RAC Audits the Focus of Recent Congressional Hearing

On July 28, 2011, the House Oversight and Government Reform Committee held a hearing on Improper Medicare Payments. The hearing highlights the ongoing friction between providers and recovery audit contractors (RACs) and the fact that the Centers for Medicare and Medicaid Services (CMS) is continuing their effort to combat fraud through such efforts as pre-enrollment screening and predictive modeling.

Daniel R. Levinson, the Inspector General, Office of the Inspector General (OIG), Health & Human Services (HHS), began the hearing discussing the 2010 fiscal year, where there was an estimated $48 billion in Medicare improper payments. While some of the improper payments were a result of fraud, other improper payments were the result of medically unnecessary claims, miscoded claims, eligibility errors, or insufficient documentation. The OIG conducts targeted reviews to determine the scope of the improper payments for service types and makes recommendations to address them.

Michelle Snyder, CMS Deputy Chief Operating Officer, noted that most improper payments are not fraudulent but the result of documentation errors, incorrect coding, and reasonable and necessary determinations. She emphasized that CMS pays about 5 million claims per day, and that under the Comprehensive Error Rate Testing (CERT) program, CMS has done considerable outreach and education to providers, performed system edits, and used online analytic tools to correct for errors.

Additionally, Ms. Snyder discussed the new contractor solicitation for an automated provider enrollment screening solution. CMS anticipates that this new screening technology will automatically verify information provided on an enrollment application for all Medicare provider supplier types.

James Lankford (R-OK) focused the hearing on RACs and the frustration hospitals and doctors have had in feeling “guilty until proven innocent.” Ms. King said there have been missteps by the RACs, and Mr. Lankford asked if CMS has added any staff for RAC oversight. Ms. Snyder stated that CMS has hired two validation contractors to give oversight of the RACs to prevent RACs from being overly aggressive with hospitals and doctors. While Mr. Levinson testified that the OIG would be releasing a report on RACs later this year, he did mention that one of the problems with RACs is that they are built on the pay and chase model of fraud enforcement.

Jim Cooper (D-TN) agreed that much of the $48 billion in improper payments actually represented overpayments by providers. He asked about fee-for-service problems versus managed care and thought it fascinating that there were no statistics yet on Part D.

Ms. Eleanor Holmes Norton (D-DC) picked up on the fact that there were no statistics yet for Part D and asked whether CMS has been ignoring fraud enforcement in this area. Ms. Snyder admitted that no statistics have been produced on Part D fraud, however CMS has been looking into it. She also proposed that CMS should have a composite rate on Part D fraud efforts this audit year.

Mr. Platt returned to the RAC audit issues identified by Mr. Lankford and asked whether the cost of appeal and the appeal process in general is fair. Ms. Snyder said there has been a robust appeals process that has resulted in edit changes. Mr. Platt also asked about recertifying all providers, and Ms. Snyder said CMS is focusing on new providers first and plans to have all providers recertified or significantly in process of recertification by January 2013. Mr. Platts thought it would be a good idea for CMS to coordinate with the U.S. Census process to conduct face-to-face recertifications while the Census collectors were out in the field.

The Congressional Hearing demonstrates that fraud will continue to be a significant area of Congressional interest. Congress and HHS plan to continue working together to root out additional areas of fraud, waste and abuse.

For more information regarding the RAC program, please contact Abby Pendleton, Esq. or Jessica L. Gustafson, Esq. at (248) 996-8510 or (212) 734-0128. More information may also be obtained at the HLP website.