AAOS Now

Published 4/1/2011
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Mary LeGrand, RN, MA, CCS-P, CPC

Someone is watching you

Did you know that the Centers for Medicare & Medicaid Services (CMS) lists more than 4,000 acronyms for various programs? In recent years, several new acronyms have been added, including the following:

  • RAC—Recovery Audit Contractors
  • CERT—Comprehensive Error Rate Testing
  • ZPIC—Zone Program Integrity Contractors
  • PSC—Program Safeguard Contractors
  • MAC—Medicare-Affiliated Contractors

What all these programs share is a common goal—they are all tasked with measuring, detecting, and correcting improper payments. In addition, they are part of the effort to identify and curb potential fraud in the Medicare fee-for-service (FFS) program. This article looks at three of these programs (RACs, CERTs, and ZPICs) and what they mean for orthopaedic practices.

RAC targets
The RAC program began as a demonstration project in 2005 and has since been expanded nationwide to help curb Medicare overpayments, underpayments, and improper billing patterns. The goal of the program is to identify improper payments (overpayments or underpayments) made on claims for healthcare services provided to Medicare beneficiaries.

Overpayments can occur when healthcare providers submit claims that do not meet Medicare’s coding or medical necessity policies. Underpayments can occur when providers submit claims for a simple procedure but the medical record reveals that a more complicated procedure was actually performed.

The following common problems can attract attention under an RAC audit:

  • New patient visits billed within the 3-year period—This problem can arise if a nonphysician provider (NPP) sees the patient initially, but the first time that the physician sees the patient, the physician reports a new patient visit (9920x). If an NPP does the initial visit, the patient will be considered an established patient at the practice for the next 3 years.
  • Improper use of modifiers—Spending time to learn about the appropriate use of modifiers can pay off. The failure to use modifiers 25 and 57 accurately for services provided on the same day or the day before a surgical procedure can trigger the RAC to issue a Recovery Demand letter.
  • Consolidated billing rules for skilled nursing facilities (SNF)—Many practices are unsure how to report services such as radiographs taken in the office, supplies, and therapy professional services when a patient is in a covered Part A SNF. Previously, Medicare would demand a refund and practices would have to file a corrected claim, reporting the technical component of the radiograph charge to the SNF and the professional services component to Medicare Part B. Now, these claims are on the RAC target list.

Be CERTain!
The CERT program measures improper payments in the Medicare FFS system, but it cannot identify fraud. During each reporting period, this program randomly reviews 50,000 carrier claims. A November 2009 study defined the process and actions as follows:

“When medical records are submitted by the provider, CERT reviews the claims in the sample and the associated medical records to see if the claims complied with Medicare coverage, coding, and billing rules. If not, CERT assigns the erroneous claims to the appropriate error category. When medical records are not submitted by the provider, CERT classifies the case as a no documentation claim and counts it as an error.

“Then, CERT sends providers overpayment letters/notices or makes adjustments for claims where an overpaid or underpaid determination was made. Finally, CERT calculates the projected improper payment rate based on the actual erroneous claims identified in the sample.”

Claim problems pertinent to orthopaedics include the following:

  • No documentation—Claims are placed into this category when the provider fails to respond to repeated attempts to obtain the medical records in support of the claim.
  • Insufficient documentation—Claims are placed into this category when the medical documentation submitted does not include pertinent patient facts (such as the patient’s overall condition, diagnosis, and extent of services performed) or if the physician’s signature is missing or illegible.
  • Medically unnecessary service—It’s trouble when CMS claims reviewers request documentation from the chart so that they can make an informed decision about whether the services billed were medically necessary based on Medicare coverage policies.
  • Incorrect coding—This category covers the circumstances when providers submit medical documentation that supports a lower or higher code than the code submitted.
  • Other—Claims—such as for services not rendered, duplicate payment errors, not covered or unallowable services—that do not fit into any of the other categories are part of this category.

Orthopaedic practices should take the following steps to reduce their risk of audit under the CERT program:

  1. Any CERT notice letters received by the practice should immediately be forwarded to the practice manager and physician managing partner. Time is of the essence.
  2. Internal compliance plans should be reviewed regularly to ensure the practice is performing coding, documentation, and claims submission audits.
  3. Every service reported must have a diagnosis, and the billed diagnosis must establish medical necessity and be documented in the office note, emergency department note, hospital note, or operative note. This should not be left to the biller who does not understand the difference between spinal stenosis and lumbago. A significant loss of revenue can result if the biller submits a diagnosis of lumbago for back pain that is due to spinal stenosis.
  4. Coding is the responsibility of the physicians and NPPs who perform the services. Practices should use the results of periodic audits to close gaps and meet internal objectives.

If you billed it, it can be audited. If you billed it and the documentation does not support the service, the risk assessment begins.

ZPIC for fraud
Perhaps the most serious and least understood program is ZPIC, which seeks to identify fraudulent activity. In addition to responding to complaints of alleged improper billing activities, ZPICs will conduct data mining on services looking for trends of services reported and violations of local or national coverage determinations. Typically, this is a long, detailed process that requires comparative analysis of current trends to past trends. A recent ZPIC audit of an orthopaedic practice sought documentation related to the medical necessity of the provision of ancillary services, as well as monitoring of testing results, and failed conservative measures as the patient progressed along the care continuum.

Orthopaedic practices should document the medical necessity of all testing, therapy, and treatments in addition to the patient’s response to the therapy. Clearly document the move from conservative management to more intensive management of a condition to support decisions for surgery based on clear statements of medical necessity. For example, prior to hip or knee arthroplasty, the patient’s responses to conservative treatments such as nonsteroidal anti-inflammatory drugs, physical therapy, and the use of external supports should be documented.

Paying close attention to business practices within the office and adhering to the office compliance plan is key. Now is the time to begin identifying risk, if any, within the practice and to develop action plans to close the gaps and correct any business processes.

Mary LeGrand, RN, MA, CCS-P, CPC, is a consultant with KarenZupko & Associates, Inc., and focuses on coding and reimbursement issues. The article has been reviewed by members of the AAOS Coding, Coverage, and Reimbursement Committee.