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Recovery Auditor Improper Payments Ratchet Up

 |  By jcarroll@hcpro.com  
   October 03, 2012

With the close of the fiscal year quarter, the Centers for Medicare & Medicaid Services has again released statistics for the amount of overpayments and underpayments. The latest report shows that the trend continues to point upward, as CMS has once again corrected more improper payments than the previous quarter, this time to the tune of $701.3 million.

In the latest quarter, CMS collected $657.2 million in overpayments and $44.1 million in underpayments. In the previous quarter, CMS identified $588.4 million in overpayments and $61.5 million in underpayments for a total of $649.9 million in corrections. Since October 2009, CMS has corrected a grand total of $2.8 billion in improperly billed Medicare claims.

The upward trend continues to show that providers must get their billing and documentation shored up on the front end, says Elizabeth Lamkin, MHA, CEO, Pace Healthcare Consulting, LLC, in Hilton Head, S.C.

"Put the bulk of your care management staff and resources on the front end with bed status determination [inpatient or observation], use second-level physician advisor reviews, and have a clinical documentation improvement specialist reviewing concurrently," she says.

The correction amounts for each quarter of the program are as follows:

  • October 2009 – September 2010: $92.3 million
  • October 2010 – December 2010: $94.3 million
  • January 2011 – March 2011: $208.9 million
  • March 2011– June 2011: $289.3 million
  • July 2011 – September 2011: $353.7 million
  • October 2011 – December 2011: $422.7 million
  • January 2012 – March 2012: $649.9 million
  • April 2012 – June 2012: $701.3 million

Accompanying the CMS release was a report that detailed the amount of improper payments collected in each individual Recovery Auditor region. Region C, Connolly Healthcare, corrected the most, in dollars, from previous quarter, having identified a total of $229.1 million in improper payments. The figures for all four Recovery Auditors are as follows (figures provided in millions):


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Viewing these statistics through another lens, however, illustrates that the Recovery Auditor program has been very good to the Recovery Auditors, says Stacey Levitt RN, MSN, CPC, senior administrative director of patient care management at Lenox Hill Hospital in New York City.

"It would be really interesting if CMS also showed the overturned appeal dollars against these numbers," she says. "Granted, not everyone is appealing their RAC demands (sadly); but those that do are usually successful."

According to the Q1 2012 AHA RACTrac report, hospitals that choose to appeal win 75% of the time.

"Unfunded government mandates, such as RACs, deplete sorely-needed hospital resources during a time when hospitals are seeing very slight margins of earnings," she said.

William Malm, ND, RN, CMAS, senior data projects manager for revenue integrity software company Craneware, Inc., with U.S. offices in Atlanta, Boston, Nashville and Phoenix, shared a similar sentiment, while also suggesting that CMS needs to provide additional guidance when it comes to compliant billing.

"These are all gross numbers that do not show the amount of money that was overturned in appeals," he says.  "While reporting over- and under-payment information is important, it contributes to confusion in the industry over the appropriateness of billing. Not to mention that the cost of managing these audits and appeals is taking away taxpayer dollars from the delivery of healthcare."

"To take money back when the standards are clear is appropriate, but to take money back when there isn't clear guidance from the beginning is inappropriate and doesn't take into account the significant administrative and operational burden these audits and appeals place on healthcare organizations."

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James Carroll is associate editor for the HCPro Revenue Cycle Institute.

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