Scaling back scrutiny
Fla. hospitals welcome prepayment review shift
Florida has one of the highest rates of erroneous Medicare claims in the nation, but the state’s Medicare administrative contractor is scaling back plans to conduct prepayment reviews of claims in historically problematic categories.
Although government officials have been clamoring in recent years to snuff out inappropriate payments in fraud hot spots such as Florida, some providers said the initial proposal by Medicare contractor First Coast Service Options would have choked off their cash flow. Officials say hospitals may find the scaled-back reviews of billing mistakes easier to swallow.
Last November, First Coast—a wholly owned subsidiary of Blue Cross and Blue Shield of Florida—announced plans aimed at slashing the state’s error rate in Medicare payments by reviewing every claim filed under 15 mistake-prone codes for cardiac and orthopedic cases starting Jan. 1 and not paying those bills until its auditors were satisfied that patient records justified the care.
But in a Jan. 19 announcement, First Coast revealed to Medicare providers in the state that it would review only 30% of the claims in 14 of the 15 DRGS and 50% of the claims in one DRG, major joint replacement without major complications.
First Coast’s announcement didn’t give a reason for the change. A spokeswoman for the company declined repeated requests for comment and referred all questions about the change to the CMS.
Asked whether federal officials told First Coast to back down from its 100% prepayment review initiative announced in November, a CMS official said last week that the agency did remind the Florida contractor about the CMS’ requirement that corrective actions to root out fraud be conducted in a “progressive” way that increases the scrutiny over time in diagnoses that don’t improve.
“We may have reminded First Coast to make sure they were doing those reviews in accordance with the progressive corrective actions requirement,” said Melanie CombsDyer, deputy director of the Provider Compliance Group in the CMS’ Office of Financial Management.
That provision in the Medicare Program Integrity Manual requires administrative contractors to use data-driven analysis to figure out how to apply medical reviews. CombsDyer said it allows for a “ratcheting up” of corrective actions such as prepayment review in cases where performance does not improve.
First Coast’s Jan. 19 notice says it may increase the percentages of claims for pre- payment review to more than 30% in the future. Most of the reviews started Jan. 1 or will start by Feb. 1.
“For now, it sounds to me like that’s the appropriate amount of review,” CombsDyer said of First Coast’s announcement.
The 15 DRGS selected for prepayment review include: implantation of permanent pacemakers and cardiac defibrillators; percutaneous cardiovascular procedures with drugeluting stents; some spinal fusions; major joint replacements without major complications; and claims for chest pains, a Dec. 11 First Coast report says.
Despite opposition from physician groups and some providers, an official with the Florida Hospital Association said hospitals could actually support the concept of prepayment reviews because they occur in near real-time.
The rapid turnaround time would be a major improvement over the controversial Medicare Recovery Audit Contractor Program under which a retrospective review process can include claims going back years. Kathy Reep, vice president of financial services for the Florida Hospital Association, said the lag time in the RAC process allows hospitals to continue submitting incorrect bills instead of discovering problems quickly.
Combs-dyer said prepayment review was also being encouraged because it cuts the actual Medicare payment error rate, unlike retrospective reviews, which can recoup money but not retroactively decrease the number of errors.
The CMS’ Comprehensive Error Rate Testing analysts estimated that 8.6% of all Medicare hospital inpatient claims were paid in error in 2011. In Florida, the overall error rate was estimated at 13.4% in 2010, the most recent year for which state-specific data were available.
President Barack Obama ordered agencies to reduce improper payments in federal programs in a 2009 executive order.
The CMS’ Medicare administrative contractors—which were formerly called fiscal intermediaries—across the country have since then been increasing their scrutiny of error rates, although First Coast’s now-canceled 100% prepayment review program grabbed the headlines, following opposition from groups including the Florida chapter of the American College of Cardiology.
The Florida prepayment review program doesn’t initially affect physician payments. However, First Coast warned in publications to providers that if a hospital’s payment was denied, the agency will issue “recoupment” letters starting Feb. 1 demanding repayments from doctors involved in the erroneous episode of care.
Dr. Jerold Saef—a cardiologist at Bay Pines (Fla.) Veterans Affairs Medical Center and head of the Third Party Payer Committee of the Florida Chapter of the Acc—said such prepayment reviews could cause havoc with Florida providers’ cash flow during the 60-day prepayment review period.
“We have a lot of concerns,” Saef said. “This prepayment audit … carries the potential for physician practices of having a devastating impact.”
Despite that sentiment, the Florida Hospital Association’s Reep said hospitals “definitely support” having physicians’ reimbursement put in jeopardy in cases where hospitals’ bills are also denied.
“The physicians are doing the documentation,” Reep said. “If the physician is not providing appropriate documentation that causes payment to be compromised, you are not going to get the physician to change their behavior if their payment is not affected.”