Medicare intensifying documentation reviews before payment

Washington -- High error rates on claims for certain hospital services has led the Medicare contractor covering Florida to propose withholding payment for certain cardiology and orthopedic procedures until the payer has had the chance to review physician documentation.

The Medicare contractor First Coast Service Options has targeted 11 cardiology and four orthopedic surgeries for prepayment review. First Coast singled out procedures that were determined to have high error rates during postpayment audits. For instance, a sample of claims for permanent cardiac pacemaker implantation procedures did not meet Medicare national coverage decision criteria during a recent comprehensive error rate audit.

The new contractor policy was set to begin Jan. 1, but physicians in Florida have been told it has been postponed for 30 days. Physicians and hospitals say they have serious concerns about the prepayment policy. Documentation and administrative errors picked up on a prepayment review could lead to physicians and hospitals losing out on pay for costly services that already had been provided for Medicare patients.

Organized medicine and hospital facilities have questioned the use of prepayment reviews and cautioned payers about unintended consequences. The American Medical Association warned the Centers for Medicare & Medicaid Services about a separate plan, released in December 2011, to dramatically increase the number of prepayment reviews nationwide in an effort to cut down on improper payments.

"The AMA agrees that this is an important goal, but we do not accept that broad-brush prepayment review is the best or only way to achieve that goal," wrote AMA Executive Vice President and CEO James L. Madara, MD, in a letter to CMS.

In the Florida case, the physician would be paid after a surgery that he or she performed even if the service were subject to prepayment review, but the hospital would not be paid until the review is completed, said Jerold L. Saef, MD, assistant chief of the cardiology division at Bay Pines (Fla.) Veterans Administration Hospital. Dr. Saef, as a member of the American College of Cardiology and its Florida chapter, has discussed the policy with First Coast. In such a situation, the Medicare contractor indicated that it would send a "take-back letter" to the surgeon when a hospital is denied payment after the review, meaning that the physician would owe Medicare what he or she already had been paid.

"The hospital has more exposure, but the physician must watch reserves to make sure they are not spending money they have to give back," Dr. Saef said.

Dr. Saef said the Medicare contractor had been making an effort to work with physicians on the issue. First Coast states on its website that it has conducted 13 onsite sessions with hospitals, three online seminars and four association meetings. The contractor would not comment on the policy beyond statements posted on its website, said First Coast spokeswoman Adriane Tish.

Physicians have called the scope of the prepayment policy unprecedented. The Medicare program has used pre- and post-payment review to determine the appropriateness of payment for services in the past, including some limited reviews that started in Florida in early 2011, but physicians had worried that the new policy would mean that 100% of claims for the listed services would be subject to review.

On Jan. 9, First Coast clarified that only 30% of claims for 14 of the procedures would be subject to prepayment review. The contractor would review 50% of claims for major joint replacements or reattachments.

Still, the clarified policy means that First Coast will be reviewing many more claims than it does now. It's unclear how physicians might appeal orders to return money to Medicare when the contractor has determined in the prepayment review stage that a service was not medically necessary, Dr. Saef said.

Prepayment reviews and retrospective audit programs have consumed increasingly more physician time over the years, said David Halsey, MD, chair of the board of specialty societies health policy committee for the American Academy of Orthopaedic Surgeons. Physicians are committed to providing the right care at the right time and are able to meet documentation requirements when the criteria are clear and evidence-based, said Dr. Halsey, an orthopedic surgeon in South Burlington, Vt.

At the same time, a physician's main focus must be on the patient, he said. "I want to make sure I'm still spending the vast majority of time listening and taking care of patients. As more of these requirements get layered on, it starts to infringe on my time."

Hospitals recognize that physicians work to provide high-quality care while making myriad health care decisions every day, said Bill Bell, general counsel for the Florida Hospital Assn. "Unfortunately, due to a variety of reasons that include everything from doctors being called away on emergency cases to changing regulations, sometimes the documentation does not meet the insurers' guidelines."

The Centers for Medicare & Medicaid Services has proposed increasing the use of prepayment reviews nationwide, not just in Florida. On Dec. 5, 2011, CMS published plans to increase the number of such reviews to cover 2.7 million claims a year, up from 1.2 million claims.

The AMA objected to CMS allowing for only seven working days for public comment on the proposal, Dr. Madara stated in the Dec. 14 letter. This action "completely eliminates the opportunity for meaningful public input and makes an absolute mockery" of President Obama's efforts to improve transparency and reduce regulatory burdens in government, he said.

The AMA also raised concerns about increasing the number of prepayment reviews. The policy has the potential to delay or reduce patient access to care, Dr. Madara said. The Association says it shares the desire to reduce payment error rates, but it called on the Medicare agency to proceed carefully toward starting or expanding any new review program.