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Low Volume Medicare Providers Get “Free Pass” From Auditing

Washington, D.C. – The Centers for Medicare & Medicaid Services (CMS) implemented new additional document request (ADR) limits last year that restrict Medicare recovery auditors to review no more than 0.5 percent of a provider’s total number of Medicare claims. The new ADR policy renders 99.5 percent of Medicare claims off limits from review for billing accuracy and has produced another side effect – low volume providers are now mathematically exempt from audits entirely.

For example, any Medicare provider that submits fewer than 1599 particular claims per year would consistently have zero claims audited for billing accuracy. This means that low volume Medicare providers may not qualify to have even one claim reviewed per 45-day cycle. In fact, 1829 low volume hospitals across the country fall into this category and have thus far been exempt from auditing since the new ADR limit was implemented.

“The new ADR methodology has essentially kneecapped the recovery of Medicare improper payments and offers a new loophole allowing low volume providers to bill Medicare without any oversight at all,” said Kristin Walter, spokesperson for the Council for Medicare Integrity. “While Medicare is planning Part A (hospital) coverage cuts for beneficiaries beginning in 2029 due to funding shortfalls, the program has implemented a policy that prevents any significant recovery of improper payments, despite Medicare losing approximately $40 billion each year to these very preventable billing errors.”

In addition to the reduction in the base ADR limit for Medicare auditing (to 0.5 percent), the new policy also adds the implementation of a sliding scale that will adjust a provider’s audit level based on their billing accuracy. The sliding scale policy is meant to reward providers who bill accurately with fewer audits and alternatively, increase scrutiny of providers with high levels of billing errors up to an ADR limit of 5.0 percent. However, low volume Medicare providers will not be categorized by CMS and therefore will remain immune from auditing in perpetuity.

“For the sake of Medicare solvency and a more level auditing playing field, we urge CMS to either set a minimum number of claims to be audited each period by provider to close the low volume loophole or alternatively, consider increasing the base ADR limit across the board for all provider types.”

In 2006, Congress mandated the creation of the Recovery Audit Contractor (RAC) Program to help protect the integrity of the Medicare Trust Funds. RACs review post-payment Medicare claims; identify areas where improper billing is taking place; correct the claims and request that the overages are paid back to Medicare. The federal government pays nothing up front for RACs to do this work; instead, RACs must be highly accurate in order to get paid.

Thus far, the RAC program has returned more than $10 billion back to the Medicare Trust Funds and extended its life by two full years. Despite this success, recent decisions have slashed Medicare oversight to a barely detectable level. CMS currently allows recovery auditors to review fewer than 26 Medicare claim types (down from 800 claim types initially) and within those issues, auditors are reviewing a mere 0.5 percent of Medicare provider claims after they have been paid.

For more information, please visit: www.medicareintegrity.org

 

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About the Council for Medicare Integrity. The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.

 

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