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GAO finds Medicare's audit contractors may duplicate efforts


By Bob Herman
Posted: August 14, 2014 - 4:00 pm ET
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The CMS' audit contractors may overlap duties and hammer hospitals with multiple reviews of the same payment claims, according to a new Government Accountability Office report that echoes concerns the provider community has voiced for years.

The GAO report looked at Medicare's alphabet soup of auditors: RACs, MACs, CERTs and ZPICs. RACs, or general recovery auditor contractors, are the most well-known and have been in place since October 2009. They review hospital claims for inappropriate payment after Medicare has already paid. Four companies—Performant Recovery, CGI Federal, Connolly and HealthDataInsights—serve as the Medicare RACs.

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Medicare administrative contractors—the MACs—are intermediaries that actually process and pay claims to providers from Medicare. ZPICs and CERTs—zone program integrity contractors and comprehensive error rate testing contractors—investigate potentially fraudulent Medicare payments and conduct other payment reviews.

Although the CMS reportedly has systems in place to prevent the contractors from conducting duplicative audits, the GAO said the CMS' oversight measures are not sufficient or reliable.

“CMS does not have reliable data to estimate the total number of duplicative claims reviews by all four types of contractors,” the GAO wrote. “In part, this is because CMS did not design the (recovery audit database) to estimate the total number of duplicative reviews.”

But for some observers, the problems surrounding Medicare's auditing system stem from its overall complexity.

“If you're a healthcare provider, and you're not a geek like me reading the CMS website about the roles (contractors) play, you're going to be confused,” said Emily Evans, a legislative analyst with consulting firm Obsidian Research Group.

The GAO concluded that post-payment Medicare reviews are essential to reduce waste in the program, but the CMS should take steps to “improve the efficiency and effectiveness of its contractors' efforts,” the office stated. Namely, the agency should monitor its recovery audit database to ensure all contractors are submitting accurate, complete data, and it should routinely assess the auditors so they are not overlapping or overburdening providers. The CMS, in a letter attached to the report, agreed with the recommendations and said it would address them, but details were sparse on its action plan.

The American Hospital Association cheered the GAO's conclusion, saying Medicare's contractors should be held to tighter oversight. The AHA has consistently criticized the contractors, specifically the RACs, arguing that they saddle hospitals with higher administrative costs and target high-priced inpatient claims to line their own pockets. RACs retain between 9% and 12.5% of identified overpayments and underpayments for all general claims. Their cut increases to between 14% and 17.5% for claims that involve durable medical equipment.

“The GAO finds that hospital record requests are often duplicative and that contractors do not always follow CMS requirements,” said Linda Fishman, a senior vice president for public policy analysis at the AHA, in a statement. “Hospitals are drowning in an onslaught of record requests which diverts resources from patient care.”

The AHA is also in the middle of a RAC-related lawsuit against the federal government. The group has said hospitals that challenge Medicare audits wait for years in the appeals process.

The American Coalition for Healthcare Claims Integrity, a group representing the contractors, argued the GAO's report maintained that payment auditors were still necessary to ensure Medicare dollars are distributed appropriately.

“While oversight efforts have been essential to managing Medicare's fiscal health, refining these programs based on provider and auditor feedback will ensure these initiatives are efficient and effective over the long term,” ACHCI spokeswoman Kristin Walter said in a news release.

Citizens Against Government Waste, a privately funded advocacy group that has supported the RAC program, agreed that the CMS' auditing process was difficult to work through, saying it “would look familiar to Franz Kafka.” But the group urged the government “not to undermine the successful RAC program.”

Earlier this month, the CMS allowed the controversial RACs to restart some reviews of hospital claims. The program had been on hiatus since June 1, when the companies' audit contracts expired. The CMS said it “remains hopeful that the new round of recovery auditor contracts will be awarded this year.”

Several members of Congress requested the GAO's report, including Sens. Ron Wyden (D-Ore.) and Orrin Hatch (R-Utah).

Before legislators left for the August recess, Kevin Brady (R-Texas), chairman of the House Ways and Means Health Subcommittee, released a draft bill to improve Medicare's compliance and audit programs. Obsidian's Evans said one of the main provisions affecting hospitals in the Protecting the Integrity of Medicare Act of 2014 would be a shift away from the current “pay-and-chase” auditing system, to one in which contractors would review Medicare claims before they were paid.

Follow Bob Herman on Twitter: @MHbherman


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