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Conducting an Audit Risk Assessment:
How to Minimize Your Financial
Exposure to the RACs and
Other Audit Contractors
Frank D. Cohen
Senior Analyst
The Frank Cohen Group, LLC
www.frankcohengroup.com
frank@frankcohengroup.com
SLIDE 1
Improper Medicare FFS
Payments Report
•
•
•
CERT
 Comprehensive Error Rate Testing
 Carriers, DMERCs, FIs
HPMP
 Hospital Payment Monitoring Program
 QIOs
Each component measures 50% of the error rate
©2011 RAC MONITOR LLC
SLIDE 2
Logistical Organization of
Study
©2011 RAC MONITOR LLC
SLIDE 3
CERT-specific Methodology
•
Randomly sampled 99,500




•
•
•
•
Initial request sent via letter
After 19 days, 3 subsequent letters were sent
After 55 days, documentation considered late
Documentation received after the cutoff date (or
not received at all) counted as errors
Initial Request
First follow-up Letter (on day 20)
Second follow-up Letter (sent on day 35)
Final Letter (OIG notification/request on day 45)
©2011 RAC MONITOR LLC
SLIDE 4
Major Categories of Errors
Paid Claims Error Rate

This rate is based on dollars paid after the Carrier/DMERC/FI/QIO
made its payment decision on the claim/admission. The paid
claims error rate is the percentage of dollars erroneously allowed
to be paid and is based on dollars
Provider Compliance Error Rate

This rate is based on how the claims looked when they first arrived
at the Carrier/DMERC/FI before edits were applied or reviews were
conducted. This rate measures how well providers prepared
claims for submission and is also based on dollars
Services Processed Error Rate

This rate is based on services processed and measures whether
the Carrier/DMERC/FI made appropriate payment decisions on
claims. This is a gross rate that combines both overpaid and
underpaid amounts and is based on numbers of services
©2011 RAC MONITOR LLC
SLIDE 5
Types of Errors Reported
•
•
•
•
•
No documentation—the provider fails to respond to repeated
attempts to obtain the medial records in support of the claim.
Insufficient documentation—the medical documentation
submitted does not include pertinent patient facts (e.g. the
patient’s overall condition, diagnosis, and extent of services
performed).
Medically unnecessary service—claim review staff identify
enough documentation in the medical records submitted to
make an informed decision that the services billed were not
medically necessary based on Medicare coverage policies.
Incorrect coding—providers submit medical documentation
that support a lower or higher code than the code submitted.
Other—Represents claims that do not fit into any of the other
categories (e.g. service not rendered, duplicate payment error,
not covered or unallowable service).
©2011 RAC MONITOR LLC
SLIDE 6
Summary Results for 2009
•
•
The national paid claims error rate in the Medicare
FFS program for this reporting period is 7.8% (which
equates to $24.1 B)
19,000 claims were reviewed using the most
stringent criteria. The national paid claims error rate
for those, when applied to the entire year, is 12.4%
or $35.4 billion
©2011 RAC MONITOR LLC
SLIDE 7
Error Rates by Category
Incorrect Coding
21%
Other
1%
No
Documentation
1%
Insufficient
documentation
25%
Medically
Unnecessary
52%
©2011 RAC MONITOR LLC
SLIDE 8
Services with Over coding
Errors
©2011 RAC MONITOR LLC
SLIDE 9
Error Rates by Provider Type
•
•
•
There is a trend of higher
provider compliance error
rates among the generalist
primary care specialties
compared to subspecialties
Based on an average of the
minimum number of
HCPCS codes to
encompass 75% of
services, generalists used
more codes than
specialists.
Conclusion: the more
HCPCS codes, the greater
the potential for coding
errors.
©2011 RAC MONITOR LLC
SLIDE 10
Error Rate by Payer
Actual
Overpymt
Carrier Cluster
Actual
Underpymt
Actual
Improper
Projected Overpymt Projected Underpymt
Projected Improper
Payment
First Coast Service Options FL 00590
$37,380
$387
$37,767
$775,436,055
$8,028,911
$783,464,966
NHIC CA 31140/31146
$10,500
$328
$10,828
$292,909,393
$9,211,641
$302,121,034
$6,998
$444
$7,442
$276,953,075
$17,222,583
$294,175,659
Empire NY 00803
$17,115
$377
$17,491
$249,748,140
$5,495,327
$255,243,467
Empire NJ 00805
$15,336
$458
$15,793
$227,749,786
$6,796,180
$234,545,967
Trailblazer TX 00900
$8,233
$257
$8,490
$189,897,448
$5,930,107
$195,827,556
Cahaba AL/GA/MS 00510/00511/00512
$8,117
$521
$8,637
$168,815,964
$11,272,514
$180,088,478
BCBS AR AR/NM/OK/MO/LA 00520/00521/00522/00523/00528
$8,285
$498
$8,783
$158,145,724
$9,284,481
$167,430,205
Noridian AK/AZ/HI/NV/OR/WA 00831/00832/00833/00834/00835/00836
$8,037
$211
$8,248
$136,681,522
$3,444,595
$140,126,116
Trailblazer MD/DE/DC/VA 00901/00902/00903/00904
$9,244
$309
$9,553
$129,958,106
$4,299,658
$134,257,765
Palmetto OH/WV 00883/00884
$7,495
$161
$7,655
$123,624,416
$2,648,868
$126,273,284
CIGNA NC 05535
$7,596
$1,311
$8,907
$91,809,062
$15,850,130
$107,659,193
HGSA PA 00865
$6,150
$247
$6,397
$90,038,025
$3,609,450
$93,647,474
AdminaStar IN/KY 00630/00660
$4,884
$1,192
$6,076
$69,344,358
$15,646,140
$84,990,497
NHIC ME/MA/NH/VT 31142/31143/31144/31145
$6,275
$481
$6,755
$69,168,943
$5,298,564
$74,467,507
Noridian ND/CO/WY/IA/SD 00820/00824/00825/00826/00889
$6,216
$664
$6,881
$56,217,240
$5,910,433
$62,127,673
CIGNA TN 05440
$5,913
$478
$6,391
$49,906,883
$4,033,625
$53,940,509
BCBS KS/NE/W MO 00650/00655/00651
$5,800
$928
$6,728
$42,237,800
$6,723,886
$48,961,686
Palmetto SC 00880
$8,750
$510
$9,260
$41,094,055
$2,395,826
$43,489,882
HealthNow NY 00801
$5,834
$284
$6,118
$41,433,801
$2,013,945
$43,447,746
$19,365
$629
$19,995
$38,731,752
$1,257,116
$39,988,868
First Coast Service Options CT 00591
$6,685
$434
$7,119
$35,203,199
$2,282,944
$37,486,143
GHI NY 14330
$7,942
$1,082
$9,025
$15,316,445
$2,087,275
$17,403,719
Noridian MAC Region 3 03002
$6,808
$642
$7,450
$10,127,123
$404,190
$10,531,313
Noridian UT 00823
$4,664
$295
$4,959
$9,661,709
$611,612
$10,273,321
BCBS AR RI 00524
$7,938
$276
$8,215
$8,295,618
$288,895
$8,584,513
CIGNA ID 05130
$3,642
$439
$4,080
$4,009,852
$483,073
$4,492,925
BCBS MT 00751
$2,499
$220
$2,719
$3,037,173
$267,420
$3,304,593
$253,701
$14,062
$267,762
$3,405,552,666
$152,799,391
$3,558,352,057
WPS WI/IL/MI/MN 00951/00952/00953/00954
Triple S, Inc. PR/VI 00973/00974
Combined
©2011 RAC MONITOR LLC
SLIDE 11
Is Your Practice at Risk?
•
Or, Show Me the Money!
•
Risk can be assessed by:




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Error Category
Carrier Location
Service Type
Specialty
Code Category
Participation Status
•
Based on both real-time and historical findings
•
Successful appeals may or may not affect risk
©2011 RAC MONITOR LLC
SLIDE 12
By Error Category
•
Insufficient Documentation

•
Medically Unnecessary
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

•
Do you coordinate and sequence ICD-9 codes and CPT
codes?
Do you have sufficient documentation to support the level
of care claimed?
Does your utilization raise potential compliance flags?
Non-Response


•
If your documentation cannot pass in internal review, it will
probably not pass a CERT review
This will be the primary target for OIG intervention
You MUST respond to requests for information
Coding Errors


This includes the proper use of modifiers; a potential
methodological target since CY 2004
Make sure services billed are provided by the billing
provider
©2011 RAC MONITOR LLC
SLIDE 13
By Carrier Location
•
•
Budgets tied to carrier action
The following accounted for over 50% for all
carriers





First Coast FL
NHIC California
WPS WI/IL/MI/MN
Empire NY
Empire NJ
©2011 RAC MONITOR LLC
SLIDE 14
By Service Type
•
•
•
•
Hospital Visits (99233, 99232, 99223)
Office Visits (99214, 99215, 99204)
Consults (99244, 99254, 99255)
DME (A2453)
©2011 RAC MONITOR LLC
SLIDE 15
By Specialty
•
Chiropractic


•
Physical Therapy

•

2nd highest adjusted rate (15.3%) and one of the
most significant dollar amounts ($2,068,262,916)
Corresponds to higher unique HCPCS incidence
(26.38)
Cardiology

•
Highest when adjusted for non-response (16.4%)
Internal Medicine

•
Highest error rate, primarily due to
misunderstanding of Medicare regs
Relatively low dollar amount ($76,784,304)
13.2% and $820,443,122
Family Practice

13.1% and $632,616,380
©2011 RAC MONITOR LLC
SLIDE 16
Code Category
•
•
•
While not stated specifically in the study,
historical data suggests that E/M codes have a
higher error rate and are more subject to audit
and review
Some medical procedures, i.e., ESRD-related
services, are at higher risk for audit and review
Utilization of codes and modifiers outside of peeraveraged norms may increase the risk for audit
and review
©2011 RAC MONITOR LLC
SLIDE 17
Code and Modifier Analysis
Quantitative Methods
SLIDE 18
Utilization Analyses
•
•
•
Utilization of both procedure codes and modifiers
have gained in analytical importance over the
past three years
OIG and carriers benchmark utilization data to
determine potential for fraud and abuse
Practices benchmark utilization data to identify
areas of compliance risk, provider performance,
and financial opportunities
©2011 RAC MONITOR LLC
SLIDE 19
Data Requirements
•
Production report with frequency


Aggregate for single provider or global analysis
Segregated for more in-depth analysis

•
Daily transaction report

•
By provider and/or location and/or department
For time-series analyses
Comparative data for control group
©2011 RAC MONITOR LLC
SLIDE 20
Procedure Code Utilization
•
Comparisons are conducted against national
averages by specialty

•
•
Uses the P/SPS Master file from CMS
Critically, top 10 - 25 codes are compared with
national CI levels to determine significance of
variability (aberrancies)
Harvard/RUC time assessments are assigned to
each code in order to assess believability of
reported provider work load is hours

OIG allows 2 times FMV before investigating
©2011 RAC MONITOR LLC
SLIDE 21
Code Utilization - Specialty
Gastroenterology
National
CPT Code Description
99213
Office/outpatient visit, est
99232
Subsequent hospital care
43239
Upper GI endoscopy, biopsy
99214
Office/outpatient visit, est
99231
Subsequent hospital care
45378
Diagnostic colonoscopy
99254
Inpatient consultation
45380
Colonoscopy and biopsy
45385
Lesion removal colonoscopy
J1745
Infliximab injection
99244
Office consultation
99243
Office consultation
99212
Office/outpatient visit, est
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
©2011 RAC MONITOR LLC
Practice
Percent of Total
12.01%
11.10%
6.59%
6.29%
5.95%
4.58%
3.64%
3.61%
3.21%
3.13%
3.10%
2.47%
2.39%
Rank
Percent of Total
4
7.26%
7
11
5.86%
3.30%
3
7.30%
10
12
1
8
4.47%
2.54%
9.86%
5.69%
6
5.88%
SLIDE 22
Code Utilization – By Provider
National
CPT Code Description
99213
Office/outpatient visit, est
99232
Subsequent hospital care
99214
Office/outpatient visit, est
Q9944
IVIG non-lyophil 10 mg
99233
Subsequent hospital care
93010
Electrocardiogram report
99231
Subsequent hospital care
99312
NURSING FAC CARE, SUBSEQ
J0880
Darbepoetin alfa injection
Q0137
Darbepoetin alfa, non-esrd
93000
Electrocardiogram, complete
99212
Office/outpatient visit, est
99223
Initial hospital care
90658
Flu vaccine, 3 yrs & >, im
99211
Office/outpatient visit, est
99238
Hospital discharge day
Q9942
IVIG lyophil 10 mg
Q0136
Non esrd epoetin alpha inj
J1564
Immune globulin 10 mg
80053
Comprehen metabolic panel
99215
Office/outpatient visit, est
J9263
Oxaliplatin
85610
Prothrombin time
99311
NURSING FAC CARE, SUBSEQ
85025
Complete cbc w/auto diff wbc
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
©2011 RAC MONITOR LLC
Practice
Percent of Total
13.47%
8.16%
7.78%
6.26%
3.02%
2.45%
2.15%
1.72%
1.68%
1.58%
1.56%
1.41%
1.38%
1.36%
1.33%
1.32%
1.19%
1.13%
1.10%
1.10%
1.09%
1.05%
0.85%
0.79%
0.73%
Rank
Percent of Total
1
2
4
20.87%
10.22%
7.77%
10
2.24%
11
24
23
1.81%
0.58%
0.62%
SLIDE 23
Global Surgical Package Codes
•
•
99024 is used to report post-surgical follow-up
services for the period of time following the
procedure as defined in the Global Surgery
guidelines. While this procedure should be
reported, the RVU values (and hence the charge)
are absorbed into the primary procedure itself.
Hence, no charges should be reported for the
99024
The relationship of these codes to global surgical
codes with 10 and 90 day follow-up periods is
important for reporting purposes
©2011 RAC MONITOR LLC
SLIDE 24
Utilization Example – Global
Surgery
•
Endoscopy/Minor Procedure

•
Minor Surgery

•
144 codes, 1,793 occurrences
Major Surgery

•
245 codes, 27,325 occurrences
155 codes, 345 occurrences
99024 (Surgical Follow Up)


615 times, 28.77% of major/minor procedures
178% (1.78 to 1) of major procedures
©2011 RAC MONITOR LLC
SLIDE 25
Example - Ophthalmology
Codes
•
New Ophthalmology Patient Visit



•
Established Ophthalmology Patient Visit



•
92002 and 92004
Major confusion between these and E&M codes
99201 – 99205
NOpV to NOV = 2.36 to 1
92012 and 92014
Major confusion between these and E&M codes
99211 – 99215
EOpV to EOV = 1.35 to 1
E&M codes pay more and as such, are subject to
detailed review and scrutiny
©2011 RAC MONITOR LLC
SLIDE 26
Modifier Utilization
•
Comparisons are done by code category and by
specialty


•
•
•
•
E/M-only modifiers are compared to E/M codes
All other codes are compared to total levels
Global comparison shows modifier utilization by
specialty for all specialties
Specialty comparison shows utilization for that
specific specialty
Provider comparison shows utilization for each
provider by specialty
Data is used to identify potential compliance
problems for high-risk modifier usage
©2011 RAC MONITOR LLC
SLIDE 27
High Risk Modifiers
•
-24 Use of E/M during Post-op Period
-25* Separately Identifiable E/M Service
-58 Staged/Related Procedure – Same Doc during postop
-59* Distinct Procedural Service (specific for CCI edits)
-62 Two Surgeons
-63 Procedure performed on infant < 4kg
-76 Repeat procedure by same physician
-78 Return to OR for related procedure during post-op
-80 Assistant Surgeon
-AS Assistant Surgeon – NP or PA
-GE Performed by resident without physician supervision
•
* See OIG Reports
•
•
•
•
•
•
•
•
•
•
©2011 RAC MONITOR LLC
SLIDE 28
Modifier Utilization - Summary
Modifier
11
21
22
24
25
26
32
47
50
51
52
53
54
57
58
59
62
76
77
78
79
80
82
91
AM
AR
BU
Total
Practice
Count
9
46
43
24
6,488
8,366
Total Practice
Utilization
Gastro
0.05%
0.25%
0.24%
2.33%
0.13% 62.50%
35.63%
4.78%
45.95% 86.31%
185
1,606
37
69
1.02%
8.82%
0.20%
0.38%
7
210
340
40
9
0.04%
1.15%
1.87%
0.22%
0.05%
58
20
1
11
0.32%
0.11%
0.01%
0.06%
16
0.09%
25.34%
56.76%
42.03%
General
Surgery
100.00%
30.23%
29.17%
0.15%
6.60%
18.92%
Internal
Medicine
Pulmonary
Disease
93.48%
67.44%
42.66%
2.08%
8.03%
15.94%
4.17%
10.65%
10.48%
16.13%
5.41%
15.94%
14.29%
33.82%
0.95%
0.88%
100.00%
Urology
22.35%
6.18%
55.56%
4.17%
28.22%
0.10%
100.00%
29.14%
18.92%
71.43%
99.05%
25.00%
22.22%
17.24%
40.00%
1.72%
90.91%
9.09%
43.75%
©2011 RAC MONITOR LLC
18.75%
81.03%
60.00%
100.00%
31.25%
SLIDE 29
Modifier Utilization – Specialty
Modifier
11
21
22
24
25
26
32
47
50
51
52
53
54
57
58
59
62
76
77
78
National
Utilization
Specialty
Utilization
Specialty Count
Variance
0.05%
0.74%
18.62%
4.53%
0
1
1,831
8
0.00%
0.05%
84.65%
0.36%
(100.00%)
(93.24%)
354.62%
(92.05%)
0.27%
5.91%
0.03%
0.01%
185
468
7
0
8.25%
20.87%
0.31%
0.00%
2955.56%
253.13%
933.33%
(100.00%)
0.25%
0.47%
1.71%
5
208
85
0.23%
9.28%
3.79%
(8.00%)
1874.47%
121.64%
0.10%
2
0.09%
(10.00%)
0.20%
47
2.10%
950.00%
©2011 RAC MONITOR LLC
SLIDE 30
E/M Utilization Analysis
•
Intra-category

•
Inter-category

•
Relationship between different but related
categories
Global category

•
Relationship between codes within a specific
category
Relationship of specific category to all codes
reported
For compliance (only), benchmark is against CMS
data set
©2011 RAC MONITOR LLC
SLIDE 31
Questions?
Email:
frank@frankcohengroup.com
Phone:
727.322.4232
Web:
www.frankcohengroup.com
©2011 RAC MONITOR LLC
SLIDE 32