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Inside CMS: Hatch Questions CMS Plan To Limit Documents RACs Can Review

Hatch Questions CMS Plan To Limit Documents RACs Can Review

Senate Finance Chair Orrin Hatch (R-UT) criticized CMS for shrinking the number of documents Recovery Auditors can review in 2016, telling the agency that given Medicare’s high error rate the RACs don’t seem to review enough claims.

Hospitals were pleased when CMS recently announced it would cut the number of documents the RACs can review from 2 percent of the number of claims from the previous year to 0.5 percent for some providers. These changes will not affect RAC reviews of durable medical equipment suppliers or physicians, according to CMS. Document requests will be spread across the different types of claims that a provider submits, like inpatient and outpatient claims, to make sure one type of claim isn’t disproportionately targeted, the agency says.

A majority of the RACs’ denials — and the amount of money recouped for Medicare — came from reviews of hospital inpatient stays before CMS instituted the two-midnight hospital admissions policy in October 2013 and barred RACs from reviewing short inpatient hospital stays.

“I understand and appreciate the complexities CMS must navigate to resolve the challenges associated with hospital short stay policies, but I believe that CMS should be stepping up a vibrant oversight presence in the program more broadly. With the recent moratorium on RA reviews of inpatient claims, I would not expect CMS to further limit reviews of non-inpatient claims, especially since these are the very areas that have some of the highest error rates,” Hatch says in a Nov. 12 letter to CMS Acting Administrator Andy Slavitt.

Hatch notes that the RACs returned significantly less to the Medicare Trust Fund in fiscal 2015 than the program had in fiscal 2014. The program was paused in June 2014 to allow CMS to wind the RACs down in preparation for new contracts. But contract protests continued for longer than expected, so CMS restarted the program in August 2014, though it limited what areas the contractors could review. The RACs are still reviewing only a limited number of issues.

CMS, in its fiscal 2014 RAC report to Congress, noted that the program had also saved less in 2014 than in fiscal 2013.

“CMS attributes some of the decrease in corrections from previous years to the limited amount of reviews that took place during the close-out process of the existing Recovery Auditor contracts,” the report says. The prohibition on hospital inpatient status reviews that accompanied the implementation of the two-midnight policy also affected how much the RACs returned to the trust fund, CMS indicates.

Hatch notes that the 0.5 percent limit on document requests is significantly lower that what it has been historically, and says CMS’ change appears to curtail the RACs’ ability to operate as lawmakers intended.

In 2014, Medicare had $48.8 billion in improper payments — the highest level of improper payments for all government programs — and Hatch says he is concerned that rather than go after waste, fraud and abuse in Medicare, CMS is restricting claims subject to audit and review. RACs look for overpayments and underpayments, but must forward cases of suspected fraud to a separate auditor that handles those cases.

CMS program integrity chief Shantanu Agrawal previously told House lawmakers that the agency reviews less than 1 percent of claims it receives, Hatch notes.

“Given the high error rate and the fact the Medicare program loses more money to improper payments than any other government program, a review level of less than one percent appears to be too low,” Hatch says.

Hatch asks CMS for a detailed plan on how to bring down the error rate in Medicare by Dec. 4, including “a serious review” to see if the agency’s plan to lower the RACs’ document request limit is appropriate. He also asks CMS to see if the RACs are being used “to the full extent of their capabilities.”

CMS should also provide Hatch with the agency’s target for recoveries in the RAC program for the current and future contracts, the letter says.

Hatch also asks for an “explanation of CMS’s plans to, and targets for, broadening the types of improper payments for recovery, or if CMS does not have such plans, an explanation of why it does not.” — Michelle M. Stein

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