Senate Issues Report on Medicare Audits: 3 Key Findings

The Senate Special Committee on Aging has released a report on Medicare audit programs — a topic the committee held a hearing on yesterday. Here are three findings from the report.

1. CMS and its contractors' post-payment review methods are inefficient and increase provider burden because of inconsistencies. The Committee's report states "significant inconsistency" in CMS contractor requirements places a burden on providers that must ensure compliance with the various requirements. This echoes a U.S. Government Accountability Office report released last year recommending that CMS make Medicare contractor requirements more consistent.

There are four different types of contractors that review Medicare fee-for-service claims. Medicare Administrative Contractors process and pay claims and work to prevent payment errors; Zone Program Integrity Contractors investigate possible cases of fraud in their designated geographic areas; Recovery Auditors, or RACs, identify improper payments; and Comprehensive Error Rate Testing contractors review samples of claims and other documents to determine the improper payment rate for claims nationwide.

All of these contractors use the same general post-payment claims review process, but CMS has different requirements for the review procedure depending on the type of contractor, according to the GAO. For example, CERT contractors must give providers 75 days to respond for requests for documentation before the contractors can declare a claim improper because of a lack of documentation. ZPIC entities only have to give providers 30 days to respond.

2. CMS prepayment reviews and audits don't consistently target problem areas and subsequently have a limited ability to affect improper payments. The committee has concluded CMS auditing programs don't consistently target areas identified by the Comprehensive Error Rate Testing program as having high levels of improper payments. This hinders the audit programs' ability to have an effect on improper payment rates. "The CMS' strategy for addressing CERT-identified problem areas is based on

approving individual issue areas for contractors to review, rather than to ensure coverage of all CERT-identified problem areas across its contractors," the report states.

For instance, according to CMS' 2013 Improper Payment report, inpatient hospital Medicare severity diagnosis-related group services had an improper payment rate of 9.9 percent. According to the Senate report, in fiscal year 2012, more than 91 percent of the $2.4 billion in overpayments identified and corrected by recovery auditors was related to inpatient claims, despite the fact that other areas had high error rates. For instance, in 2013, home health services had a 17.3 percent improper payment rate.


3. CMS could have missed opportunities to reduce improper payments by effectively educating stakeholders. Although CMS has asserted it has educational measures (such as comparative billing reports) it uses to educate providers on proper medical billing, 58 percent of hospitals responding to the American Hospital Association's RACTrac survey said they were not educated on avoiding payment errors. The report states, "Effective education would involve both education on how to avoid payment errors, and basic information about the roles of the contractors which directly engage providers and suppliers in this process. On the website maintained by the CMS which provides information about Medicare, however, the only header under its Compliance and Audit Section is a reference to Part C and D audits," with no mention of Part A and B audits.

For more information, read the full report here.

More Articles on Medicare Audits:
CMS' Medicare Recovery Audit Contractor Program: 8 Things to Know
Senate to Hold Medicare Audit Improvement Meeting
CMS Delays New RAC Contracts


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