The American Orthotic & Prosthetic Association is proposing a change to Medicare's recovery audit contractor program that it says would keep providers from suffering devastating financial losses while appealing disputed claims.
The organization says providers should not have to refund alleged overpayments identified by RACs until after an administrative law judge reaches a decision on an appeal. Now, even providers who are in the right end up short on cash, in some cases for years, because of a backlog of appeals, association leaders said.
RACs examine providers' claims to make sure their Medicare payments were accurate and appropriate. The CMS outsources the program to four private companies and pays those companies a contingency fee for every overpayment they find.
“More than 100 orthotic and prosthetic providers already have shut down due to delays in the Medicare appeals process and hundreds more are at risk of suffering the same thing,” said Charles Dankmeyer, the group's president. “There's no end in sight to this monster backlog.”
The move, Dankmeyer said, would also save Medicare money. Now, if the administrative law judge rules in the provider's favor, the CMS must return the payment with interest. In 2013, the CMS owed orthotic and prosthetic providers who won appeals before the judge an estimated $85,661 in interest—nearly one-third of the total amount the CMS ultimately was able to keep from orthotic and prosthetic providers after that level of appeals, according to a report prepared for the organization by Dobson DeVanzo & Associates and released Thursday.
The CMS said it had not yet received the proposal, which would require legislation, and declined to comment. The Council for Medicare Integrity, a RAC lobbying group, criticized the report.
According to the RACs, billing errors by durable medical equipment, prosthetic, orthotic and supplies services cost Medicare $5.1 billion a year.
“We would have hoped that AOPA's report would have addressed the steps DME/HH-H providers are taking to combat waste within their sector of the nation's healthcare system,” the RAC council said in a statement, referring to the durable medical equipment and home health and hospice industries.
The RAC program has been a source of controversy on a number of fronts, drawing the ire of providers for years.
Last year the American Hospital Association and three members sued HHS over the backlog of appeals, saying hospitals wait as long as five years for resolution. A judge dismissed the suit in December, saying the inconvenience didn't warrant the court's intervention.
The U.S. Court of Appeals for the Federal Circuit, meanwhile, ruled recently that a lower court must reconsider how the CMS procures new contracts for the program, leaving the program in limbo.
That decision came after one of the program's contractors, CGI, filed a lawsuit protesting the agency's intention to wait until after a challenge passes the second level of appeal before paying RACs under the new contract. RACs now get their cut after a provider returns the payment to the government.