The Big 10
- By David Kopf
- Jan 01, 2012
It’s fair to say that audits were the biggest issue immediately threatening the industry through 2011, and while the industry deals with the bidding of Round Two of competitive bidding, and works to advance the marketing pricing program as an alternative, audits will remain a serious issue. CMS ramped up its “program integrity” budget for 2011 and built up a vast reservoir of auditing resources that is using to unleash an onslaught of pre- and post-payment audits on providers.
In the fiscal year of 2010, CMS invested $311 million in its program integrity, which was a 50 percent increase from 2009’s outlay. In 2011, providers felt the effect of that investment in a bad way. Claims dating compaback to October 2007 were subject to recoupment, and providers facing prepayment audit could have 100 percent of their incoming claims reviewed before payment. CMS estimated it would recover $10.4 billion this year, and that kind of sum is attractive indeed to an agency and Congress, who are both fixated on cutting costs at all costs.
The ramp up of audits was a financial disaster for many providers, particularly small ones that cannot survive having so much funding held in limbo. With budgets already in disarray from so many other funding cuts, the audits can close a business, or at the very least, involve so many claims that it is nearly impossible to determine and effective strategy for dealing with them.
There are three main types of audits: Recovery Audit Contractors (RAC), Comprehensive Error Rate Testing (CERT) and Zone Program Integrity Contractors (ZPIC).
RAC audits are post-payment audits detect overpayments and underpayments. RAC audits randomly select claims and reviews result from data analysis; they can’t audit claims simply because they represent a high dollar amount. These audits can go back three years from the date the claim was made, stopping at Oct. 1, 2007. They combine what is called “automated” reviews conducted by software systems, and “complex” reviews, which are conducted by auditing staff. Current focus areas for the RACs are pharmacy supply and dispensing fees billed by a DME supplier; wheelchair bundling; and urological bundling.
CERT audits are post-payment audits conducted by the CERT contractor AdvanceMed, which randomly selected a sample of approximately 120,000 submitted claims, and request medical records from providers who submitted the claims. The claims and medical records are reviewed for compliance with Medicare coverage, coding and billing rules. Key areas of focus for the CERT audits are diabetic test strips, power mobility and oxygen.
ZPIC audits are part of CMS’s Benefit Integrity Audits, and are prepayment audits that identify and prevent fraud, waste, and abuse of incoming claims. These are aggressive audits that even result in the ZPIC auditors referring some cases to law enforcement agencies. The ZPICs also maintain a list of providers that require future monitoring based on past history. There are seven ZPIC zones covering all geographies served by Medicare, but so far two have been awarded to contractors: Zone 4, which covers Colorado, New Mexico, Oklahoma and Texas was awarded to Health Integrity; and Zone 7, which covers Florida, Puerto Rico and Virgin Islands, was awarded to SafeGuard Services.
Some key ways providers are dealing with them are to implement rigid documentation requirements that require the complete and correct medical documentation from all referral partners, before they can process their claims. That can be a tough bullet to bite for providers, because those partners can balk.
This is why many providers are actively educating their referral partners to prevent souring relationships with those partners. Now providers are developing in-services and other educational tools and proactively reach out to partners to explain to them the Medicare requirements, as well as CMS’s ramped-up audit programs and make clear that it is in their patient’s and their own best interest for them to provide the correct and complete documentation.
Also, providers are conducting internal audits to ensure their claims are clean and all departments are living up to the documentation requirements of the business. They are also employing document imaging and retrieval systems to easily store and access any and all documentation related to a claim or a patient. This will cut down the time required to respond to and address an audit when it comes up.
However, as hard as providers are working to comply with audits, there is a larger problem: there is no true oversight of the auditors themselves, and many providers are complaining of indiscriminate, inconsistent and often arbitrary audits. Moreover, many of the auditors are using very vague interpretations of Medicare guidelines, which further throws the process into question.
In fact, the process has become so out of whack that Peter Budetti, deputy administrator for the Center for Program Integrity at CMS, said the agency will conduct an “audit audit” to investigate provider concerns after coming under criticism from HME industry and hospital representatives at a federal fraud-prevention summit last June. CMS Administrator Donald Berwick, who participated in the summit, admitted that audits are “a blunt tool.”
Moreover, the HHS Office of Inspector General released a report in November that stated that while Zone Program Integrity Contractors had received billions in taxpayer money, they have yet to accurately report their workloads. The report noted that while the Zone 4 ZPIC received $11.4 million and the Zone 7 ZPIC received $10.8 million to conduct activities under their benefit integrity task orders for the first contract year (Sept. 30, 2008, through Oct. 31, 2009), it was not reporting accurate data on its workload, and the data was so inaccurate and non-uniform that it prevented a full assessment of the situation.
Of course, CMS fraud czar Budetti and the HHS OIG are starting what providers already know: the audit contractors are out of control, and nothing tangible is being done to rein them in. This means that Medicare audits will continue to hamper, harangue and harass providers into 2012. Providers must put into place any and all business practices and tools to help them drive the unimpeachable documentation practices necessary to fight the audits, while trying to come up with strategies for keeping their businesses running while these audits place their funding in financial limbo.
This article originally appeared in the January 2012 issue of HME Business.
David Kopf is the Publisher and Executive Editor of HME Business and DME Pharmacy magazines. Follow him on Twitter at @postacutenews.