On Nov. 25, Noridian announced an Oregon-specific probe review for inpatient rehabilitation facilities (IRFs) in the state. The review will include 100 claims for IRFs in the state billed on or after Nov. 23.

This audit follows a similar probe review in May 2014 that was completed for IRFs in the state of Washington – so it should come as no surprise.

What is the Purpose of the Probe Review?

When Medicare Administrative Contractors (MACs) identify a particular provider or service type as being “at risk” for billing errors, the issue is validated with a prepayment probe review. These reviews generally include a sample size of 80-100 claims – in the case of the recently announced review, 100 claims will be selected – and error rates are calculated based on Centers for Medicare & Medicaid Services (CMS) criteria. If the error rates are high, the MAC will follow the probe review with a targeted review of additional claims.

Targeted reviews are initiated also when further review and education are believed to be necessary to improve provider accuracy in billing. These reviews are focused on identified errors and include education of providers about the identified errors.  

What Does Noridian’s Probe Review Mean to IRFs?

In the case of the aforementioned Washington probe review, the overall error rate (which is determined by dividing the dollar amount of charges billed in error, minus any confirmed under-billed charges) for the total amount of charges for claims reviewed was 75 percent. Only 30 of the 100 claims in the sample were accepted and the remaining 70 were denied in full. As a result, Washington providers were subject to a specific, targeted review.

The interim results of the targeted review continue to show an error rate of 37.9 percent from a total of 558 claims reviewed from April 14, 2015 through Oct. 27, 2015, and the targeted review is continuing. 

The table below outlines the reasons for denial provided on Noridian’s website related to the Washington probe and targeted audits. 

The denial reasons follow the pattern seen by other MACs that have completed IRF reviews in recent years and demonstrate that such providers continue to have difficulty with ensuring that documentation demonstrates that each case meets the updated Medicare guidelines for reasonable and necessary care in an IRF. 

What About the Other MACs?

The table below summarizes our review of currently posted issues on the remaining MACs websites:

IRFs should frequently check their MAC website for updates and review all listserv communications from the MAC to stay on top of current audit activities.

What Should the Included IRFs Do Now?

Because error rates are calculated based on the full set of records requested, IRFs should be certain that they do not receive denials for failure to ensure that the record is submitted in a timely manner and that the record is complete. When an additional documentation request (ADR) is received:

  • Respond in a timely manner. Make sure that records are received within 45 days of receipt or the claim will be denied.
  • Look for the obvious. Claims will be denied if key documents are missing. Be certain that copies of the preadmission assessment and final IRF-PAI document are included in the documentation submitted in response to the ADR. These are the most commonly missed documents that result in denials.
  • Double-check the record. Organizations often have a hybrid medical record that includes not only information in the electronic medical record (EMR) but additional paper documents that are scanned.  Have someone familiar with the IRF record review the documentation being sent to be certain there are no missing documents.

The Bottom Line

The importance of having complete, accurate, and timely documentation cannot be denied. IRFs will continue to be subject to audits from a variety of review agencies and historically have not done well on audits – not because patients admitted aren’t appropriate for IRF admission, but more generally due to documentation issues and errors. As the industry faces ongoing scrutiny of claims, education of all staff related to timely and appropriate documentation, along with internal audits to assess and improve performance, are essential.    

About the Author

Angela M. Phillips, PT, is president and chief executive officer of Images & Associates. A graduate of the University of Pennsylvania’s School of Allied Health Professions, she has over 35 years of experience as a consultant, healthcare executive, hospital administrator, educator, and clinician. Ms. Phillips is one of the nation’s leading consultants assisting IRFs in operating effectively under the Medicare Prospective Payment System (PPS) and in addressing key issues related to compliance.

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