The Centers for Medicare & Medicaid Services (CMS) Recovery Audit Program’s mission is to identify and correct Medicare improper payments through the efficient detection and collection of overpayments made on claims of healthcare services provided to Medicare beneficiaries, and the identification of underpayments to providers so that the CMS can implement actions that will prevent future improper payments in all 50 states.
Through the creation of the program, an estimated $5.4 billion has been returned to Medicare, labeled as “improper payments,” yet understandably hospitals and providers argue that they are struggling to manage the program because of its perceived inefficiencies, in part because much of it remains manual and paper-based. As such, the program receives constant attention and legislative oversight.
However, despite the perceived oppression, some organizations are embracing the program for what it is and making the best of it. One such health system is Boca Raton Regional Hospital, a Florida not-for-profit featuring 400 licensed beds, more than 800 physicians, a nursing and support staff of more than 2,000, and 1,200 volunteers. Because of a large elderly population in South Florida, Boca Raton Regional Hospital has a significant amount of Medicare patients—more than 65 percent of its patient population, significantly higher than the national average of 37 percent. A consequence of having a large number of patients covered by the government program is the volume of audit and Medicare information requests received.
According to Rudy Braccili, executive director of revenue cycle services at the hospital, his experience navigating the often complex recovery audit program has not been without its challenges, but the organization has developed practices allowing it to work better with CMS to accomplish goals of each agency. By participating in the CMS esMD program, for example, the hospital has improved the timeliness of Medicare reimbursements, all the while saving the hospital more than $3 million in the process.
As you likely know, the recovery audit program is the product of a successful demonstration that utilized recovery auditors to identify Medicare overpayments and underpayments to healthcare providers and suppliers in randomly selected states. The demonstration ran between 2005 and 2008 and resulted in more than $900 million in overpayments being returned to the Medicare Trust Fund and nearly $38 million in underpayments returned to healthcare providers. Given its success, it was continued indefinitely.
However, with the program’s success, recovery audits remain a huge and often overwhelming concern for health systems in that the program is considered financially burdensome and potentially takes time away from patient care.
In spite of the challenges faced by each camp, CMS is attempting to make it easier for hospitals to respond to recovery audits through the use of esMD. The esMD Gateway is a CMS-sponsored health information exchange that allows for the sending of electronic documentation from the hospital to CMS. Electronic submissions allow hospital staff the ability to track their claims documents throughout the audit process better than they have been able to do in the past.
At Boca Raton Regional Hospital, the health system is experiencing quicker claims paid with fewer denials, reduced administrative costs associated with the recovery audits, elimination of paper-based and manual processes, and timely response to pre- and post-payment audit reviews. Additionally, esMD has shown to improve CMS’ auditing processes because it eliminates lost documents, allows for the exchange of electronic files, reduces mailroom intake and scanning costs associated with handling paper, and provides HIPAA-compliant transmission and storage of medical documents.
While the RAC program has evolved into an incredibly complex though little-known federal effort, CMS must continue to address issues and consequences as they arise. One such problem has been addressing the secure exchange of claims information between CMS and hospitals. Since Medicare receives 4.8 million claims per day, and CMS’ Office of Financial Management estimates that in the Fiscal Year 2014 Medicare issues more than $45.8 billion in “improper payments,” most improper payments are detected only by a human comparing a claim to the medical documentation.
This manual process results in more than 1 million requests for additional medical documentation to support a Medicare claim each year, and most documentation is submitted in paper form or via fax. CMS is addressing the lack of parity of information exchange by creating and endorsing the use of a health information exchange to mitigate its previous manual process.
Through the health information exchange esMD, hospital staff now are able to provide supporting claims documentation in response to an audited claim. In so doing, hospitals like Boca Raton Regional Hospital are ensured their records are received within the allowable response period, their patients’ data is secure, and, in nearly all cases, its claims are paid more quickly than if the process were entirely paper-based.
Prior to esMD, Boca Raton Regional Hospital faced burdensome turnaround times in response to information requests, taking weeks vs. days with esMD; experienced increased labor costs required to fulfill audit information requests; increased hard and material costs; and insecure data transfer when sending physical information to adjudicate Medicare claims.
Components of the mandatory recovery audit program participation have proven fruitful for multiple parties, based on their priorities and objectives. Medicare has recouped more than $5 billion in overpayments since the program’s inception. By all accounts, the program is considered a success, even if it’s not widely celebrated as such by hospital leaders. Nevertheless, based on the program’s mandate, its success has not meant that all organizations are suffering under an overwhelming and uncircumventable program—on the contrary.
By utilizing esMD, Boca Raton Regional Hospital has established a better relationship with CMS, Braccili says. The case for electronic health information exchange is made as the hospital is able to manage the recovery audit process efficiently. Specifically, Boca Raton Regional Hospital is experiencing:
- Quicker turnaround: Providers are reporting the payment turnarounds when using esMD are as few as six to 10 days as opposed to the paper process, which takes three to four weeks.
- Reduced labor costs: esMD reduces the amount of labor required to fulfill audit requests because there’s no longer a need to print and mail paper documents or feed a fax machine or burn CDs.
- Reduced hard costs: There are no more shipping and handling expenses for the hospital.
- Secure audit submissions: esMD transactions are secure and HIPAA-compliant, with all submissions tracked through a proven audit trail, ensuring no lost documentation.
Though the recovery audit program remains a challenge for some because it can cost money to manage, CMS continues to maintain its charge, and innovate as it is able. Finally, Boca Raton Regional Hospital has experienced a reduction in Medicare audits and requests for supporting information since using esMD technology, and because the hospital is able to exchange health information and records its financial outlook has actually improved because of more timely reimbursements, and the hospital has completely eliminated the administrative burdens of managing the flow of records to support the claims. Also, notably, the esMD program has saved the hospital more than $3 million since it began exchanging medical documentation electronically.
About the Author
Nicole Smith, vice president of operations and government services at Vyne, is a successful healthcare business professional with expertise in management, operations, sales, and marketing. Nicole brings more than 15 years of experience to her current role as the vice president of operations and government services.
Comment on this Article
EDITOR’S NOTE: Joyce Davis of CMS, along with Rudy Braccili, and Nicole Smith will present a complimentary webcast on the subject of esMD on Tuesday, June 28 at 1:30 p.m. ET. Register here to attend.