EXECUTIVE SUMMARY

CMS has made changes in the scope of work for the Recovery Auditor program and has proposed a number of other changes to be implemented when new RA contracts are issued.

  • CMS has restricted the number of additional documentation requests, has shortened the “look-back” period for patient status reviews, and announced penalties for RAs with high error rates.
  • The new contracts shorten the time RAs have to complete complex reviews, requires RAs to wait 30 days before referring cases to the Medicare Administrative Contractors, and postpones contingency payments to RAs until after the second level of appeals.
  • The Audit and Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) bill, introduced in the Senate in December, revamps the appeals process, adding an Ombudsman for Medicare Reviews to assist in resolving complaints by hospitals that have appealed and those considering appeals, and establishes an Appeals Medicare Magistrate program with attorneys who will handle appeals of denials for $1,500 or less.

CMS has cranked up the Recovery Audit program again, but changes are in the works.

The new scope of work for the auditors, which went into effect Jan. 1, changes both the timeframe for review and the numbers of records that can be requested, says Deborah K. Hale, CCS, CCDS, president of Administrative Consultant Services, a Shawnee, OK, healthcare consulting firm.

CMS made what it calls “enhancements” to the current contract and has announced changes that will be included when new Recovery Auditor contracts are issued.

In addition, a bill pending in Congress makes changes in the audit program and especially in the appeals process.

The current RA contracts were set to expire in 2014 but have been extended several times due to lawsuits challenging the contracts, and other technical issues. CMS has issued a request for proposals from potential RA participants and has extended the current RA contracts until July 31.

“CMS is trying to link the new contract with the end of the current contract July 31, but has postponed the date that proposals from potential RAs were due from Dec. 18 to Jan. 21. The date that the new RA contracts take effect will depend on how quickly CMS can evaluate the new proposals and if there are any legal challenges,” says Steven Greenspan, JD, LLM, vice president of regulatory affairs for Executive Health Resources, a Newtown Square, PA, healthcare consulting firm.

A major change that went into effect Jan. 1 restricts a RA’s additional documentation requests (ADR) to 0.5% of a provider’s total number of paid bills for all types of claims in the previous year. The RAs have to wait 45 days between ADR letters and can send requests only eight times a year, Hale says.

Hale gives the following example of how the change would work: If a provider had 22,530 Medicare claims paid in 2014, the RAs would be limited to a total of 112.65 (0.5%) letters requesting additional documentation, or 14 records in each 45-day cycle.

The limits could be increased or lowered, depending on the hospital’s rate of denials, Hale says. “Providers with low denial rates will have ADR limits decreased, while providers with high denial rates will have their ADR limits increase,” she says.

“To address hospitals’ concerns that they do not have the opportunity to rebill for medically necessary Medicare Part B services by the time a medical review contractor has denied a Medicare Part A claim, CMS is changing the Recovery Auditor ‘look-back period’ for patient status reviews to six months from the date of services in cases where the hospital submitted the claim within three months of the date it provided the service,” Hale says.

Through its enhancements to the program, CMS now requires Recovery Auditors to maintain an overturn rate of less than 10% at the first level of appeal. If their overturn rate is higher, CMS could decrease the additional documentation requests the RA could issue or cease some reviews until the problem is corrected. CMS is also requiring recovery auditors to maintain an accuracy rate of at least 95% or face a reduction in ADR limits.

Recovery Auditors now are required to have a contractor medical director and to give physicians at providers the opportunity to discuss cases with the contractor medical director. CMS also encourages the RAs to have a panel of specialists available for consultation.

When the new contracts are issued, the Recovery Auditors will have 30 days to complete complex reviews and notify providers of their findings. Currently, they have 60 days. The RAs will not receive contingency fees for complex reviews that aren’t completed within 30 days, Hale says.

The new contracts also will require the Recovery Auditors to wait 30 days before sending a claim to the MAC for adjustment. “The 30-day period will allow the provider to submit a discussion period request before the MAC makes any payment adjustment,” Hale says.

In the new contract, RAs will not receive their pay until a case has been affirmed at the second level of appeal. The new contract will require RAs to confirm receipt of providers’ request for discussion or other written correspondence within three business days.

Meanwhile, a bill is pending before Congress aimed at reducing the estimated backlog of appeals of nearly 1 million Medicare claims.

The Audit and Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) bill was introduced by Senate Finance Committee Chairman Orrin Hatch (R-UT) and Sen. Ron Wyden (D-OR) with a goal of improving the Medicare audit and appeals process.

The bill (S.2368) proposes to give the Office of Medicare Hearings and Appeals more money for appeals and establishes the position of an independent Ombudsman for Medicare Reviews to assist in resolving complaints by hospitals that have appealed and those considering appeals. It also establishes an Appeals Medicare Magistrate program in which attorneys handle appeal requests for cases when the amount in question is between $150 and $1,500, Greenspan says.

The bill would establish a voluntary alternate dispute resolution process to allow multiple pending claims with similar issue of law or fact to be settled together.

The bill was introduced Dec. 8, 2015, and referred to the Senate Finance Committee, which sent it on to the full Senate.