Updated on: June 22, 2012

Feds Tighten the Hatches—Again—on Improper Payments

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Original story posted on: March 29, 2010
wiitalaRNow, “payment-recapture audits” are on their way, thanks to the healthcare reform legislation (officially known as the Patient Protection and Affordable Care Act), which President Obama signed into law on March 10. In a nutshell, here’s the plan: No later than December 31, 2010, federal government agencies must expand the current recovery audits to include Medicaid as well as Medicare Parts C and D.

 

In the case of Medicaid, each state must contract with at least one recovery audit contractor (RAC) to identify underpayments and overpayments. This should not be confused with the audits now being conducted by the Medicaid integrity contractors (MICs). The MICs are part of the Medicaid integrity program (MIP) and, unlike the RACs, do not receive financial incentives to uncover improper payments.



However, as explained by Amy Fehn, a partner with Wachler & Associates, Royal Oak, MI, “What they [the federal government]) want to do is
tie the auditors’ compensation to the identification of overpayments” and underpayments.


Details Still Unclear


Exactly how the feds intend to expand payment-recovery audits beyond the current Medicare fee-for-service (FFS) program is still unclear. In a statement issued on the day he signed the healthcare legislation, President Obama ordered the director of the White House Office of Management and Budget (OMB) to “
develop guidance within 90 days” on “actions executive departments and agencies must take to carry out the requirements of this memorandum.”


A number of questions remain unanswered at the moment, says Fehn. Specifically: Will the RAC program be expanded from its current focus to include Medicaid plus Medicare Parts C and D? Or will RACs continue what they’re doing with the Medicare FFS program, and will separate audit contractors be hired for the other programs?


More clear, at least according to President Obama’s statement, is that the goal of the increased audits is to “save at least $2 billion from expanded use of the audits over the next three years.” With that goal on the horizon, “
Executive departments and agencies should use every tool available to identify and subsequently reclaim the funds associated with improper payments.”


Provider Perspective


No matter which way things go, the promise of expanded audits means a “heavier administrative burden,” says Mary Gabrys, CHC, St. Luke's, Duluth, MN.


“Responding to RAC requests takes time, manpower and effort from many hospital departments, including compliance officers, health information management, coding, and case management.” Naturally, she says, the government’s expanded healthcare coverage will require more oversight and more comprehensive scrutiny of provider practices.


“It will be interesting to see how they’re going to put all of the pieces together,” says Gabrys.


About the Author


Randy Wiitala, BS, MT (ASCP)
conducts CPT coding and chargemaster assessments, reviews provider operations for regulatory agency compliance, evaluates administrative policies and procedures and assists in the development of quality-assurance programs. He's also a frequent seminar presenter, speaking to hospitals, corporations, clinics, state hospital associations and professional organizations. These educational programs cover a variety of areas, such as coding, regulatory compliance and reimbursement for laboratories; chargemaster system management; and APCs. Randy contributes to a number of MedLearn books, as well as the Laboratory Compliance Manager newsletter. He is the project lead on MedLearn’s RAC Outpatient Data Analytics. He is a member of the American Society of Clinical Pathologists, the National Certification Agency and Healthcare Financial Management.



Contact the Author

rwiitala@medlearn.com

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