Fallout Continues over Audit Reform Bill

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Original story posted on: March 21, 2013

Dust continues to settle following Tuesday’s re-introduction of the Medicare audit reform bill (HR 1250) in the U.S. House of Representatives by Rep. Sam Graves (R-Mo.) and Rep. Adam Schiff (D-Calif.).

Their previous bill, introduced on Oct. 16, 2012, died in committee during the closing days of the 112th Congress. The bill would reinstate and make statutory a hard cap on Additional Documentation Requests (ADRs) on the part of Medicare auditors, limiting them to a maximum of 2 percent of all hospital claims or 500 ADRs per 45 days, according to Graves. 

"Every year, more than $65 billion in improper payments are made to healthcare providers due to fraud, waste, abuse, and billing errors,” Amanda Keating, a spokesperson for the American Coalition for Healthcare Claims Integrity, said in a written statement to RACmonitor. “This puts a tremendous burden on a Medicare system already struggling to remain solvent. Restricting audits runs counter to the growing need for transparency and accountability in the program.”   

On the other hand, Steven J. Meyerson, MD, vice president of Accretive Physician Advisory Services, seemed to express a prevailing attitude among many providers dealing with responding to ADRs. 

“Hospitals are being inundated by ADRs from a number of different Medicare auditors,” Meyerson said in a statement of his own. “The current ADR limit applies only to complex medical reviews and prepayment reviews performed by the (RACs).” 

Meyerson noted that the bill would apply the ADR cap to the total sum of ADRs from all of the Medicare auditors, including the RACs, the Medicare Administrative Contractors/Fiscal Intermediaries (MACs/FIs), Comprehensive Error Rate Testing (CERT), the Zone Program Integrity Contractors (ZPICs), and the program safeguard or integrity contractors.  

Graves, speaking before a delegation from the American Health Information Management Association (AHIMA) meeting in Washington, D.C. on Tuesday, told the group his bill would put in place common-sense reforms allowing auditors to still conduct adequate oversight of billing problems without an open-ended invitation from CMS (the Centers for Medicare & Medicaid Services) to continually bombard hospitals with requests and denials. 

“Our smaller, rural hospitals are especially ill-equipped to deal with this increased administrative burden,” Graves said.

Frank Cohen, a senior healthcare analyst for the Frank Cohen Group, said he is looking beyond what is being described as the “administrative burden” of the ADR requests to the more fundamental issues of auditing practices.

“I see that much of the focus is on reducing the administrative burden, which is a good thing,” Cohen told RACmonitor. “But I don’t see where it (the bill) addresses the issue of abusive auditing techniques by the auditors.”

Cohen suggested establishing a base error rate, above which an auditor would be responsible to cover the costs of an appeal in certain cases – if an organization were to reverse a significant number of findings on appeal, for example, the auditor would be responsible to pay the organization for every reversed appeal above that acceptable rate of error. 

“In the most recent stats I saw on RAC audits, hospitals are successfully reversing RAC findings at the rate of 72 percent,” Cohen said. “I wonder if that financial burden is, in fact, greater than the burden of supplying additional documentation.” 

Meyerson lauded reform aspects included in the proposed legislation.

“The bill includes other important reforms, including financial penalties for failing to comply with certain requirements of the RAC program, such as failing to meet the timeline for completing audits and for providing demand letters and would charge the RAC a fee if a denial is overturned on appeal,” Meyerson said. “It also includes a requirement for greater transparency in RAC activity, including public reporting of each RAC’s denial and appeal rates as well as its denial overturn rate. This data is not currently available to the public.” 

As a physician, Meyerson said there is a key element of the bill regarding the validation of medical necessity denials.

“It would require physician validation of medical necessity denials,” Meyerson said. “Currently, these decisions are made by nurses who are second guessing physicians yet are not trained to make complex medical judgments as required by Medicare guidelines.”

“Our coalition's goal is to tell the story of the more than $3.4 billion recovered for Medicare since 2009, and the billions more that stand to be recovered as audits continue,” Keating explained. “In our view, the recovery process strengthens the Medicare program, ensuring its long-term viability."

Nonetheless, Cohen continues to be critical of sampling techniques used by the auditors – and what he describes as “abusive auditing techniques.”

“In my opinion, a key part of accountability is to ensure that the audits themselves are conducted properly,” Cohen said.

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Chuck Buck is publisher of RACmonitor

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Chuck Buck

Chuck Buck is the publisher of RACmonitor and is the program host and executive producer of Monitor Monday.

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