But how many people are aware that there is another type of legislation at work that could cut down on the number of RAC denials we get? Sounds almost too good to be true, doesn't it? While the legislation is real, it's in very draft form right now. Unfortunately, from where I sit, it also seems to be flying very low under the radar among my peers and I think it deserves some attention.
First of all, if you are not yet familiar with RACs, those are the Recovery Audit Contractors hired by Medicare to recoup improper payments to hospitals and physicians and return that money - with penalties - to the Medicare program. The idea is great - run all the claims data through proprietary software and analyze it to see what looks weird. This can be anything from improperly coded claims to admitting a patient to the hospital for a short stay rather than treating them as an outpatient. Side note: contrary to what a lot of Medicare patients are told, hospitals do not get paid more for outpatient claims; they actually get paid less. Medicare patients pay more out of pocket for hospital outpatient services and in most cases, hospitals get paid less than if patients were inpatient. But if hospitals admit patients who could be treated as outpatients for short stays, they can have to pay the money back plus RAC penalties.
There are two types of RAC audits: automated and complex. Automated reviews can be identified just by looking at data without reviewing the medical record. Complex reviews require review of the medical record (e.g., for coding errors). But the RACs don't have the final say; there is a rather lengthy appeals process that providers can - and should - take advantage of because several RAC denials have been overturned. The problem is, there are about eight levels of appeals that end with the administrative law judge and currently there is a backlog of appeals at the administrative law judge level.
Enter the Hospital Improvements for Payment (HIP) act of 2014 (don't you just love that so many healthcare laws start with "hip?!"). This is a draft proposal aimed at reducing RAC audit backlogs by creating a new Hospital Prospective Payment System (HPPS) for Medicare short stays (less than 3 days length of stay), including observation services. In short, it calls for the following;
- Creation of the new HPPS by the year 2020
- Creation of an alternate reimbursement system for short stays from fiscal year 2016 to fiscal year 2019 as data is gathered for the 2020 system
- Elimination of RAC reviews for short hospital stays until HPPS is implemented
By now, there may be a lot of people jumping up and down with joy, but of course there is a catch. The proposal calls for dual submission of claims by hospitals in fiscal year 2016 in order to establish payments. This means that hospitals would have to submit both ICD-10-PCS and CPT codes for short hospital stays for 2016. Yes, the proposal assumes that we will be coding ICD-10-PCS in fiscal year 2016, which incidentally, begins on October 1, 2015. The proposal would also implement an ICD-10-PCS to CPT crosswalk. If the dual coding of claims didn't make you nervous, the crosswalk should. I've never met a crosswalk I trusted. Let's face it, if one coding system easily crosswalked to another, then we wouldn't need two different coding systems, would we? I can see lots of operational challenges starting with the productivity dive that would surely occur and ending with training challenges since it's getting harder to find inpatient coders who code CPT and many facilities have decided not to train their outpatient coders in ICD-10-PCS.
Read All About It
This is just a small snipit of what HIP is about, but I encourage you to read up on it yourself, starting with information from the House Committee on Ways and Means and checking out the industry commentary to see where you stand. Here are some links you should check out:
- Document from the House Ways and Means Committee - section by section of proposed bill
- AHA Comments to Rep. Kevin Brady Re: Hospital Improvements for Payment Act of 2014 Discussion Draft dated December 18, 2014
Let Your Voice be HeardFor more information from the House Ways and Means Committee, including information on submitting comments, click here. This proposal has the potential to rock the world of hospital reimbursement (again) and has some definite pros and cons. While it's still only a draft and is not a done deal, it's time to take the opportunity to let our voices be heard and submit comments.