Senate committee to target waste in Medicare

The Senate Finance Committee will consider such nitty-gritty issues as patient observation status and the redundant overlap among CMS auditors when senators look at ways to reduce waste and abuse in federal healthcare spending.

A 12-page summary report (PDF) from the committee on Jan. 31 outlined the results of 2,000 pages of public comments received by the Senators in response to a call for recommendations last May on ways to fix Medicare. Those responses, boiled down into a list of bullet points in the summary, will inform the bipartisan group of six senators as they draft legislation for the 113th Congress, which ends in January 2015.

Among the top items is the long-simmering issue of how hospitals decide whether a given patient's care justifies the most expensive Medicare benefits, known as Medicare Part A hospitalization, or if the patient should have gotten less-lucrative outpatient Part B observation care.

The CMS is being sued by a class-action group of patients who say observation status unfairly saddles them with hospital and rehabilitation costs. The agency is facing separate litigation from the American Hospital Association, which says the uncertainty surrounding inpatient admissions allows Medicare's recovery audit contractors to unfairly deny them reimbursements for legitimate care.

“I think they should just get rid of observation status, because it is abused so terribly and it has such a bad effect on Medicare beneficiaries,” said Gill Deford, director of litigation at the Center for Medicare Advocacy, which filed the citizens' lawsuit in Connecticut federal court. “Even if it had a good use at some point, it has been abused and it should be eliminated.”

Medicare auditors have taken a sharp interest in questioning hospitals' short-stay and setting-of-care decisions—so much so that many providers told the Senate committee that they often receive overlapping requests for audits being done by different companies looking at the same claims.

The Senate committee will consider “making numerous process changes to how the various CMS audit contractors operate to ensure they are doing so efficiently and effectively,” a news release on the report said.

Andrew Wachler, the managing partner with Wachler & Associates who handles many Medicare auditing issues, welcomed the committee's attention to outpatient billing and the auditing contractors.

“I think this is justifiably at the top of the list, because of the amount of resources. This is billions of dollars being collected from these hospitals,” he said. “Those dollars could go to patient care.”