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Patients' mishandled funds could lead to RAC audits
Health care providers are becoming more familiar with the many errors that can trigger a RAC audit, but what is much lesser known among the health care community is that a patient's mismanagement of Medicare set-aside (MSA) funds post-settlement also could trigger an audit.
It is common practice that a MSA be created and approved by Medicare in workers' compensation, liability, or auto settlement cases that meet certain criteria. An MSA is a portion of a patient's settlement funds that are "set aside" as the primary source of paying for case-related medical expenses typically covered by Medicare, explains Hany Abdelsayed, a director with Rising Medical Solutions, a medical-financial solutions company in Chicago.
Misuse of those funds, however, can get a provider involved with a Recovery Audit Contrac- tor (RAC). RAC represents the efforts of the Centers for Medicare & Medicaid Services (CMS) to recover overpayments to providers. The tendency is to assume that the patient is responsible for the appropriate use of those funds and, therefore, would be liable for any mishandling of the funds, but that is not necessarily the case, Abdelsayed says. When the MSA funds are misused, the government can come after the health provider.
"The government is getting much more aggressive in monitoring the payments they are making to medical providers, as well as the use of MSA funds," he says. "Through the RAC program, they are going out to search for money they paid in error and trying to recover those funds."
It is not enough for the health care provider to ensure it is doing everything right with Medicare billing, Abdelsayed says. Few providers realize they have to watch out for mistakes on the patients' part as well.
"Most often, the patient just doesn't know they should speak up about the primary payer, or they don't really understand how the MSA works," he explains. "If you tell them Medicare is paying for the treatment, that's good enough for them, and they don't complain."
Medicare wants its money
The problem arises when Medicare realizes it paid for treatment that should have been paid for with MSA funds or when a primary payer an insurance company involved in the settlement should have paid. If that situation is discovered, the provider could be subject to audit and would have to return the funds to Medicare, Abdelsayed explains.
"You have to give the money back, and then you have to start the collection process to try to get that money back from the truly responsible party the patient or the primary payer," he says. "And you may have triggered a RAC audit that could uncover other problems."
The injured worker should be responsible for seeing that the proper source of funds was used for the treatment, but Medicare will go after the health care provider, because it has the money and they want it back, Abdelsayed says. It may not seem fair that the provider is the one that gets in trouble and suffers the financial loss, he says, but Medicare's primary goal is to recover the funds.
"Medicare may go after the injured worker, as well and jeopardize their Medicare benefits, but the provider is the real target," Abdelsayed says. "This could happen in a few months or a few years. By the time Medicare takes the money back, the provider is way behind in tracking down that patient and hoping he or she has some way to pay the bills."
To avoid this problem, health care providers should determine from the outset even when the patient is eligible for Medicare and does not have private insurance whether there will be a primary payer such as an insurance company, for the patient's treatment. Don't just assume that Medicare should pay for the treatment because the patient is eligible, or because other care has been paid by Medicare.
Any sort of injury on the job or suggesting a personal injury lawsuit should be a red flag for this hazard. The admissions process must include asking the right questions, because the patient may not volunteer that there is another source of payment.
"If someone comes in for treatment and indicates that there was some sort of injury involved, the medical provider needs to ask whether this will involve an insurance claim and any potential liability. If this is a slip-and-fall or any kind of workers' compensation claim, they need to identify who the primary payer will be, and that will be the insurance company involved in that claim," Abdelsayed explains. "Once they identify that, they need to ask if the claim has settled and if there is a Medicare set aside involved in this case."
For more information on RAC audits and MSA, contact:
Hany Abdelsayed, Director, Rising Medical Solutions, Chicago. Telephone: (877) 747-4644. E-mail: email@example.com.