Insights

There have been several announcements regarding Medicare audits in the last few weeks.  Here’s a brief recap of the good news and the not-so-good news out of the Centers for Medicare & Medicaid Services (CMS).

Good News:  Temporary Relief from RAC Audits.  On February 18, 2014, CMS called a temporary halt to Recovery Audit Contractors’ (RACs) post-payment reviews.  Noting it is now in the procurement process for the next round of RAC contracts, CMS explained this pause would permit the RACs to complete all outstanding claim reviews by the end date of the current contracts.

Since February 21, the RACs have been prohibited from sending documentation requests to providers to initiate new post-payment reviews.  RACs can continue to initiate automated reviews (those not requiring medical record reviews) through June 1.  By that date, RACs must complete all pending post-payment reviews and submit payment adjustments to the Medicare Administrative Contractors (MACs).

Good News:  Two-Midnight Rule Breathing Room.  CMS also has announced RACs will be permanently prohibited from reviewing patient status reviews for claims with dates of admission October 1, 2013, through October 1, 2014.  However, RACs still may review inpatient admissions for reasons other than compliance with the Two-Midnight Rule.

On March 12, CMS once again updated its FAQs on the Two-Midnight Rule.   According to the revised FAQs, cancelled surgical procedures following an inpatient admission will be reviewed under the same benchmark standard:  whether, at the time of the admission, the physician reasonably expected the patient would require a two-midnight stay.

Not-So-Good News:  Contractor Review of Related Claims.    On February 5, CMS released Transmittal 505 amending section 3.2.3 of the Program Integrity Manual.  Effective March 6, RACs, MACs, and Zone Program Integrity Contractors (ZPICs) can deny other related claims submitted before or after the specific claim under review.

The revised manual provision offers two examples:

• An inpatient claim and associated documentation is reviewed and determined to be not reasonable and necessary, and therefore the physician claim can be determined to be not reasonable and necessary.
• A diagnostic test claim and associated documentation is reviewed and determined to be not reasonable and necessary, and therefore the professional component can be determined to be not reasonable and necessary.

Before this change, auditors could not deny claims unless they gave appropriate consideration to actual claims and associated documentation.  As a general rule, auditors would not invest the resources to review physician claims.

Now, an auditor may issue a denial of a related physician claim automatically when it issues a denial on a hospital claim.  As a result, physicians now have a vested interest in a hospital’s processes to ensure the validity of hospital claims.  And hospitals now have the opportunity to enlist physicians in support of these processes.

If you have questions about the Two-Midnight Rule, coding and documentation, or reimbursement, contact the experts listed below at PYA, (800) 270-9629.

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