Featured in Health Business Daily, April 4, 2012, and featured Health Business Daily Story, April 3, 2012

After Hospital Repays MAC Millions, RAC Audits Same Claims and Recoups Again

Reprinted from REPORT ON MEDICARE COMPLIANCE, the nation's leading source of news and strategic information on Medicare compliance, Stark and other big-dollar issues of concern to health care compliance officers.

By Nina Youngstrom, Managing Editor
March 26, 2012Volume 21Issue 12

For Trinity Health, sometimes it feels like nice guys finish last. After one of the Michigan-based integrated delivery system’s subsidiary hospitals voluntarily repaid millions of dollars to its Medicare administrative contractor (MAC) for medically unnecessary one-day stays, the recovery audit contractor (RAC) hit the very same claims. So far, the RAC has recouped $2 million, which means that Trinity has paid back a portion of the money twice, according to Trinity’s calculations. Its complaints have fallen on deaf ears, says Andrei Costantino, director of organizational integrity, despite CMS promises that different program-integrity contractors won’t mess with the same claims.

“We are being penalized for doing the right thing,” Costantino tells RMC. “We are now repaying it a second time.”

The RAC-MAC double trouble began with “a very large repayment” to the MAC, National Government Services (NGS). It stemmed from one Trinity hospital’s claims for one-day stays. The hospital identified the error through its own compliance reviews, and then hired a consultant to help determine the scope of the error, which was done through statistical sampling and extrapolation, Costantino says. Then the RAC, CGI Federal, started auditing the very same claims that were the subject of the repayment, and denying them, which triggered recoupment. The RAC told Trinity it won’t remove any claims from the RAC review and denial process until NGS gives the word, despite receiving detailed information from Trinity supporting the voluntary repayments to the MAC, Costantino says. “We are almost positive this is not how CMS wants the programs to be run,” he says.

Hospital Is Hit With Double Whammy

One cause for the quagmire is the trouble Trinity has had identifying someone at NGS to resolve the repayment issue with CGI, Costantino says. After four months, however, and with the helping hand of its external legal counsel, Trinity found a person at NGS “who is now diligently working on helping us with these issues.” As a result, Costantino is confident that in the end, Trinity will get the duplicate repayments back. But he finds it baffling that the RAC and MAC won’t end the audits of erroneous claims that have already been repaid; they’re wasting everyone’s time. The only explanation from the MAC is that it’s examining Trinity’s statistical sampling methodology.

Costantino says that challenges always arise when dealing with repayments that involve statistical sampling and extrapolation, including identifying the population, sampling frame, and extrapolation. “What experience tells us is that statistical sampling has always been a well-accepted means by the government of addressing overpayment issues. Since the Trinity subsidiary was dealing with an enormous population that covered several years, the only practical solution was using a government-approved statistical sampling methodology. Reviewing all claims in the population was not only impractical but time- and cost-prohibitive,” Costantino contends.

If, however, the MAC challenges Trinity’s extrapolation, that could change the repayment amount. But meanwhile, he says, it’s confusing why NGS would not reach out to the RAC to suspend its review until this process was completed. That’s cause for concern now that providers may face a 10-year look-back period under the 60-day overpayment return mandate, if CMS finalized its proposed regulation with that audit period intact.

“It’s depressing. We keep spending money and fighting RAC denials for the same claims we repaid,” Costantino says. “We could be using that money for quality of care instead of spending money to fight contractors,” he says

To prevent RAC audits when you have already repaid MACs, hospitals may want to consider skipping extrapolation in favor of a claim-by-claim repayment, says attorney Bob Wade, with Krieg DeVault in Mishawaka, Ind. That way, RACs have no reason to get involved. But repayments that don’t rely on extrapolation are more expensive because they identify claims patient by patient and claim number by claim number, he says. Unfortunately for Trinity, Wade says, “the MAC may be using the RAC to verify the extrapolation process.”


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