Neurologists to Medicare: Modify Audit Program: Audits Expected to Yield Billions for Medicare

Neurology Today
21 May 2009; Volume 9(10); p 14

BUTCHER, LOLA

For advice on how neurology practice should prepare for an audit, visit www.aan.com/news/?event=read&article_id=7420 .

The AAN Professional Association and the American Association of Neurological Surgeons (AANS) have joined with other medical organizations to ask the federal government to back off some provisions of a controversial Medicare audit program.

The Recovery Audit Contractors (RAC) program, which uncovered more than $1 billion in inaccurate Medicare payments during a three-year trial, is being rolled out nationwide this year.

You can understand from a business standpoint why Medicare is doing this, but I think the RAC audits will be an onerous process for physicians, said Joel M. Kaufman, MD, a neurologist in the Lifespan health system in Rhode Island.

Dr. Kaufman, who chairs the AAN Payment Policy Subcommittee, and others worry that the program creates an incentive for auditors to be overly aggressive and that the auditors will be insufficiently knowledgeable about neurology practice to make the right judgment calls. The RAC auditors are not government employees; four independent contracting firms will each be awarded a region of the country to audit after a competitive bidding process.

The RAC program, initiated by Congress as part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, started in 2005 as a three-year demonstration program in California, Florida, and New York, the three states with the highest Medicare utilization. In 2007, Arizona, South Carolina, and Massachusetts were added to the trial.

From the beginning, Medicare providers have complained to the Centers for Medicare and Medicaid Services (CMS) about some provisions of the RAC program. When the demonstration project ended in 2008, CMS paused for a few months to consider complaints and make some changes.

But the financial haul to CMS coming from the RAC audits virtually guaranteed that the program would survive. While 4 percent of those were underpayments that CMS repaid to hospitals and physicians, a whopping 96 percent of the RAC findings were overpayments, which hospitals, physicians, and other Medicare providers had to send back to the federal government - with interest.

Figure. DR. JOEL KAUFMAN: You can understand from a business standpoint why Medicare is doing this, but I think the RAC audits will be an onerous process for physicians.

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Based on the demonstration program, CMS estimates that 3.9 percent of Medicare dollars paid in 2007 involved the inappropriate use of coverage, coding billing or payment rules. Nationwide, that means $10.8 billion in overpayments and underpayments - and, if the ratio of overpayments to underpayments holds up nationwide - a very nice windfall for the Medicare Trust Fund.

During the three-year demonstration, RACs corrected more than $1.03 billion in improper Medicare payments. The sheer size of the improper payments convinced Laura B. Powers, MD, a retired neurologist in Knoxville, TX, that a new Medicare audit program is justified.

Responsible organizations are generally happy to work with CMS in trying to help them uncover fraud and abuse and to reduce waste within the program, said Dr. Powers, who chairs the AAN Medical Economics and Management Committee.

What she and Dr. Kaufman - and most other physicians - do not like is that RAC auditors are paid on a contingency fee, meaning the more money they collect from providers, the greater their compensation.

I think that creates the potential for abuse on their part because it may encourage them to deny things that are on the fence, Dr. Kaufman said.

In the demonstration phase, the RACs directed most of their attention to hospitals. In fiscal year 2007, for example, 95 percent of all overpayments identified were from inpatient hospitals, skilled nursing facilities, or outpatient hospital providers. By contrast, fewer than 5 percent of the overpayments had been made to physicians.

Physician groups lobbied CMS to have physicians removed from the RAC program entirely, but to no avail. Indeed, when the rules for the nationwide rollout were announced, a provision was added to allow RAC audits to include evaluation and management (E&M) codes.

The huge problem with that is there is (from one reviewer to another) little correlation in how they judge the level of coding for evaluation and management codes, Dr. Powers said.

That is the point that the Academy, the AANS, and nearly 100 other medical societies made in a March 9 letter to CMS.

Despite detailed Medicare guidelines that specify the documentation required for each level of E&M service, knowledgeable individuals often reach different conclusions regarding the E&M level of service justified by the documentation, the letter said. We strongly urge CMS not to allow RACs to perform E&M audits.

Including E&M codes in the audit scope may make neurology practices more susceptible to RAC audits, Dr. Powers said.

We have a higher percentage of our income from evaluation and management coding than a procedure-based specialty, such as surgery or radiology, she said.

Thus, if RAC auditors compare all medical specialties to see which ones use the most E&M codes, neurology might surface as an attractive target for audits. A better strategy would be to look for outliers within each specialty.

Comparing neurologists to neurologists would be a more reasonable way to approach it, Dr. Kaufman said.

Of particular concern are the billing codes for consultations. The current CMS policies on split-shared billing, transfer of care, and documentation for consultations are unclear and physicians remain confused about their implementation, the letter signed by the medical groups said, pointing out that allowing RAC auditors to review consultation codes exploits the widely acknowledged confusion.

Figure. DR. LAURA POWERS: Responsible organizations are generally happy to work with CMS in trying to help them uncover fraud and abuse and to reduce waste within the program.

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The medical groups are asking CMS to resolve the issue before the RACs begin to audit physicians. The current start date is expected to be in August.

The RAC audit program includes five levels of appeal. Elissa K. Moore, an attorney specializing in RAC audits for McGuire Woods, a national law firm with a big health care practice, said hospital providers appealed nearly 23 percent of the RAC rulings during the demonstration project, and about one-third were ultimately decided in the provider's favor.

Physicians need to consider the time and money involved with an appeal - and the likelihood of winning - in deciding whether to appeal a RAC decision.