Medicare's peer-review organizations would join the ranks of federal agencies and contractors rifling through hospital billing records looking for fraud and payment errors, under a draft HCFA proposal.
Upping the ante, HCFA would pay the PROs extra if they succeed in reducing payment errors.
The PROs, 37 private-sector institutions in charge of identifying and correcting deficiencies in the quality of care provided to Medicare beneficiaries, would be required to develop inpatient "payment error prevention programs" in their jurisdictions.
The contract calls on the PROs at a minimum to analyze hospital billing data and review individual patient records. From those reviews, the PROs would identify patterns of incorrect billing that resulted from poor documentation, incorrect DRG assignment, inappropriate transfers or medically unnecessary care.
Although the PROs' focus would be on identifying errors and working collaboratively with hospitals to reduce them, the draft contract also requires the organizations to refer findings to Medicare intermediaries or law-enforcement agencies, such as HHS' inspector general's office or the U.S. Department of Justice.
Detection of overutilization and fraud has always been part of the PROs' portfolio. But in their current three-year contract-called a "scope of work"-the PROs have largely gotten out of the business of retrospective case reviews and more into analyzing patterns of care to determine where quality can be improved.
The PROs said they are uncomfortable with resuming a more punitive role, particularly since they have succeeded in working as partners with providers in quality-improvement projects.
"If (the proposal) means what it says, providers would have reasons to be reluctant to work with PROs," said David Schulke, executive vice president of the American Health Quality Association, the trade group that represents the PROs.
Providers had the same reaction, and added that the federal government already has plenty of agents looking for fraud.
"It's sort of a case of how many cooks are going to be in the kitchen," said Laura Gogal, vice president and chief counsel for the Federation of American Health Systems, which represents for-profit providers. "We're concerned about duplication of effort and conflict between authorities."
A HCFA representative, however, said, "We believe that all HCFA contractors have a role in program integrity and payment error reduction. We have not determined what the scope of the role of the PROs will be."
Schulke added, however, that the current draft proposal, dated Oct. 29, is an improvement over earlier drafts because it has cast the payment-error reduction project in quality-improvement rather than law-enforcement terms.