The Centers for Medicare & Medicaid Services (CMS) reported late Friday that the Recovery Audit Contractors corrected $592.5 million in payments from the Medicare Fee-for-Service program through June 30, or up until the end of the third quarter of the 2011 fiscal year.


Of that amount, $233.4 million came in the form of overpayments the RACs collected during the third quarter of the fiscal year alone, while $55.9 million was third-quarter underpayments returned to providers. That brought the total value of third-quarter corrected payments $289.3 million, according to CMS, which published these findings in its quarterly newspaper.


Top RAC Regional Issues


Medical necessity reared its problematic head as the leading issue in Regions A and D during the time covered by the new CMS report. DRG validation was the top issue in Region B, while durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) topped the list of causes of corrected payments in Region C.


Two different medical necessity issues were at play in Regions A and D during this time. In the former region, reporting of renal and urinary tract disorders caught the attention of DCS. CMS in its newsletter noted that medical documentation for patients with renal and urinary tract disorders “needs to be complete and support all services provided.” In this case CMS said that Medicare only pays for inpatient hospital services that are “medically necessary for the setting billed.”


In Region D, the medical necessity issues under the microscope were minor surgery and other treatments billed as inpatient care. CMS reminded providers in its newsletter that when beneficiaries with known diagnoses are admitted for a “specific minor” surgical procedure or treatment expected to keep them in the hospital for less than 24 hours they are considered outpatients “regardless of the hour they presented to the hospital.” CMS went on to state that this rule applies whether a bed was used or whether the patient remained in the hospital after midnight.


In Region B the leading Medicare issue was DRG validation, or more specifically, per CMS, “extensive operating room procedure(s) unrelated to principal diagnosis.” CMS further stated that principal diagnosis and principal procedure codes for inpatient claims should be related, noting that errors occur when providers bill incorrect principal or secondary diagnoses, resulting in an incorrect MS-DRG assignments.


CMS, in noting the top issue in Region C (DMEPOS), said that Medicare does not make separate payments for DMEPOS when a beneficiary is party to a covered inpatient stay.

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