By Terry Baynes
Feb 19 (Reuters) - A U.S. government-sponsored audit program
that forces healthcare providers to return improper Medicaid
payments doubled its recoveries in fiscal 2012 over the prior
year, according to the Centers for Medicare and Medicaid
The Recovery Audit Program, which uses private contractors
to scour Medicare records and identify suspect payments,
recouped close to $2.3 billion in fiscal 2012, a spokeswoman for
the Centers for Medicare and Medicaid Services told Reuters.
That figure is up from $797 million in 2011, the first year the
program was fully operational, according to agency reports.
The audit program seeks to identify coding errors, payments
for services that were not medically necessary, payments that
lack sufficient supporting documentation and other lapses. Once
a suspect payment is discovered, the government is able to
reclaim what it paid for those services and pays the auditors a
commission on the collections.
The escalating recoveries reflect increased activity on the
part of the four private contractors that conduct the audits:
Performant Recovery in Livermore, California; CGI Federal Inc in
Fairfax, Virginia; Connolly Inc in Atlanta; and
HealthDataInsights Inc Las Vegas. In 2011, the auditors
collected on 827,000 claims for overpayments, up from 185,000 in
2010, according to annual reports issued by the Centers for
Medicare and Medicaid.
The audit program has drawn harsh criticism from hospitals
and their lawyers who accuse the private auditors of being
overly zealous in their efforts to recover money for the
government and of being motivated by the commissions they earn.
In 2011, when the Centers for Medicare and Medicaid Services
collected $797 million from the audit program, it paid the
contractors a total of $82 million, according to a report the
agency submitted to Congress on Feb. 5 for fiscal 2011.
"The increase (in recoveries) demonstrates what's happening
out there. They're getting much more aggressive," said Joe
Whatley of plaintiffs' firm Whatley Kallas, who represents
providers in cases challenging the auditors' claims of
overpayment. The auditors "have every incentive to go out there
and make demands for as much money as possible."
A spokeswoman for Performant Recovery declined to comment
and referred inquiries to the Centers for Medicare and Medicaid
Services. Spokeswomen for the other three auditing companies did
not respond to requests for comment.
A spokeswoman for the Centers for Medicare and Medicaid said
in an email that the agency has sought to work closely with
healthcare providers and that it issues quarterly newsletters
providing information about the types of problems the auditors
find and suggestions for avoiding those pitfalls.
The contractors regularly meet with hospital associations to
gauge their impact on providers, according to the agency.
The audit program has sparked at least one lawsuit asserting
that the government is seeking to shirk its obligation to
reimburse providers for medically necessary care.
In the suit, filed last year in U.S. District Court in
Washington against the U.S. Department of Health and Human
Services, the American Hospital Association is challenging the
auditors' practice of disputing decisions by doctors to treat
patients in the hospital instead of on an outpatient basis. In
the case when an auditor overrides a doctor's decision, the
government reclaims what it paid for the inpatient services. The
auditing companies are not named in the lawsuit.
The hospital association contends that even if a patient
could have been treated in an outpatient setting, the government
still has to reimburse the provider for medically necessary
In the report the Centers for Medicare and Medicaid
submitted to Congress on Feb. 5, the agency noted that 2011 was
the first year the auditors actively reviewed short-stay
inpatient admission issues. Those admissions represented a large
portion of the overpayments the government collected in 2011,
the report said.
After auditors' fees, expenses and appeals were deducted
from the total recovery, the Centers for Medicare and Medicaid
Services returned $488 million to the Medicare Trust Fund for
2011, the report said.
In addition to the overpayments, the auditors also
identified $142 million in underpayments that were repaid to
providers and suppliers in 2011, according to the report.
The Centers for Medicare and Medicaid has not yet submitted
its full, official report for 2012.
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