Doctors wary of Medicare audit plan's incentives

Washington -- Physicians in three states are worried that a new type of Medicare audit will amount to a federally sanctioned form of "bounty hunting."

Starting in May, the Centers for Medicare & Medicaid Services will hire recovery audit contractors to scour Medicare claims in California, Florida and New York to make sure the government is paying appropriately for services. Although the participating firms will be responsible for finding both overpayments and underpayments, the contractors will be paid based only on how much overpayment they recoup from physicians and others.

If the pilot program is successful, it might be expanded to other states.

The project's setup is sure to produce questionable audits of Medicare claims in cases in which the judgment of whether an overpayment has taken place could go either way, said Troy Tippett, MD, a neurosurgeon in Pensacola, Fla., and president-elect of the Florida Medical Assn.

"There is no question when you pay someone to find something and you're not going to pay them if they don't find anything, those borderline claims will more likely go into the error category," Dr. Tippett said.

The American Medical Association plans to stay vigilant in making sure that the physician community is not persecuted by auditing companies intent on maximizing their profits.

"Due to overzealous audits of physicians' Medicare claims in the past, the AMA is devoting substantial resources to ensure that the Medicare demonstration project is implemented fairly and properly, with adequate safeguards," said AMA Chair J. James Rohack, MD. "CMS has agreed to meet with the AMA and state medical societies of California, New York and Florida to ensure that the program moves forward in a balanced manner."

Responding to questions from Dr. Tippett and Melvyn L. Sterling, MD, an internist from Orange, Calif., during the AMA's National Advocacy Conference in Washington, D.C., CMS Administrator Mark McClellan, MD, PhD, sought to allay doctors' fears that the new audits will turn into unregulated bounty hunts.

"We need to make sure ... we are doing this effectively to address incorrect payment," Dr. McClellan said. "Doctors acting in good faith should not be the target of this program."

CMS officials insist that most physicians have little to worry about from the new initiative, which was mandated by the 2003 Medicare reform law.

The agency has decided to exclude evaluation and management claims from the types of documentation that the recovery audit contractors will be reviewing. The decision to focus mainly on Medicare hospital claims and outpatient procedures that do not qualify as evaluation and management will exclude a major portion of the services for which the typical physician bills Medicare, Dr. McClellan said.

But such a pronouncement comes as little comfort to some physicians in the three states who are not entirely sure that the E&M codes won't eventually come into play.

"CMS added a nice little caveat that they could look at E&M services if they are not 'reasonable and necessary,' " Dr. Tippett said. "That's a very broad and all-encompassing term."

Incentives' intent

Physicians are also worried about the core intent of the initiative, despite whatever scope the initial program may have. Even doctors who might not be greatly affected find once again that their profession is the target of significant scrutiny.

"This is something that will be at least perceived as a punitive program [even] if [it's] not actually a punitive program," Dr. Sterling said.

The CMS plan envisions digging deeper into physician records than agency contractors typically do now.

Medicare contractors, which include the carriers that deal with the physician community, currently review less than 5% of the claims submitted by program participants. The new audit contractors will look at a larger number of claims to see if any overpayments or underpayments have taken place.

Battle against inappropriate payments

Federal officials have made it clear that they intend to rein in Medicare overpayments, which cost the federal government billions of dollars a year. The purpose of the latest CMS project is to determine whether the new type of audits can be effective in reducing excess payments.

The choice of California, Florida and New York as the test subjects is based on the fact that the three states typically incur the largest Medicare expenditures every year and thus offer the greatest opportunities for recovering overpayments, according to the agency.

Recovery audit contractors have experienced some success in controlling spending in other sectors of the economy but have been accused by stakeholders of being overly aggressive and intimidating, said Michael R. Manthei, a partner with Holland & Knight LLP in Boston. CMS and physician organizations will need to monitor the firms' activities closely to make sure that everything remains on the level, he said.

In the meantime, doctors in the three states can try to protect themselves by making sure that they keep close enough tabs on their claims to decrease the chances that an auditor might find some of their reimbursements questionable, something that Manthei said physicians should be doing no matter where they practice.

"While I know it's difficult, and there are a lot of burdens on your time, you have to become personally involved in the billing process in order to ensure its integrity," he said. "You cannot just rely on the billing company."