October 2014

Educating or Infuriating?
By Lisa A. Eramo
For The Record
Vol. 26 No. 10 P. 20

Some providers believe MAC probe and educate audits have raised more questions than they’ve answered.

Why are certain claims denied? What can providers do to fix the problem proactively? These are simple questions, but they are ones that many organizations continue to ask as third-party audits mount.

In the past, recovery auditors (formerly referred to as recovery audit contractors or RACs) and other auditors haven’t taken the time to truly educate providers about how to avoid the mistakes that trigger denials. Considering recovery auditors are paid on a contingency fee basis for every error they find, this shouldn’t be surprising. In addition, besides the information provided in the review results letter, formal education isn’t required of recovery auditors. For these reasons, experts agree that there is little inherent incentive to actually help providers improve compliance.

The tug of war between providers and auditors has a long history rooted in what many view as unfair denials that slow cash flow and a lengthy appeals process that requires significant operational burden. However, the Centers for Medicare & Medicaid Services (CMS) is trying to change the environment so that providers better understand where they may be going wrong—particularly when it comes to the contentious two-midnight rule.

In an effort to help providers comply with the rule that took effect October 1, 2013, Medicare administrative contractors (MACs) are not only auditing claim samples for compliance, but they’re also providing individualized provider education based on those audit results. These new prepayment audits—termed “probe and educate”—began in November 2013 and include claims with dates of service of October 1, 2013, through March 31, 2015. Providers subject to these prepayment audits include acute care inpatient hospital facilities, long-term care hospitals, and inpatient psychiatric facilities. (Note: Critical access hospitals are subject to the two-midnight rule but have been excluded from the probe and educate audits.)

The MAC probe and educate audits are noticeably different from their predecessors, says Ronald Hirsch, MD, FACP, CHCQM, vice president of the regulations and education group at AccretivePAS. For example, the educational component is completely new to providers, many of whom have grown accustomed to the adversarial nature of the recovery auditor audits. “I think the intent of these audits is completely different than any other audit,” he says. “It’s about teaching providers how to do things right to avoid future audits.”

The education includes detailed review results letters, a one-on-one phone call with a MAC as necessary, and another round of reviews to ensure ongoing compliance.
Others agree the education will be helpful, although they admit that the subjectivity of the reviews continues to frustrate providers. Validating a physician’s expectation for a two-midnight stay is a clinical judgment, and sometimes MACs and hospitals simply don’t see eye to eye, says Dawn Crump, MA, SSBB, CHC, vice president of audit management solutions at HealthPort. “I think it’s a mixed review right now. CMS and MACs are making an attempt, and that’s progress over what we’ve found before,” she says.

Deborah Grider, CCS-P, CDIP, CPC, CPMA, CPC-H, CPC-P, a senior manager of revenue cycle at Blue & Co who has worked with at least one hospital that underwent a probe and educate review, says providers have been generally skeptical of the audits. “The feedback I’ve heard is that these audits are just another level of bureaucracy to keep from paying us,” she says. “Struggling to comply is a challenge. We’ve had meaningful use stage 2 to get ready for, and it was delayed. We’ve had ICD-10 to get ready for, and it was delayed. We’ve had the two-midnight rule to get ready for, and it was delayed. All of this has become overburdening for our health care system.”

What to Expect
The two-midnight rule, published in the FY 2014 IPPS Final Rule (CMS-1599-F), clarifies and modifies the CMS’ long-standing policy on inpatient admissions. It states that inpatient admissions are deemed generally appropriate when the record includes documentation indicating that the physician expected the beneficiary to receive medically necessary hospital care over two midnights. The expectation of a two-midnight stay is based on complex medical factors such as the patient’s history, comorbidities, severity of signs and symptoms, current medical needs, and the risk of an adverse event.

All of this information must be clearly documented to support the physician’s rationale for admission. According to the rule, under the two-midnight presumption, “inpatient hospital claims with lengths of stay greater than two midnights after the formal inpatient order and admission order is issued generally will be presumed appropriate for Part A payment and will not be the focus of medical review efforts absent evidence of systematic gaming, abuse or delays in the provision of care in an attempt to qualify for the presumption.”

During the probe and educate audits, MACs focus on hospital stays of one midnight or less. They will not concentrate on stays spanning two or more midnights unless there is evidence of systematic manipulation, abuse, or delays in care in an attempt to qualify for the two-midnight rule.

What can hospitals expect in terms of the volume of claims reviewed? At small hospitals, MACs review 10 claims while large hospitals are subject to 25 reviews. When asked about how it devised the sample sizes as well as how it identifies small vs large facilities, the CMS responded in an e-mail:

“CMS selected 10 claims from most hospitals to permit limited review indicative of provider trends, while allowing providers the opportunity to adjust their internal operations and receive targeted education. The list of large hospitals includes hospitals that received in excess of $100 million in MS-DRG payments alone in cost reporting year 2009.”

Small providers whose audits include a 10-claim sample are deemed by the CMS to be no or minor concern if they have no more than one error within that sample. Those with two to six errors are deemed to be of moderate to significant concern, while those with seven or more errors are labeled a major concern. Large providers whose audits include a 25-claim sample are deemed to be of no or minor concern if they have no more than two errors. Those with three to 13 errors are labeled as moderate to significant concern, while those with 14 or more errors are considered to be a major concern.

The CMS was unable to provide specific information regarding the outcomes of these audits to date nor was it able to provide a percentage of providers requiring additional education and whether those providers took advantage of that opportunity.

Common Denials
One of the most common reasons for denials related to the two-midnight rule is that the documentation doesn’t reflect the physician’s expectation that the patient requires medically necessary services spanning two midnights. “Physicians don’t always say why they’re admitting a patient,” Grider says. “We have to have clear, concise reasons for the admission.” This includes a clear diagnosis that supports admission as well as clear validation of medical necessity throughout the stay, she adds.

Documentation of the presence of complications and comorbidities (CCs) and major CCs isn’t sufficient anymore, says Richelle Marting, JD, MHSA, RHIA, CPC, CEMC, CPMA, CPC-I, an attorney at Forbes Law Group. “A patient can have several comorbid conditions, but if it’s not clear from the documentation that they’re exacerbated or why they’re contributing to the patient’s risk … that’s not enough for Medicare to side with the physician and find that it was medically necessary to be an inpatient,” she says.

Another source of denials is inpatient orders that aren’t signed before discharge. “Many physicians’ initial admitting order is given as a verbal order. CMS has made it clear that they want that order authenticated before the patient is discharged,” Hirsch says.

Audits Lead to Frustration
Although the goal of the probe and educate audits is to ultimately help providers, this doesn’t negate the fact that inappropriate denials may occur. The two-midnight rule is new to everyone, which means MACs are struggling to understand the rule as well, Hirsch says. However, what’s frustrating for some providers is the feeling they know more about the rule than the MACs, he adds.

For example, some MACs incorrectly interpret the rule to state that physicians must document, “I expect two midnights.” Documentation of the physician’s thought process and rationale for the duration of the admission is critical, but physicians aren’t required to use this specific language. In a document clarifying the rule, the CMS states: “Physicians need not include a separate attestation of the expected length of stay; rather, this information may be inferred from the physician’s standard medical documentation, such as his or her plan of care, treatment orders, and physician’s notes.”

Other providers are frustrated when they use widely recognized admission criteria such as Interqual or Milliman, only to subsequently discover that their claim has been denied. “They’re using what are fairly common tools in the industry to make that decision and yet retroactively, they’re being told that the decision wasn’t appropriate,” Marting says. “Medicare doesn’t endorse any of those tools. They’re just tools; they’re not absolutes. When a patient meets criteria, and you think it’s appropriate for an inpatient admission, the physician still needs to document why he or she thinks it’s appropriate for inpatient admission.”

When asked about admission criteria, the CMS provided the following statement via e-mail: “While utilization review committees may continue to use commercial screening tools to help evaluate the inpatient admission decision, providers should note that the tools are not binding on the hospital, CMS, or its review contractors.”
The sample size used by the CMS also seems somewhat unfair, Marting says. “On a prepayment audit, I don’t think I’d want more than [what the CMS uses]. It would certainly hold up your revenue for a longer period of time if you had a larger sample. But at the same time, there’s a very low threshold for error before you’re drawn into this continuous follow-up audit process,” she says.

Another common frustration among hospitals is that MACs are denying inpatient-only procedures despite CMS requirements for MACs to approve these cases unless other requirements aren’t met. “Unless the MAC clearly looks and makes sure that it’s not an inpatient-only surgery, it may inappropriately deny the stay,” Hirsch notes.

Some hospitals are experiencing denials because physicians don’t sign the history and physical (H&P) prior to a patient’s discharge. The CMS stated in an e-mail that if the H&P is used as the sole source of the certification, then providers must authenticate that certification in a timely manner. If the H&P is not the sole source of the certification, the CMS requires a timely certification signature—typically on the physician order for admission—prior to discharge. The lack of signature on the H&P would not be cause for denial.

Hirsch says that some MACs are incorrectly interpreting this to mean that physicians must always sign the H&P and that an omission of a signature prior to discharge is cause for a denial.

Questions Persist
One of the most significant questions about the probe and educate audits is what the CMS plans to do with the information it gleans.

In an e-mail response, CMS officials said the following: “As part of our ongoing operations, CMS will continue to monitor the probe and educate process to determine if additional resources are necessary for providers.” The agency indicated that providers have been receptive to the education provided and that the CMS is open to provider feedback regarding the program.

Crump fears that the CMS eventually may use audit results to fuel its recovery audit program. More specifically, she’s concerned that recovery auditors may be able to go back and audit claims that are currently off limits due to the CMS’ moratorium. “If CMS allows RACs to review these claims on a contingency fee basis, I would expect that they’re going to have quite different results than the MACs,” she says. “Maybe because of the probe and educate, it will be out of the scope for the RACs for a little while, and I think that’s a good thing.”

The CMS provided the following response via e-mail: “The RAC moratorium is based on dates of service, not audit dates. Therefore, the recovery auditors will not be permitted to retrospectively review such claims for appropriateness of patient status.”

Crump also wonders whether a denial that is ultimately overturned on appeal will contribute to a provider’s overall error rate. According to the most recent Recovery Auditor Scope of Work, recovery auditors audit providers based on whether they have a high propensity for error. As it currently stands, appeal reversals don’t affect the error rate. This means that even though denials are later overturned through appeals, a provider’s overall error rate doesn’t reflect this outcome.

How to Prepare
Rather than take a defensive stance, hospitals should be open to these audits and welcome them as an opportunity to improve compliance, Crump says. “One of the benefits of the probe and educate audits is that MACs are willing to listen,” she says. “They give you a lot more reasons as to why they deny a claim. It’s not just a blanket statement.”

“Hospitals should welcome these audits as a learning experience,” Hirsch says. “Use the MACs to get feedback to help improve processes. This is not the adversarial process of the RAC audits at all.”

To illustrate his point, Hirsch says his own experience with the MACs has been positive. In particular, he was able to speak with a MAC medical director following a webinar to clarify several wrong answers in the presentation. “We spent a half hour on the phone discussing the rule,” he says. “She was very open to listening to my opinion. She went back to CMS to work things out and make sure that her MAC was doing this properly.”

When it comes to denials for inpatient-only procedures, work with the MAC to address the issue proactively, Hirsch says. Try to develop ways in which these procedures can pass through the audits without scrutiny. If any inpatient-only claims are requested inappropriately, notify the MAC immediately. Some MACs are able to rescind these requests so that hospitals don’t need to appeal inappropriate denials, he adds.

As hospitals undergo these audits, Marting says coding managers should ask the following questions:

• How will the hospital ensure that its contact information is updated in PECOS (Provider Enrollment, Chain and Ownership System) so the MAC knows to whom it should send documentation notices? Many claims are denied simply because providers don’t respond in a timely manner.

• Are any of the CMS’ most commonly identified issues related to the two-midnight rule problematic at your hospital? These issues include missing or flawed documentation orders, short stays for procedures and medical conditions with no expectation for a two-midnight stay, and attestation statements without supporting documentation.

• How will staff members monitor records to ensure that recovery auditors don’t request records that the MAC has already probed?

• If your hospital is subject to rereviews after a probe and educate audit, how will you ensure that you can educate staff members and monitor compliance in a timely manner?

• How can you provide individualized physician education to improve their documentation, certification, or orders?

In addition to asking questions, Hirsch says facilities should take advantage of every educational opportunity offered by the MAC, adding that coding managers, the chief medical officer, physician advisors, and case managers all should partake in the sessions.

Also, reiterate to providers that their documentation must reflect their thought processes. “It’s all about doctors thinking in ink—what’s wrong with the patient, why they’re concerned, and what they’re going to do for the patient,” he says. “If it turns out that the patient gets great treatment and improves very quickly, it’s OK if they go home the next day. That’s an unexpected recovery. The initial portrayal of their illness needs to be clear.”

While the ultimate goal is to reduce denials, the process also presents an opportunity for hospitals and MACs to improve communication. Experts agree that one of the audits’ silver linings is that hospitals may be able to develop closer relationships with their MACs, which could be a huge help as the industry transitions to ICD-10.

For more information about the MAC probe and educate audits, visit the CMS website at www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/Medical-Review/InpatientHospitalReviews.html.

— Lisa A. Eramo is a freelance writer and editor in Cranston, Rhode Island, who specializes in HIM, medical coding, and health care regulatory topics.