Determined to Collect: Are You at Risk?

(Excerpted from Medical Economics, November 21, 2008)

Since 2005, Medicare Recovery Audit Contractors, operating in just California, New York and Florida have already collected nearly $1 billion. Due to this success, the Centers for Medicare and Medicaid Services will expand the program to a dozen more states in the first quarter or 2009, with all 50 states being targeted by January 2010.

Although the first phase of Recovery Audit Contracts (RAC) focused on hospital systems, expansion efforts could lead to increased attention on primary care physicians. Currently physician groups have been asserting that these "private" contractors hired to administer RAC are placing undue stress on providers. However, the increased oversight of the audit program has already led to the closure of clinics that were blatantly guilty of fraud.

In order to assess your vulnerability to an audit, here are some guidelines from a summary report that outlines and defines improper payments on claims:

1. Payments made for services that were medically unnecessary or didn't meet the Medicare medical necessity criteria for the service rendered. (For instance, a claim from a hospital for three colonoscopies for one beneficiary in one day, when only one procedure was necessary.)
2. Payments made for services that were incorrectly coded. (For example, a provider submits a claim for a certain procedure, but the records indicate that a different procedure was actually performed.)
3. A provider fails to submit sufficient documentation to support the claim.
4. Other errors might include such instances as a provider being paid twice because duplicate claims were submitted.

Among the overpayments tallied, 40% were classified as medically incorrect, 35% were wrongly coded, 8% had insufficient documentation, and the remaining 17% fell under the classification of "other".

Underpayments generally occur when a provider submits a claim for a simple procedure, but the medical records indicate a more complex procedure was undertaken.

Currently some changes are being undertaken to relieve the burden on audited providers. Key changes include:

1. Reduction of the "look back" period, reduced the time span an audit can cover from four to three years.
2. Each audit contractor is to hire a physician medical director to oversee the record review process.
3. Assistance must be provided to nurses, therapists and certified coders upon request.
4. By 2010, the Centers for Medicare & Medicaid Services will require all RACs to maintain a web portal that updates each provider on the status of all record requests.

With this increased focus on reviews and audits, healthcare providers should also investigate Physician's Billing Errors & Omissions insurance coverage, which could provide defense against payor audits from public and private payors and indemnification of fines and penalties. Your RGI Insurance professionals can provide additional information and guidance in this area. Simply e-mail your request to info@rgiinsurance.com or visit us at www.RGIinsurance.com.