The Centers for Medicare & Medicaid Services (CMS) randomly audit health care providers’ claims for reimbursement, to recoup funds the program may have already paid under fraudulent or incorrect pretenses, via Recovery Audit Contractors (RACs). This is part of the broad-sweeping Medicare Claim Review Programs established by the government, processes which were formalized in the 1990s. On November 15, CMS announced that Medicare’s RACs in certain high-volume or high-population states would begin pre-payment audits of many cardiovascular and orthopedic procedures’ claims, prior to releasing payment to providers. This new process, which affects all procedures falling into the below Diagnosis Related Groups (DRGs), will begin on January 1, under the Agency’s newest attempt to lower the cost of health care:
Clearly, the list is weighted toward the costlier cardiovascular procedures, but also affects many of the commonly utilized spine and orthopedic DRGs, ostensibly based on Medicare program data. However, no data to date have been released which would support this broad and impactful initiative by CMS. In fact, it has been reported that one Medicare contractor states if it “appears that the scrutiny being used is unnecessary, there will be a shift in focus away from the initial DRG’s towards other, different DRG’s.”
For now, submission of a claim under any of the above listed DRGs will trigger a mandatory review prior to payment by Medicare, for procedures performed in the following states: Florida, California, Michigan, Texas, New York, Louisiana and Illinois (for these states’ high populations, and proclivity of providers in submitting fraudulent or erroneous claims); and Pennsylvania, Ohio, North Carolina and Missouri (for these states’ high volumes of short inpatient hospital claims).
What Does This Mean for Industry? Impact on Device Manufacturers, Facilities and Physicians
Payment delays for providers. These claims for services provided on or after January 1 will all be subject to an automatic audit, prior to the release of payment. As such, auditors will at least ensure that proper documentation exists to substantiate the care given Medicare beneficiaries, and that no fraud, abuse or other errors exist, which may constitute improper payment by Medicare. As long as the care provided is well documented, reasonable and necessary (the requirement for Medicare’s coverage), the audits should represent nothing more than a delay in payment to physicians and facilities.
Providers’ documentation is more critical now, than ever before. While individual physicians, submitting claims under Medicare Part B, may be upset or bothered about this new policy, they are better served by ensuring their documentation (e.g., medical histories, clinic visit and operative notes) are in top form, for each claim submitted along with the above noted DRGs. A concerted effort by the physician’s office staff as well as the facilities submitting their claims, will allow for the best possible outcome following the RAC audit. After all, as long as services provided to a Medicare beneficiary are reasonable and medically necessary, and the documentation reflects such as per the standard of care, the RAC audits will be nothing more than a speed bump on the path to reimbursement.
A tougher sell to hospitals’ purchasing officers? For medical device manufacturers, this means a potentially tougher sell to hospitals submitting claims under Medicare Part A, as inpatient hospital administrators who focus intently on the “business” side of health care will view this mandatory pre-payment audit requirement as cumbersome, and could potentially negatively impact accounts receivable. Particularly so if the audits uncover reversible errors, or if the RAC determines a basis for a fraud or abuse on the Medicare program.
A basis for future coverage decisions? At this time, it is unclear whether these pre-payment audits will develop into a future rationale for Medicare’s coverage analyses, once the Medicare contractors in those affected states more carefully review the claims. While not likely, these audits might possibly be the precursor to Medicare’s future coverage decisions regarding spine fusion, or other procedures that surgeons and facilities rely upon in treating patients. Just how impactful this will be may depend upon which issue(s) in (and field(s) of) medicine the Agency tries to tackle over the next few years.
MCRA believes the impact of this recent action by CMS to provide for pre-payment audit of many cardiovascular and orthopedic/spine procedures in key states will not be immediately significant. The program is set to expire in 3 years, on December 31, 2014.
Hospitals and physicians submitting claims to Medicare for services related to the affected DRGs should carefully document and catalogue the clinical need for these patients in undergoing the procedures falling within the affected DRG. In doing so, CMS may learn the clinical benefit and value of these procedures, which may help to stave off potential coverage issues, in the long term.
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