Providers Face Growing Demands From Increasing Number of Medicare Contractors

According to CMS, it “uses … contractors to help administer the Medicare and Medicaid programs in an effort to reduce burden upon providers.” But providers are feeling increasingly burdened with the seemingly never-ending requests by different contractors and auditors.

Here is a partial list of contractors who at one time or another may be calling up a provider or knocking on their door, looking for information.

First there is the general category of claims processing contractors, now mainly known as “Medicare administrative contractors” (MACs) but also referred to, still, in statutes, laws and judicial decisions, as fiscal intermediaries or carriers. MACs are involved in the first level of appeals and may contact providers for a variety of reasons, including the resolution of issues regarding initial and renewal enrollment applications; providing education and guidance on procedures for billing Medicare; resolving issues regarding claims; requesting medical records related to claims that have been submitted so the MAC can perform a medical review; paying providers for approved claims or explaining why some claims are not processed or are denied; and recovering overpayments on claims previously processed. CMS uses Qualified Independent Contractors to conduct reconsiderations, the second level of appeals.

Then there are Program Integrity Contractors which include  Program Safeguard Contractors (PSCs) and Zone Program Integrity Contractors (ZPICs), which are gradually replacing the PSCs. These contractors are charged with identifying cases of suspected fraud and taking appropriate actions.

Through the Comprehensive Error Rate Testing (CERT) program, CMS uses contractors to randomly test submitted claims for improper payments. Through the Payment Error Rate Measurement (PERM) program, CMS reviews a sample of Medicaid claims in one-third of the states each year to develop a national estimate of improper payments. CMS also uses Medicaid Integrity Contractors (MICs) that analyze Medicaid claims data to investigate suspected/potential provider fraud, waste, or abuse; audit provider claims and identify overpayments; and  provide education to providers and others on payment integrity and quality-of-care issues.

CMS uses Specialty Medical Review Contractors to conduct medical review studies of Part A and B claims, which allow CMS to better understand trends in billing behavior that may lead to improper payments. CMS also uses a single Medicare Coordination of Benefits Contractor to support the collection, management, and reporting of other insurance coverage of Medicare beneficiaries.

Quality Improvement Contractors (QIOs)–one for each state–provide quality of care review services and conduct quality improvement projects. QIOs are private, mostly not-for-profit organizations, staffed by professionals, mostly doctors.

Recovery Audit Contractors. Probably the most high-profile type of contractor in recent years is the Recovery Audit Contractor (RAC). CMS uses RACs to identify and correct underpayments and overpayments. There are four RACs nationally and their responsibilities include working with providers to detect and correct Medicare and Medicaid improper payments.

As noted in a recent blog, in the fourth quarter of 2012, hospitals reported over 60,000 requests for medical records from RACs. Most hospitals spent over $10,000 responding to RAC requests, while 13 percent spent over $100,000 in the fourth quarter responding to requests. According to the American Hospital Association, hospitals reported appealing more than 40% of all RAC denials, with a 72% success rate in the appeals process.

To address concerns about the recovery audit contractor program in particular, two Republican congressmen have re-introduced legislation, “The Medicare Audit Improvement Act” (HR 1250). Among other things, the legislation would reinstate and make statutory a hard cap on Additional Document Requests (ADRs) on the part of Medicare auditors to 2 percent of hospital claims with a maximum of 500 ADRs per 45 days. It also would assess penalties for auditors that do not comply with basic program requirements such as deadlines and issuance of “demand letters.”

New types of contractors. At the American Health Lawyers Association Institute on Medicare and Medicaid Payment Issues in Baltimore, Judith Waltz, an attorney with Foley and Lardner in San Francisco, noted that there are even more types of contractors starting to monitor Medicare providers. “National Site Visit Contractors,” part of the National Fraud Prevention Program, will be used as part of a new site visit verification process that will screen new providers and suppliers to keep questionable ones from enrolling in the Medicare program. An Automated Provider Screening (APS) process will validate provider and supplier enrollment application information using various public and private databases as well as automatically check other databases.

Karen Jackson, director of CMS’ Medicare Contractor Management Group, noted that in the Office of Inspector General’s work plan for 2013 there are 17 different studies of contractor operations in progress, covering just about every type of contractor described here. So, even as the contractors are more closely watching health care providers, both the executive and legislative branches are more closely watching the contractors.