Health Affairs Editor-In-Chief Alan Weil moderated the eight-member panel discussion, explaining that its purpose was to be “illuminating, forward-looking, and solution-oriented.”

As it turned out, most of the energy of the panel was, as Weil noted, tied to FFS payments, even though the industry is moving into new payment models and more bundling. He asked providers: What role do the new payment models play when it comes to audits? Is it odd to discuss this when the future will be so different?

One of the panel members, Margaret Hambleton, vice president and corporate compliance officer for Dignity Health (one of the five largest hospital systems in the nation), quickly answered that question.

“Audit programs are important, but the current ones are inefficient and unintentionally shifted away from patient care,” she said. “I think as we move to bundled payments and other population health delivery models, and the risk shifts from CMS to the payer community, a lot of these discussions will go away.”

Mindy Hatton, senior vice president and general counsel for the American Hospital Association (AHA), agreed, saying that “many audit functions won’t be as important in future.” Although Kathleen King,director of healthcare for the Government Accountability Office (GAO), pointed out that there would be other issues.

Nonetheless, the future isn’t here yet, and improper payments and audits are on the minds of Congress, including  Committee Chairman Sen. Bill Nelson (D-Fla.).

As Nelson noted in his opening statement, “Medicare must shift to a strategy that prevents these problems (improper payments) from occurring in the first place” and work more with providers on the front end to ensure that claims are submitted properly and without mistakes.

To prevent these problems, panel members offered a package of several recommendations, something Weil called “a fairly long list of process improvements.” The most frequently repeated improvements include those below.

Too Many Auditors

How many auditors does it take to reduce improper payments? Apparently, when it comes to reducing those in the Medicare program, it takes at least four: Medicare Administrative Contractors (MACs), Comprehensive Error Rate Testing (CERT) contractors, Zone Program Integrity Contractors (ZPICs), and, of course, Recovery Auditors (RACs).

Hospitals get multiple and frequently redundant requests for claims. One hospital reported to the AHA that the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) and a RAC performed the same review but got different numbers. Hambleton called the current audit programs “inefficient, and unintentionally shifting providers away from patient care.”

Understanding the federal organizational structure better than anyone on the panel, King gave an overview of a study conducted by the GAO. At the request of Congress, the GAO scrutinized various issues related to post-payment review, and it issued one report last September that provided background about the different auditors.

She explained that all of the contractors were established under different laws and are managed by different parts of CMS. The fact that their requirements differ often impedes their efficiency and effectiveness.

The GAO recommended that CMS examine this problem, including identifying to what extent contractors duplicate each other’s reviews, and take a look at whether it could develop a strategy to coordinate the work of the post-payment contractors.

King noted that CMS agreed with the assessment and has been working on a plan to make the process more consistent and effective. This will be summarized in the GAO’s second report, which will be released this summer.


Revamp the RACs

The RAC program came under the most fire, as expected, although Chad Janak,vice president of audit operations for Connolly Healthcare LLC, did his best to defend the program, stating that it “works well” – as proven by the fact it has returned more than $8 billion to the Medicare trust fund. He then went on to explain that RACs were playing by the rules that CMS established.

Nonetheless, the AHA’s Hatton asked Congress to “reform the RAC payment program and impose penalties on Recovery Auditors when a denial is reversed on appeal” — a suggestion with which several other panel members agreed.

One researcher in the audience suggested that RACs have a tendency to look for areas where there is policy confusion, then go after claims in those areas, thus generating denials. Not all of the denials will be appealed because many systems don’t have resources to appeal.

Steve Stang of Health Care Assurance Services with Clifton Larson Allen LLP noted that contractors conducting program integrity audits do not always follow government standards. One such standard is that the auditor should be objective and fair, but the fact that RACs receive a contingency fee could be construed as compromising any sense of independence.

Prevention and Education

The first step toward obtaining an effective program integrity strategy is prevention, and this is the responsibility of CMS. As King pointed out, it is CMS’s responsibility to ensure that only the  “right providers” be enrolled and keeps out the ones that they think would abuse the program. The Patient Protection and Affordable Care Act gave the agency increased authority to do that, and CMS has been using that authority in recent months.

The next step is upfront provider education, which most of the panelists pointed out as an easy way to reduce improper payments. Unfortunately, the statement of work for the RACs essentially prohibits education, even though several panelists thought they could communicate directly with providers about problems found.

Currently, the only contractors authorized to conduct provider education are MACs. Diana Haramboure,senior vice president and chief administrative officer for First Coast Service Options — the MAC for providers in Florida, Puerto Rico and the U.S. Virgin Islands — explained the process her company uses.

First Coast’s “first course of defense” is to help providers submit claims right the first time, she explained. When the MAC conducts an audit, it shares the comparative billing report so the provider can see its standing in relation to its peer group.

Being the only hospital provider representative on the panel, Hambleton commented that the MAC approach is very collaborative. It gives adequate information about the problem and shares data that supports the reason for the denial.

“I welcome their reviews as an educational opportunity,” she said.

About the Author

Janis Oppelt is the editorial director for MedLearn Publishing, a division of Panacea Healthcare Solutions.

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