falsity of the relevant information, or acts in reckless disregard of the truth or falsity of the information; however, the Act states that a violation may occur even if there no intent to defraud.
Examples:
•Falsifying a medical chart notation
•Submitting claims for services not performed, not requested, or unnecessary
•Submitting claims for expired drugs
•Upcoding and/or unbundling services
•Submitting claims for physician services performed by a non-physician provider (NPP) without regard to Incident-to guidelines
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Federal False Claims Act
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Qui Tam Provision
The Department of Justice obtained more than $3.5 billion in settlements and judgments from civil cases
involving fraud and false claims against the government in the fiscal year ending Sept. 30, Principal
Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division,
announced today. This is the fourth year in a row that the department has exceeded $3.5 billion in cases
under the False Claims Act, and brings total recoveries from January 2009 to the end of the fiscal year to
$26.4 billion.
Most false claims actions are filed under the Act’s whistleblower, or qui tam, provisions that allow
individuals to file lawsuits alleging false claims on behalf of the government. If the government prevails in
the action, the whistleblower, also known as the relator, receives up to 30 percent of the
recovery. Whistleblowers filed 638 qui tam suits in fiscal year 2015 and the department recovered $2.8
billion in these and earlier filed suits this past year. Whistleblower awards during the same period totaled
$597 million.
Federal False Claims Act
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Qui Tam Rewards
Blue Cross Blue Shield of Massachusetts paid $2.75 million after putting in false Medicare
reports, inflating the number of claims it processed and exaggerating the speed with which
claims were processed. Because of this fraudulent activity, it received larger Government
reimbursements than it was entitled to. The relator was a former employee of BCBS
Massachusetts and recovered $550,000.
Blue Cross Blue Shield of Michigan paid $27,600,000 in a Qui Tam action for submitting false
documentation and fraudulent billing. The fraud occurred when the Government tried to
review a specific set of audits and BCBS backdated their audits to hide what it had done. Mr.
Flynn, a man who had performed audits for Blue Cross Blue Shield, blew the whistle
and was rewarded $5,500,000.
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Federal False Claims Act
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Qui Tam Rewards
For Unnecessary Tests, False Billings, Medicare Fraud
Damon Clinical Laboratories, Inc. fraudulently billed Medicare, Medicaid and CHAMPUS by
bundling medically unnecessary tests not knowingly ordered by doctors. The Government
recovered $83,700,000 and Jeanne Byrne, one of three whistleblowers, received
$9,000,000.
For Laboratory Billing Practices; Medicare/Medicaid Fraud
In another Medicare/Medicaid case involving GlaxoSmithKline and a whistleblower – in which
a man named Merena blew the whistle on fraudulent laboratory billing practices – the
Department of Justice received $333 million. After a seven day evidentiary hearing to
determine the relator’s share, Mr. Merena was awarded $52,049,126.00.
Federal False Claims Act
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False Claims Act Penalties
The statute originally provided for a civil penalty of not less than $5,000, and not more than $10,000, per claim, plus three times the amount of the Government damages if FCA liability was found. This amount is occasionally increased based on the Federal Civil Penalties Inflation Adjustment Act (FCPIA). Current penalties are $5,500 to $11,000 per claim. The person in violation will also be liable for the costs of the civil action brought to recover any such penalty or damages.
Example:
A company was found to have submitted 554 false and fraudulent claims to Medicare, totaling approximately $309,456.
554 claims x $11,000 = $6,094,000
Loss to government $309,456 x 3 = $928,368
$6,094,000 + $928, 368 = $7,022,368 total fines
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Federal False Claims Act
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False Claims Act Penalties
The FCA allows for reduced penalties (mitigation) if the person committing the violation self-
discloses. §3729 a.2 states that the court may assess not less than two times the amount of
damages (as opposed to three times), which the Government sustains because of the act of that
person, if:
•the person responsible furnishes officials of the United States responsible for investigating false
claims violations with all information known to such person about the violation within 30 days after
the date on which the defendant first obtained the information;
•such person fully cooperates with the investigation of such violation; and
•at the time such person furnishes the information about the violation, no criminal prosecution, civil
action, or administrative action has commenced under this title with respect to such violation, and
the person did not have actual knowledge of the existence of an investigation into such violation.
Physician Self-Referral Law42 U.S.C. § 1395nn
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Bans referrals to entities for a DHS
The Physician Self-Referral law is also known as the
Stark law as it was named after Pete Stark. This law
prohibits physicians from referring patients to receive
“designated health services” from entities with which the
physician or an immediate family member has a financial
relationship, with a few exceptions. This law applies to
services payable by Medicare or Medicaid.
Proof of specific intent to violate the law is not required.
Penalties for physicians who violate the Stark law include
fines as well as exclusion from participation in the federal
health care program.
•$15,000 per service
•Three times the amount claimed
Designated Health Services (DHS)
• clinical laboratory services;
• physical therapy services;
• occupational therapy services;
• radiology services;
• radiation therapy services;
• durable medical equipment and
supplies;
• parenteral and enteral nutrients,
equipment, and supplies;
• prosthetic and orthotic devices and
supplies;
• home health services;
• outpatient prescription drugs; and
• inpatient and outpatient hospital services
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Examples of Violations of Stark Law
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$237,454,195 judgment against Tuomey Healthcare System (Tuomey), a small, nonprofit
hospital in Sumter, South Carolina, on July 2, 2015.
The heart of the case involves 19 part-time physician employment agreements that Tuomey
entered into with surgeons on its medical staff. The impetus for these arrangements
apparently arose from a concern that these physicians were increasingly performing
outpatient surgeries at their offices or at ambulatory surgery center (ASC) facilities, rather
than as outpatient hospital surgeries, and thus Tuomey was losing revenue it would otherwise
receive from the facility fees generated by outpatient hospital services. According to the
whistleblower and the government, Tuomey entered into these part-time employment
agreements in order to stem the loss of this business.
Anti-Kickback Law
42 U.S.C. § 1320a-7b(b)
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Prohibits remuneration to induce or reward patient referrals
The Anti-Kickback law is similar to the Stark law but imposes more severe penalties, making
it a felony to receive payment or remuneration in return for referring a patient to another
entity. This law requires proof of intention, and states that the person must “knowingly and
willfully” violate the law. This law applies to referrals from anyone, not just physicians and
applies to any items or services.
Penalties include criminal fines of up to $25,000 per violation and up to a 5 year prison term
per violation. In addition, civil penalties may be applied including:
•False Claims Act liability
•Civil monetary penalties and program exclusions
•Potential $50,000 CMP per violation
•Civil assessment of up to three times the amount of kickback
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Anti-Kickback Law
42 U.S.C. § 1320a-7b(b)
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Example:
Medicare and Medicaid programs require patients to pay copays for service.
Physicians are required to collect the copays due from the patients. When these
copays are routinely waived, the physician could violate the Anti-Kickback law.
You may waive a copy if an individual determination is made that the patient cannot
afford to pay, or if you have made reasonable collection efforts and they have failed.
Waive Amounts Owed by Medicare Beneficiaries for
Self-Administered Drugs
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OIG Policy Statement Regarding Hospitals That Discount or Waive Amounts Owed by Medicare Beneficiaries for
Self-Administered Drugs Dispensed in Outpatient Settings
http://oig.hhs.gov/compliance/alerts/guidance/policy-10302015.pdf
Ordinarily, routine discounts or waivers of costs owed by Medicare beneficiaries, including cost-sharing amounts,
potentially implicate the Federal anti-kickback statute,6 the civil monetary penalty and exclusion laws related to
kickbacks,7 and the Federal civil monetary penalty law prohibiting inducements to beneficiaries.8 Nonetheless, in the
limited circumstances described in this Policy Statement, hospitals will not be subject to OIG administrative sanctions if
they discount or waive amounts that Medicare beneficiaries owe for Noncovered SADs (including Noncovered SADs that
may be covered under Medicare Part D) the beneficiaries receive in outpatient settings, subject to the following
conditions: • This Policy Statement applies only to discounts on, or waivers of, amounts Medicare beneficiaries owe for
Noncovered SADs that the beneficiaries receive for ingestion or administration in outpatient settings;9 • Hospitals must
uniformly apply their policies regarding discounts or waivers on Noncovered SADs (e.g., without regard to a beneficiary’s
diagnosis or type of treatment); • Hospitals must not market or advertise the discounts or waivers; and • Hospitals must
not claim the discounted or waived amounts as bad debt or otherwise shift the burden of these costs to the Medicare or
Medicaid programs, other payers, or individuals.
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The Exclusions Statute42 U.S.C. § 1320a-7
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Requires the OIG to exclude providers from federal healthcare programs for
certain violations
The Exclusion Statute legally requires the OIG to exclude individuals or entities from
participation in all federal health care programs who have been convicted of:
•Medicare or Medicaid fraud or other offenses related to the delivery of items or services
under Medicare or Medicaid.
•Patient abuse or neglect
•Felony convictions for other health care related fraud, theft, or other financial misconduct
•Felony convictions for unlawful manufacture, distribution, prescription or dispensing of
controlled substances
Exclusion can be mandatory or permissive. The exclusion will not be less than five years, but
could be longer if aggravating factors exist.
Civil Monetary Penalties Law42 U.S.C. § 1320a-7a
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Allows the OIG to seek Civil Monetary Penalties for a wide variety of conduct
The Social Security Act authorizes the Secretary of HHS to seek civil monetary penalties, assessments, and exclusions for many types of conduct. The Secretary of HHS has delegated many of these authorities to the OIG. The Civil Monetary Penalties Law(CMPL) contains many of the OIG’s civil monetary penalties (CMPs). One of the reasons the OIG may seek CMPs against a person is for improper filing of claims. The law states that any person is in violation if he or she knowingly presents, or causes to be presented, a claim to any Federal or State agency that the Secretary determines:
• is for a medical service or other item or service that the person knows or should know was not provided as claimed, including any person who engages in a pattern or practice of presenting or causing to be presented a claim for an item or service that is based on a code that the person knows or should know will result in a greater payment to the person than the code the person knows or should know is applicable to the item or service actually provided (upcoding, miscoding, etc);
• is for a medical or other item or service and the person knows or should know the claim is false or fraudulent;
• is presented for a physician’s service, or item or service incident to a physician’s service, by a person who knows or should know that the individual who furnished or supervised the service was not a licensed physician, was a licensed physician but with a license obtained through a misrepresentation of material fact, or represented to the patient at the time the services was furnished that the physician was certified in a medical specialty by a medical specialty board when they individual was not so certified;
• is for a medical or other service that was furnished during a period in which the person was excluded from the Federal healthcare program under which the claims was made;
• is for a pattern of medical or other items or services that a person knows or should know are not medically necessary.
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Civil Monetary Penalties Law42 U.S.C. § 1320a-7a
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Process
The OIG will initiate the case by sending a demand letter outlining the CMP,
assessment, and/or exclusions sought by the OIG, and the facts supporting the
sanction. If the subject of the action disagrees, he/she can request a hearing before
an HHS administrative law judge (ALJ).
The OIG will seek to settle the allegations before proceeding to action. If a
settlement is not reached, the law provides for the method of proceeding. There is
also a provision for review by a court of appeals that a defendant may file within 60
days of a determination of guilt.
Civil Monetary Penalties Law42 U.S.C. § 1320a-7a
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Penalties
CMPs may range from up to $10,000 to $50,000 per violation, depending on the type of violation and the entity. They may also include an assessment of up to three times the amount claimed for each item or service, or up to three times the amount of remuneration offered, paid, solicited, or received. For example, for fraudulent claims, the OIG may seek a penalty of up to $10,000 for each item or service improperly claimed, and an assessment of up to three times the amount of the improperly claimed.
Example
The OIG investigates a provider for billing
for services that were not rendered. It is
determined the provider submitted 25
fraudulent claims, resulting in $20,000 in
over-payments made to the provider.
The maximum penalty the OIG may seek
for fraudulent claims is $10,000 per item or
services and an assessment of up to three
times the amount of the over-payments.
Calculation of maximum penalty:
25 claims x $10,000 = $250,000
$20,000 in overpayments x 3 = $60,000
$250,000 + $60,000 = $310,000 maximum
penalty that can be assessed.
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Office of Inspector GeneralU.S. Department of Health & Human Services
OIG Work Plan
Sets forth various projects to be addressed during the fiscal year by the Office of Audit Services, Office of
Evaluation and Inspection, Office of Investigations, and
Office of Counsel to the Inspector General.
Corporate Integrity
Agreements
Negotiated as part of a
settlement of federal
health care program
investigations arising
under a variety of civil
false claims statutes.
Compliance Plans
Compliance program guidance to encourages development and use of
internal controls to monitor adherence to applicable statutes, regulations, and program requirements.
OIG Work Plan
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Example
NEW Physician home visits–reasonableness of services We will determine whether Medicare payments to physicians for evaluation and management home visits were reasonable and made in accordance with Medicare requirements. Since January 2013, Medicare made $559 million in payments for physician home visits. Physicians are required to document the medical necessity of a home visit in lieu of an office or outpatient visit. Medicare will not pay for items or services that are not "reasonable and necessary." (Social Security Act, §1862(a)(1)(A)) (OAS; W-00-15-35754; expected issue date: FY 2016)
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OIG Work Plan
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Example
NEW Prolonged services–reasonableness of services We will determine whether Medicare payments to physicians for prolonged evaluation and management (E/M) services were reasonable and made in accordance with Medicare requirements. Prolonged services are for additional care provided to a beneficiary after an evaluation and management service has been performed. Physicians submit claims for prolonged services when they spend additional time beyond the time spent with a beneficiary for a usual companion evaluation and management service. The necessity of prolonged services are considered to be rare and unusual. The Medicare Claims Process (MCP) manual includes requirements that must be met in order to bill a prolonged E/M service code. (MCP manual, Pub. 100-04, Ch. 12, Sec. 30.6.15.1(OAS; W-00-15-35755; expected issue date: FY 2016)
Corporate Integrity Agreements
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Negotiated as part of a settlement of federal health care program
investigations arising under a variety of civil false claims statutes
Most CIAs have the same core requirements, along with specific steps for the individual or entity that are related to the
conduct that led to the settlement. The core requirements are as follows for an individual or entity engaged in a
corporate integrity agreement:
•Hiring a compliance officer/appointing a compliance committee;
• Developing written standards and policies;
• Implementing a comprehensive employee training program;
• Retaining an independent review organization (IRO) to conduct annual reviews;
• Establishing a confidential disclosure program;
• Restricting employment of ineligible persons;
• Reporting overpayments, reportable events, and ongoing investigations/legal proceedings; and
• Providing an implementation report and annual reports to the OIG on the status of the entity’s compliance activities.
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Corporate Integrity Agreements
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Independent Review Organization (IRO)
• Retaining an independent review organization (IRO) to conduct annual
reviews
• The CIA will contain the details of the IRO and the responsibility of the
individual or entity in respect to the IRO
• Discover Sample – 50 sampling units
• Error rate exceeding 5% prompts Full Sample
• Statistical sampling program – RAT STATS
Compliance Plans
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Compliance plan core elements
The OIG has identified seven elements that should be present in every compliance plan based on
criteria adopted by the federal government in the federal sentencing guidelines. The OIG lists seven
fundamental elements for an effective compliance program, which are:
1. Implementing written policies, procedures and standards of conduct;
2. Designating a compliance officer and/or compliance committee;
3. Conducting effective training and education;
4. Developing effective lines of communication;
5. Enforcing standards through well-publicized disciplinary guidelines;
6. Conducting internal monitoring and auditing; and
7. Responding promptly to detected offenses and developing corrective action
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Compliance Plans
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Non-compliance
The compliance guidance also indicates that whenever non-compliance is identified by the
compliance staff, corrective action must be taken, although there can be varying degrees of
disciplinary action. Any finding of non-compliant conduct must be documented in the compliance
files and should include:
•date of incident
•name of the reporting party
•name of the person responsible for taking action
•the follow-up action taken
Compliance Plans
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Potential benefits
• Increasing accuracy of documentation;
• Increasing the speed and optimization of proper payment of claims;
• Minimizing billing mistakes;
• Reducing the chances that an audit will be conducted by CMS or the OIG;
and
• Avoiding conflicts with the self-referral and anti-kickback statutes.
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Compliance Plans
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CMS’ five practical tips for creating a culture of compliance:
1. Make compliance plans a priority now.
2. Know your fraud and abuse risk areas.
3. Manage your financial relationships.
4. Just because your competitor is doing something doesn’t mean you can,
or should.
5. When in doubt, ask for help.
Centers for Medicare & Medicaid
ServicesCMS Guidelines
CoP/CfC
Conditions of Participation
and Conditions for
Coverage
RACs
Recovery Audit
Contractors
NCCI & MUE
National Correct Coding
Initiative and Medically
Unlikely Edits
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Conditions of Participation/Conditions for Coverage
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Standards that must be met in order to participate
The Federal Register sets forth standards in Conditions of Participation (CoP) and Conditions for Coverage (CfC) that
must be met to participate in Medicare and Medicaid Programs. The standards include guidelines for documentation and
apply to both hospitals and ambulatory surgery centers.
42 CFR §482.24 outlines the Conditions of Participation for medical record services. The conditions include that each
patient should have a medical record; medical records must be organized to allow for prompt completion, filing, and
retrieval; record must be retained for at least five years; and, patient confidentiality should be protected.
Although there are not Conditions of Participation specifically for providers, an auditor should understand the CoPs exist,
and often define medical record standards for facilities.
Conditions of Participation/Conditions for Coverage
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§ 482.24 Condition of participation: Medical record services.
(4) All records must document the following, as appropriate:
(i) Evidence of—
(A) A medical history and physical examination completed and documented no more than 30 days before or 24 hours after admission or registration, but prior to surgery or a procedure requiring anesthesia services. The medical history and physical examination must be placed in the patient's medical record within 24 hours after admission or registration, but prior to surgery or a procedure requiring anesthesia services.
(B) An updated examination of the patient, including any changes in the patient's condition, when the medical history and physical examination are completed within 30 days before admission or registration. Documentation of the updated examination must be placed in the patient's medical record within 24 hours after admission or registration, but prior to surgery or a procedure requiring anesthesia services.
(ii) Admitting diagnosis.
(iii) Results of all consultative evaluations of the patient and appropriate findings by clinical and other staff involved in the care of the patient.
(iv) Documentation of complications, hospital acquired infections, and unfavorable reactions to drugs and anesthesia.
(v) Properly executed informed consent forms for procedures and treatments specified by the medical staff, or by Federal or State law if applicable, to require written patient consent.
(vi) All practitioners' orders, nursing notes, reports of treatment, medication records, radiology, and laboratory reports, and vital signs and other information necessary to monitor the patient's condition.
(vii) Discharge summary with outcome of hospitalization, disposition of case, and provisions for follow-up care.
(viii) Final diagnosis with completion of medical records within 30 days following discharge.
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National Correct Coding Initiative (NCCI)
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Background
• Implemented to:
• promote correct coding methodologies; and
• control improper assignment of codes that result in inappropriate
reimbursement.
• Based on:
• Standard medical and surgical practice;
• Coding conventions included in CPT;
• Coding guidelines developed by national medical societies;
• Local and national coverage determinations; and
• Review of current coding practices.
National Correct Coding Initiative (NCCI)
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NCCI Policy Manual
“Occasionally a provider may perform two procedures that should not be
reported together based on an NCCI edit. If the edit allows use of NCCI-
associated modifiers to bypass it and the clinical circumstances justify use
of one of these modifiers, both services may be reported with the NCCI-
associated modifier. However, if the NCCI edit does not allow use of
NCCI-associated modifiers to bypass it and the procedure qualifies as an
unusual procedural service, the physician may report the column one
HCPCS/CPT code of the NCCI edit with modifier 22. The Carrier (A/B
MAC processing practitioner service claims) may then evaluate the
unusual procedural service to determine whether additional payment is
justified.“
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Medically Unlikely Edits (MUE)
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Edits based on units of service
• Lower the Medicare Fee-For-Service Paid Claims Error Rate
• Define maximum units of service that a provider would report:
• Under most circumstances
• For a single beneficiary
• One a single date of service
• For a specific HCPCS/CPT code
Recovery Audit Contractors (RACs)
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Overview
Recovery Audit Contractors by region:• Region A: Performant Recovery
• Region B: CGI Federal, Inc.
• Region C: Connolly, Inc.
• Region D: HealthDataInsights, Inc.
RAC Requirements: • Maintain 95% accuracy rate
• Maintain overturn rate of less than 10%
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Recovery Audit Contractors (RACs)
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What do RACs audit?
• CMS approved issues
• Examples include:
• Cataract surgery-Complex
• Inpatient rehab-Complex
• Incorrect billing of hydration therapy-Automated
• Major joint replacement-Automated
• Incorrect billing of E/M-Complex
Recovery Audit Contractors (RACs)
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Types of review
• Automated - no medical record needed. Improper payments are
determined based solely on the submitted claims and regulatory
guidelines such as National Coverage Determinations, Local Coverage
Determinations, and the CMS Manuals.
• Semi-Automated - claims review using data and potential human review of
a medical record or other documentation. Medical records are supplied at
the discretion of the provider to support a claim identified by data analysis
as an improper payment.
• Complex - medical record required.
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