Medical Necessity, IRF and DME: Three New Potential RAC Targets

by Ronald Hirsch, MD, FACP, CHCQM.
Published on Jan 16, 2018

Last week the Centers for Medicare & Medicaid Services (CMS) created a new page on its Recovery Audit Contractor (RAC) website titled Provider Resources. CMS indicated that it will post on this page any new issues the RACs have proposed to audit and are being evaluated by CMS for approval. 

This first release lists three potential targets in three different areas. In medical necessity for inpatient care, CMS will be evaluating whether to allow the RACs to review inpatient rehabilitation facility (IRF) admissions. In durable medical equipment (DME) they will look at home BiPAP machines, and in pharmacy they will be evaluating chemotherapy and biologic drugs for excessive or insufficient units for 46 different drugs.

It is hard to know what to do with this information, since CMS has never done anything like this before. We have no idea what percentage of issues proposed for RAC audit actually get approved for it, but I would think that CMS would not waste its time performing a review if there was not a good chance of the issues being approved.

But what could you do with this information? If you have an inpatient rehab facility and you’re not already carefully screening admissions and ensuring that you have all the required documentation, you are in real trouble, because the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) has had this on its work plan for a couple of years. If you are a DME provider, you should have a handle on home BiPAP documentation requirements, because everything that DME suppliers do is being heaving scrutinized.

So that leaves the 46 drugs. And because they never make it easy for us, CMS only provided the HCPCS codes and not the full drug names. I looked up a few of them, and aside from having nearly unpronounceable names, they all seem to have exorbitant costs, with many costing over $5,000 per dose. Now, 46 is a lot of drugs to start preemptive auditing, so do you wait to see which ones get approved for RAC audits, or do you alert your pharmacy now?

I would suggest sending the list of HCPCS codes to your pharmacy and having them look at your usage. If any of the drugs are used commonly, you may want to carefully review the way you handle them, including ensuring that there is a valid physician’s order and a recent progress note showing that the patient is being monitored, that the pharmacist is calculating the correct dosage, that the nurse properly documents the drug administration and drug wastage, and finally, that the billing of the drug for proper units is being reviewed. I should point out that these audits, if approved, will include both hospitals and physician offices, so the doctor’s income is at risk too.

From the information provided, it does not appear that CMS will be allowing the RACs to audit for adherence to standards of care for treatment of different cancers. In other words, the RACs will not yet be allowed to review if the right chemotherapeutics were given in the right order and at the right dosage for the patient’s condition – but I expect that at some point CMS will allow such audits.

CMS stated that this Provider Resources page will be updated monthly; it will be interesting to watch and see what issues get approved and which disappear.