Healthcare Business News

CMS recovery audits on hold as contractors wrestle big backlog

By Beth Kutscher
Posted: February 20, 2014 - 4:00 pm ET

The CMS is winding down its recovery audit program with its current contractors, placing the program effectively on hold—perhaps for several months—while it awards new contracts. The pause could be tacit acknowledgment of the need to address issues with the program, a healthcare analyst said.

“I'm interpreting this as the CMS using the pretext of re-procurement as a reason to pause the program and address the enormous amount of concern that has arisen from the provider community,” said Emily Evans, a partner and legislative/regulatory analyst at Obsidian Research Group. “I expect this hiatus to be prolonged; I don't think this is a couple month's thing or a six-month thing.”

The agency said last February that it will undergo a procurement process to select vendors to continue the RAC program, which is responsible for detecting improper Medicare payments. But it has yet to even issue a request for proposals for new contractors.

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The CMS has extended its contracts with its current four vendors until Dec. 31, 2015, for “administrative and transition activities.” The contracts were to end on Feb. 7.

The purpose of the extension is to allow the current contractors to handle and wind down appeals.

For providers, that means a lull in additional documentation requests, or ADRs, while the CMS addresses both a backlog of claims and concerns about the effectiveness and fairness of the program.

“It obviously puts on hiatus a pretty enormous administrative burden,” Evans said. “However, this period of time—while they're not getting any (ADRs)—could still be audited in the future. No one should let down their guard.”

The program currently has a three-year look-back period.

Tomorrow, however, is the last day a recovery auditor can send a post-payment ADR, and Feb. 28 is the last day Medicare administrative contractors can send a pre-payment ADR to the Recovery Audit Prepayment Review Demonstration. June 1 is the last day for auditors to send improper payment files to Medicare administrative contractors for adjustment.

The appeals process has become so overloaded that HHS' Office of Medicare Hearings and Appeals recently began notifying hospitals that it won't be able to accept new appeals until the backlog clears.

Sixty-five administrative law judges are now receiving 15,000 claims per week, when they're only equipped to handle 2,000. That has meant a collective backlog topping 350,000 appeals.

While providers may enjoy some breathing room, a group that represents the program's contractors called the move “very disappointing” and “another hurdle for the highly effective RAC program.”

“This decision will undoubtedly have negative implications for the Medicare trust fund and, most importantly, taxpayers,” said a spokeswoman for the American Coalition for Healthcare Claims Integrity in a statement, pointing out that Medicare lost $36 billion to waste last year. “The ongoing efforts by hospitals to eliminate Medicare oversight, and the complicity of Congress, is deeply concerning.”

Follow Beth Kutscher on Twitter: @MHbkutscher

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