AMA urges Medicare to rescind prepayment review demo

Washington Some procedures that hospitals use to treat Medicare patients who have fainted or are bleeding internally would be subject to prepayment review by a government auditor in 11 states beginning in June.

The American Medical Association and 35 other physician organizations have serious concerns about plans to conduct recovery audit prepayment reviews on hospital procedures associated with eight diagnoses in California, Florida, Illinois, Louisiana, Pennsylvania, Michigan, Missouri, New York, North Carolina, Ohio and Texas. The associations wrote an April 3 letter urging the Centers for Medicare & Medicaid Services to rescind the program before it begins targeting hospital procedures for more scrutiny.

Reviews would aim to ensure compliance with Medicare payment rules before claims for procedures are paid. For instance, CMS would require recovery audit contractors to review gastrointestinal hemorrhage cases and claims associated with syncope and collapse.

“It is hard to imagine a more clinically obtuse code set for CMS to have chosen for prepayment review,” the letter stated. “While a physician may make an informed judgment about the ultimate diagnosis in any of these clinical scenarios, conservatism may be the best option when dealing with such potentially life-threatening diagnoses, as there is no room for error. When making such determinations, which are not often clear-cut, physicians should not have to consider hospital reticence to treat such patients due to increased government scrutiny and the attendant risk of lost payment.”

The Obama administration announced the demonstration project in November 2011. CMS officials seek to reduce improper payments by $50 billion and cut the Medicare payment error rate in half. Prepayment reviews are expected to prevent improper payment of claims in states with either high volumes of short inpatient hospital stays or high rates of fraud.

Medicare also is experimenting with two similar projects to cut costs. In January, CMS allowed 380 hospitals involved in another project to rebill inpatient services as less costly outpatient services after initial claims were denied because they listed the wrong care settings. The agency also has plans to test prior authorization for power mobility devices starting in June.

The physician organizations’ letter states revisions also should be made to the power wheelchair demonstration. CMS should focus on extreme statistical outliers instead of scrutinizing every health professional who orders devices in states involved in the project — California, Florida, Illinois, New York, North Carolina and Texas.

The prepayment demonstration would use recovery audit contractors to review claims. But based on previous experience with the RACs, physicians believe those contractors are incapable of conducting reviews efficiently or accurately. For instance, a recent survey by the American Hospital Assn. concluded that 39% of hospitals reported that their contractors had not met a 60-day deadline to make determinations on claims reviews.

“The AMA is concerned that using recovery auditor contractors for prepayment review could lead to significant errors and major burdens for physician practices,” said AMA President Peter W. Carmel, MD. “A recent CMS report shows that when providers appeal the decisions made by RACs, they prevail 46% of the time. We will work with CMS to find appropriate ways to identify clinically sound, nonburdensome and effective means of reducing improper payments.”

The April 3 letter offered several recommendations, including engaging with the CMS Center for Program Integrity to clarify the objectives of each demonstration. The center oversees anti-fraud efforts, but it appears to have had little involvement in these demonstrations, the letter said.

CMS also could take additional steps to lower improper payments, such as publishing contact information for medical directors working for Medicare contractors and publishing complete reports on error rate testing. “Without access to the full report, physicians are unaware of emerging improper payment errors and vulnerabilities,” the letter said.