October 6, 2011

The Landscape of Medicare and Medicaid Contractors

By

a-wachler

j-Colagiovanni

 

 


 

 

By: Andrew B. Wachler, Esq. and Jennifer Colagiovanni, Esq.

 

With much of the attention focused on Recovery Audit Contractors (RACs) during recent years, providers may be unfamiliar with the other audit contractors utilized by the Centers for Medicare & Medicaid Services (CMS). CMS recently released a MLN Matters article in an effort to increase provider awareness of the current contracting environment and the various entities that may request medical records or other documentation. It is important for providers to recognize these various CMS contractors and the different roles they play. Different contractors serve different functions, including claims processing, program integrity, specialty medical review, appeals and quality improvement.

Claims processing contractors are entities contracted by CMS to process provider enrollment applications and claims submitted by providers and suppliers, and to make payments in compliance with Medicare regulations and policies. Currently, these entities include carriers, Fiscal Intermediaries (FIs), Regional Home Health Intermediaries (RHHIs) and Medicare Administrative Contractors (MACs). Due to a provision of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, claims processing authority currently is being transitioned to the MACs (much of the carrier, FI, and RHHI workload already has or will be shifted to MAC jurisdictions). The MACs also perform duties such as recovering overpayments on previously processed claims, handling provider enrollment issues, providing education on Medicare billing procedures and resolving issues pertaining to submitted claims. Recently CMS announced that MACs also will be responsible for issuing demand letters in connection with RAC-identified overpayments beginning in January 2012.

 

Program Integrity contractors are responsible for identifying cases of suspected fraud. Specifically, CMS contracts with Program Safeguard Contractors (PSCs) and Zone Program Integrity Contractors (ZPICs), which are in charge of implementing the Medicare Benefit Integrity program. PSCs and ZPICs use a variety of proactive and reactive techniques to identify and address potentially fraudulent billing practices. CMS is currently in the process of transitioning PSCs to ZPICs, which soon will perform all benefit integrity work. Seven ZPICs were created to perform program integrity for Medicare Parts A, B, C and D (prescription drugs), plus DME, home health and hospice, and Medi-Medi.

 

CMS also has contracted with the Recovery Audit Contractors (RAC) to carry out program integrity efforts. RACs conduct automated, semi-automated and complex reviews in an effort to identify and recover improper payments (i.e. underpayments and overpayments). There are four RAC regions, each with its own contractor: Diversified Collection Services (Region A), CGI (Region B), Connolly Consulting (Region C) and HealthDataInsights (Region D). The Tax Relief and Health Care Act of 2006 authorized the RAC program for Medicare Parts A and B. The Patient Protection and Affordable Care Act of 2010 expanded the program to cover Medicare Parts C and D as well as Medicaid. The Medicaid RAC program was created as a tool to fight Medicaid fraud and abuse, and the program shares some similarities with the Medicare RAC program. CMS released the final rule for the Medicaid RAC program on Sept. 14, 2011.

 

Medicaid Integrity Contractors (MICs) contract with CMS to perform program integrity work. There are three types of MICs: Review MICs, Audit MICs and Education MICs. Review MICs are responsible for investigating potential provider fraud, waste or abuse. Audit MICs are the Medicaid version of RACs in that they audit claims submitted by providers and identify improper payments. However, unlike the RACs, which are limited to a three-year lookback period, Audit MICs may review claims dating back up to five years. Education MICs are responsible for educating providers regarding payment integrity and quality-of-care matters.

 

Specialty Medical Review Contractors are tasked with preventing and minimizing improper payments. These contractors include the Medicare Coordination of Benefits Contractor (COBC), whose duties include overseeing all activities that support the collection, management and reporting of other insurance coverage for Medicare. Another specialty contractor is the Medicare Secondary Payer Recovery Contractor (MSPRC), which is responsible for recovering funds for which Medicare should not have been the primary payer. Finally, the National Supplier Clearinghouse (NSC) has been contracted by CMS to handle enrollment activities related to DME suppliers.

 

CMS also has contracted with entities to conduct first- and second-level provider appeals of claim denials. First-level appeals (redeterminations) are conducted by carriers, FIs, RHHIs and MACs. For second-level appeals (reconsiderations), CMS has contracted with Quality Independent Contractors (QICs), which conduct independent reviews of the initial determination, any redetermination and other issues related to payment of the appealed claim. There are seven QICs in total: two Part A QICs, two Part B QICs, one Part C QIC, one Part D QIC and one DME QIC.

 



 

Administrative Law Judges (ALJs) oversee the third level of the appeals process. ALJ hearings may be conducted in person, by video teleconference (VTC) or by telephone. During these hearings, parties have an opportunity to present documentary evidence, legal arguments and witness testimony, which may involve internal clinicians and experts. The ALJ will examine the issues, question parties and other witnesses, and review documents material to the issues. An ALJ’s decision is based on the hearing record and is required to be made within 90 days from the date a request for the hearing was received (unless the time period is extended or waived).

 

If a provider is unsatisfied with an ALJ decision, it may appeal the decision to the Medicare Appeals Council (MAC). A MAC decision typically is issued within 90 days of receipt of a request for appeal. The MAC’s decision binds all parties unless the decision later is modified by a federal district court; if the MAC does not issue a decision, dismissal or remand within the required time frame, a provider may request that the case be accelerated to federal district court.

 

Quality Improvement Contractors, also known as Quality Improvement Organizations (QIOs), are private organizations (mostly nonprofits) whose staff consists mostly of physicians and other healthcare professionals. Each state, as well as the District of Columbia, Puerto Rico and the Virgin Islands, has its own QIO. The role of the QIO is to provide quality-of-care review services and to implement quality improvement projects. QIOs are tasked with improving quality of care for beneficiaries and ensuring that care is medically necessary, reasonable, provided in the appropriate setting and rendered in accordance with recognized healthcare standards.

 

While the audit landscape and its numerous acronyms can be intimidating, providers are advised to arm themselves with knowledge about the roles of the various contractor entities. Understanding the focus of each can provide significant insight if and when a provider receives a record request or experiences an audit of claims.

 

About the Authors

 

Andrew B. Wachler is the principal of Wachler & Associates, P.C.  He graduated Cum Laude from the University of Michigan in 1974 and was the recipient of the William J. Branstom Award. He graduated Cum Laude from Wayne State University Law School in 1978. Mr. Wachler has been practicing healthcare and business law for over 25 years and has been defending Medicare and other third party payor audits since 1980.  Mr. Wachler counsels healthcare providers and organizations nationwide in a variety of legal matters.  He writes and speaks nationally to professional organizations and other entities on a variety of healthcare legal topics.


Jennifer Colagiovanni is an attorney at Wachler & Associates, P.C.  Ms. Colagiovanni graduated with Distinction from the University of Michigan and Cum Laude from Wayne State University Law School.  Upon graduation, Ms. Colagiovanni was nominated to the Order of the Coif. Ms. Colagiovanni devotes a substantial portion of her practice to defending Medicare and other third party payer audits on behalf of providers and suppliers.  She is a member of the State Bar of Michigan Health Care Law Section.

 

Contact the Authors


awachler@wachler.com

 

jcolagiovanni@wachler.com

 

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