BP - Health Care Compliance Association

RAC demonstrations
and inpatient
rehabilitation –
Vision of things to
come?
Editor’s note: Jane Snecinski is Principal at Noblis,
Center for Health Innovation, headquartered
in Falls Church, VA. Ms. Snecinski may be
reached by e-mail at jane.snecinski@noblis.org
for additional information.
The past two years have proven to be
very challenging for providers of rehabilitation
services—both inpatient and
outpatient. This article is one of two specifically
written to focus on the compliance issues
that have been brought into focus by the
Recovery Audit Contractors (RACs). These
issues have increased the financial risk for
providers of rehabilitation services. This article
specifically looks at the issues for providers of
inpatient rehabilitation services.
For providers of inpatient rehabilitation
programs, the change with the greatest public
awareness has been the increased focus on the
“75% Rule,” which has been modified in regulation
to have a 60% threshold; that is, 60% of the
patients admitted to an inpatient rehabilitation
program must have a diagnosis that is included
in a list identified in regulation. In addition to
having the diagnosis identified, the medical
record must support that the beneficiary has
received treatment for the identified diagnosis.
If the threshold is not maintained on an annual
basis, the organization stands the risk of losing
their Medicare rehabilitation provider status.
However, although the enforcement of the
By Jane Snecinski, FACHE
75% Rule has placed an increased focus
on the diagnoses of the patients admitted
to inpatient rehabilitation programs, the
work of the demonstration Recovery Audit
Contractors (RACs) has the potential to
have a staggering significant and immediate
financial impact on any provider of
inpatient rehabilitation programs/services.
The focus of these audits, primarily, has been
on “medical necessity,” as defined by federal
regulation, guidelines, and the Conditions
of Participation for inpatient rehabilitation.
Moreover, even though medical necessity is a
long-standing cornerstone of health care, the
review of medical necessity is relatively new
to the rehab market. This issue, it appears,
is even more important than a diagnosis
that is identified as compliant with the 75%
Rule, because if the admission to inpatient
rehabilitation is not deemed medically necessary,
then the admission is denied—even if
the patient has a “compliant” diagnosis.
As addressed in Section 306 of the Medicare
Prescription Drug Improvement and
Modernization Act of 2003, the RAC demonstration
project began in 2005 in Florida,
California, and New York. The RACs have
several objectives, but they are incentivized
to recoup reimbursement for the Medicare
program through denials of reimbursement
for services. Inpatient rehabilitation was
a primary focus of the RAC efforts in the
demonstration states, including California
and Florida. Although the plan was for CMS
to expand the RAC program to all states
within an established timeline, they have
accelerated their implementation plan, due
to the perceived success of the program. It
is anticipated that the RAC program will
be instituted in all states by 2009 (slightly
delayed from the original plan).
The mission of the RAC demonstration
project (announced January 11, 2005) was to
“reduce Medicare improper payments through
the efficient detection and collection of overpayments
and underpayments and the implementation
of actions that will prevent future
improper payments.” 1 Because the range of
providers that receive Medicare payment is so
broad, post acute providers, specifically providers
of inpatient and outpatient rehabilitation,
were reviewed by the RACs within the scope
of their contract. As with all Medicare providers,
improper payments in the post acute settings
can be received for three primary reasons:
n Services are provided and payment
received for services that have not been
deemed as ‘medically necessary’ for the
level of care in which they were provided;
n Codes/scores are submitted that result in
payment that may not be completely correct
or accurate, (e.g., inaccurate diagnostic
coding, inaccurate coding of functional
status, coding of diagnoses without documentation
of treatment); and
n The medical record/documentation does
not ‘tell the story’ and provide enough
support for the claim for which payment
has been received.
The understanding of these issues and integration
into the documentation of inpatient
rehabilitation, as well as proactive auditing and
associated corrective actions, will be critical to
surviving under the permanent RAC program.
Continued on page 22
Health Care Compliance Association • 888-580-8373 • www.hcca-info.org
21
March 2009