March 21, 2013

Medicare Audit Improvement Act Introduced As Delegates Descend on Capitol

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On the day when members of the American Health Information Management Association (AHIMA) were urged to reach out to members of their congressional delegations, two members of Congress re-introduced their bill to overhaul the recovery audit process — a bill that died in committee at the close of the last session of Congress.

Rep. Sam Graves (R-Mo.) and Rep. Adam Schiff (D-Calif.) presented the legislation in the U.S. House of Representatives on Tuesday as the Medicare Audit Improvement Act of 2013. Their previous bill, introduced on Oct. 16, 2012, died in committee during the closing days of the 112th Congress. Tuesday also marked AHIMA's Health Information Professional Week. Schiff personally presented the bill in front of an audience of 200 AHIMA delegates on Tuesday morning before filing the bill with the House clerk at which time it became HR 1250.

Tuesday's bill would amend the Medicare Modernization Act of 2003 to rectify problems identified since the creation of the Recovery Audit Contractor (RAC) program, the bill's sponsors wrote in a news release. 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 or500 ADRs per 45 days, Graves noted.

"While I believe we must continue to identify and correct verifiable fraud, hospitals have been buried in the administrative burdens put on them by Medicare audit contractors," Graves said. "Doctors and nurses should be focused on caring for patients, not trying to comply with the ever-increasing requests for documents.  My 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.  Our smaller, rural hospitals are especially ill-equipped to deal with this increased administrative burden."

Mixed Reaction

Reaction to the news of the proposed bill was swift and mixed, with statements of endorsement coming from the American Hospital Association (AHA) and AHIMA. Others were less supportive.

"What seems to be escaping all of those involved on the side of government is that 'administrative burden' doesn't end with request No. 500 within a 45-day period," Fi-Med Management Compliance Officer J. Paul Spencer said in a written statement to RACmonitor. "The burden actually begins with Additional Documentation Request (ADR) No. 1, because this is not about collecting additional reimbursement for past claims, but rather protecting past dollars already reinvested."

Going beyond the ADR issue that the bill seeks to address, Taryn Schraad of Lawrence Memorial Hospital in Lawrence, Kan. was concerned about the "administrative burden" of the appeal process.

"If board-certified physicians were available at every discussion and appeal level, and it was mandated that the option to review any and all denials with a M.D. or D.O. be made for every provider, the 'rubber-stamped denials' that flow from the recovery auditors might be reduced for those further up the chain in the appeal process," Schraad told RACmonitor in a written statement.

On the other hand, the AHA professed its support of the proposed legislation in a statement to RACmonitor.

"This legislation provides much-needed guidance for auditors while keeping them out of making medical decisions that should be between patients and their physicians," said Rick Pollack, AHA's executive vice president. "It also will improve recovery auditor transparency and allow denied inpatient claims to be billed as outpatient claims when appropriate."

AHIMA noted that "although RACs have had success in recouping improper payments, RAC determinations have also resulted in thousands of errors and have been frequently overturned through costly appeals processes."

AHIMA further noted that hospitals and healthcare systems have been inundated with redundant audits, unmanageable medical record requests and inappropriate payment denials. Thus, the inefficiencies of the program often result in wasted resources and directly contribute to increases in healthcare costs.

"We don't oppose audits – they provide needed checks and balances to achieve quality healthcare through quality information," AHIMA CEO Lynne Thomas Gordon said. "However, the existing RAC program is broken and needs immediate changes."

Healthcare attorney David Glaser with the law firm Fredrikson & Byron sees similarities between the previous bill and the language in Graves' news release.

"Based on the press release, it sounds like the new bill may be identical to the bill introduced last year. Some parts of that bill were definitely exciting," Glaser told RACmonitor. "For example, it requires RACs to compensate healthcare organizations when the healthcare organization prevails in an appeal. The 2012 bill required CMS to establish a rate schedule to compensate organizations that prevail on appeal."

Another provision, Glaser noted, requires the hospital to be permitted to re-bill claims as outpatient claims as long as outpatient care was shown to have been medically necessary. The 2012 version indicated that the new bill would be treated as an "original" bill for the purposes of the timely filing requirements.

"It appears that the purpose of the provision is to permit re-billing after the one-year claims filing deadline has passed," Glaser said. "I am not entirely certain that the proposed language will accomplish that, but that is clearly its goal."

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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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