Medical Review and GAO :: Reliant Rehab

Medical Review and GAO

The National Association for the Support of Long Term Care recently met with CMS to discuss the recent “re-start” of Part B Medical Review for claims over $3700.  The following memorandum was provided to Reliant Rehabilitation.

NASL Update on Targeted Medical Review of Therapy Above $3,700

May 18, 2016

NASL and other therapy organizations met with Dr. Argrawal, Director of Program Integrity for CMS.  His staff are responsible for the targeted medical review.  CMS staff provided additional details in the meeting regarding the MACRA directed targeted medical review of therapy above $3,700. 

CMS has hired one contractor, Strategic Health Solutions (SHS) as the Supplemental Medical Review Contractor to conduct these reviews.  They are using just one contractor in order to improve consistency of the reviews. 

SHS will review therapy claims of providers compared to their peers.  They identified three peer groups.  The three groups include 1. skilled nursing facility 2. private practice and 3. outpatient facilities.  So SNF claims will be compared with other SNF claims.  Private practice claims will be reviewed with other private practice claims. They noted that home health therapy will not be reviewed in this program. 

Once SHS decides to target a provider, SHS will send a letter to the provider asking for information on 40 claims.  The provider has 45 days to respond. 

Criteria for review– CMS would provide no further detail on the criteria for review other than what has been stated in their initial information.  This is what has been stated: Post-payment medical review of Part B Therapy claims from providers with a high percentage of patients receiving therapy beyond the threshold as compared to their peers for dates of service July 1, 2015 to the present.  CMS would not define “high” and said that high will be different for each peer group.  It could also change over time.  They would also be looking at the denial rate of the individual claims within the batch of 40.  A high denial rate within that batch could cause more review.   

CMS indicated that discussion could occur between the provider and the SMRC and additional documentation could be added to the record.  Providers will receive one letter (for all the claims) at the end which is a “review results” letter. 

CMS has tasked SHS with only one round of the 40 claims review.  Review is for dates of service back to July 1, 2015 to the present.  Perhaps they chose this date because the MACRA statute for targeted review was effective around that time.   They said they could decide to have additional review later. 

NASL was concerned about data on previous review projects by this contractor that show a 40% non-response rate by providers.  CMS responded to this by saying that SHS will follow up several times with the provider if receive a non-response from a provider.   SHS has posted a sample letter to their website that would be sent to providers.  The SHS letter includes a cover letter from CMS explaining the review.  The link is then choose MACRA Outpatient Therapy Cap to get to the letter.

GAO Recommends Recovery Auditors to Conduct Medicare Prepayment Reviews

Background-Summary Courtesy of NASL of which Reliant Rehabilitation is a Board of Governors Member.

The Chairman of the Senate Finance Committee, Chairman Orrin Hatch (R-UT), asked the U.S. Government Accountability Office (GAO) to examine the activities of the Medicare fee-for-service claim review contractors and recommend program improvements.  On April 13, 2016, GAO finalized a report to Chairman Hatch, “GAO-16-394 Medicare Claim Review Contractors,” which examines the following activities:

  • the differences, if any, between prepayment and postpayment reviews, and the extent to which the contractors utilize these types of reviews;
  • the extent to which Medicare claim review contractors focus their review on different types of claims; and
  • CMS’ cost per review and the amount of improper payments identified by the claim review contractors per dollar paid by CMS.  

To examine, the difference, if any, between prepayment and postpayment reviews, and the extent to which the CMS contractors utilize these types of reviews, GAO interviewed the Centers for Medicare and Medicaid Services (CMS), Recovery Auditors (RA) and Medicare Administrative Contractor (MAC) officials.  They also examined various CMS reports to Congress, and budget or legislative proposals relevant to the RA program. 

As part of GAO’s effort to obtain perspectives on differences between responding to prepayment and postpayment reviews, the GAO also interviewed officials from 10 organizations representing a variety of different types of Medicare health care providers who have experienced claim reviews.  The National Association for the Support of Long Term Care (NASL) was one of the provider organizations interviewed, along with representatives from the American Physical Therapy Association (APTA), American Medical Rehabilitation Providers Association (AMRPA) and the American Association for Homecare (AA Homecare). 

CMS Claim Review Contracts — MACs, RAs & SMRCs.  CMS contracts with claim review contractors that use varying degrees of prepayment and postpayment reviews to identify improper payments and protect the integrity of the Medicare program.  The Medicare Administrative Contractors (MAC) conduct prepayment and postpayment reviews.  As of January 2016, 12 MACs – referred to as A/B MACs – processed and reviewed Medicare Part A and B claims, and 4 MACs – referred to as DME MACs – processed and reviewed DME claims.  MACs are also responsible for identifying both high-risk providers and services for claim reviews.  In 2013 and 2014, 98 percent of MAC claims reviews were prepayment.  MACs have focused their reviews on physician and durable medical equipment claims, the latter of which had the highest rate of improper payments.

CMS currently contracts with four Recovery Auditors (RA), which assist to identify improper payments through postpayment claim reviews.  CMS is required by law to pay RAs contingency fees from recovered overpayments.  Therefore RAs can only conduct prepayment reviews under a demonstration.  From 2012 through 2014, CMS conducted a demonstration in which the RAs conducted prepayment reviews and were paid contingency fees based on claim denial amounts.   In 2013 and 2014, inpatient claim reviews accounted for 78 and 47 percent, respectively of all RA claim reviews.

The Supplemental Medical Review Contractor (SMRC), conducts nationwide postpayment claim reviews, which are part of CMS-directed studies. In 2013 and 2014, 85 percent of RA claim review and were prepayment and 100 percent of SMRC reviews were postpayment, and the focus of the claim reviews varied.

How GAO Obtained Data.  GAO obtained data from CMS on the number of prepayment and postpayment claim reviews conducted by the four RAs, which CMS contracts with to identify improper payments through postpayment claim reviews. They also obtained data from each of the 16 MACs, who are CMS contractors whose primary purpose is to better ensure payment accuracy in their geographic regions and ensure provider compliance with Medicare requirements.  Additionally, GAO also obtained reports generated by the Supplemental Medical Review Contractor (SMRCs), which conducts a nationwide postpayment claim reviews which are part of CMS-directed studies.   

To examine CMS’s ability to collect overpayments, the GAO conducted a performance audit from June 2015 to February 2016 on each of the three different types of contractors that conduct Medicare fee-for-service claim reviews.  GAO also reviewed the Department of Health and Human Services Office of Inspector General (HHS OIG) reports on Medicare which are currently not collectible (overpayments for which a provider has not made a repayment for at least 6 months after the due date). 

GAO’s Analysis.  GAO’s analysis found the RA and SMRC claim review and funding data was reliable for the purposes of the report.  The MAC data on the number of prepayment and postpayment reviews and the number of reviews by claim type were reliable for the purposes of their report.  However, MAC data on the amount of identified improper payments and agency funding data for certain MACs were not reliable for the report.

GAO’s analysis also determined that few differences exist between prepayment and postpayment reviews for CMS contractors.  However, prepayment reviews — which occur before payments are made — can better protect Medicare funds compared to postpayment reviews primarily because CMS is not always able to collect overpayments identified through postpayment reviews.  Postpayment reviews require more administrative resources compared to prepayment reviews. 

GAO’s report also determined provider organizations generally respond to prepayment and postpayment reviews similarly. The GAO report notes, “Key stakeholders GAO interviewed identified few significant differences in conducting and responding to prepayment and postpayment reviews.  Specifically, CMS, MAC and RA officials stated that prepayment and postpayment review activities are generally conducted by claim review contractors in similar ways.” 

Provider organizations also identified two key issues specific to prepayment reviews.  Most health care provider organizations told the GAO that providers generally respond to prepayment and postpayment reviews similarly, as both types of review occur after a service has been rendered, and they involve similar medical documentation requirements and appeal rights. However, provider organizations highlighted two issues specific to prepayment reviews:

  1. Providers have the option to hold discussions with the RAs for postpayment review findings, which allows for the opportunity to share additional information before payment determinations are made — and before providers potentially enter the Medicare claims appeals process.  Such discussions are not available for RA prepayment claim review or for MAC reviews.
  2. Providers may face certain cash flow burdens with prepayment claim reviews that they do not face with postpayment reviews due to how the claims are treated in the Medicare appeals process.

Lack of Reliable MAC Cost and Savings Data Precludes Analysis.  GAO was unable to determine the cost per review and the amount of improper payments identified by the MACs per dollar paid by CMS because the agency does not have reliable data on funding of MAC claim review for 2013 and 2014, and the agency collects inconsistent data on the savings from prepayment claim denials.

GAO Recommendations

GAO recommends that the Secretary of HHS direct the Acting Administrator of CMS to take the following two actions

  • In order to better ensure proper Medicare payments and protect Medicare funds, CMS should seek legislative authority to allow the RAs to conduct prepayment claim reviews;
  • In order to ensure that CMS has the information it needs to evaluate MAC effectiveness in preventing improper payments and to evaluate and compare contractor performance across its Medicare claim review program, CMS should provide the MACs with written guidance on how to calculate and report savings from prepayment claim reviews.

The Department of Health and Human Services disagreed with GAOs first recommendation, and noted that other claim review contractors conduct prepayment reviews and CMS has implemented other programs as part of its strategy to move away from “pay and chase” process of recovering overpayments, such as prior authorization initiatives and enhanced provider enrollment screening.  Additionally, they found that prepayment reviews better protect agency funds compared with post payment reviews, and they believe that seeking the authority to allow the RAs to conduct prepayment reviews is consistent with CMS’s strategy.

However, HHS agreed with the second recommendation that CMS provide the MACs with written guidance on how to accurately calculate and report savings from prepayment claim reviews.  HHS stated that it will develop a uniform method to calculate savings from prepayment claim reviews and issue guidance to the MACs.

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