Years of backlog causes Medicare to suspend next phase of payment audits

Mar 10, 2014 | Hospital Finance Efficiency

The Centers of Medicare and Medicaid Services (CMS) implemented a Recovery Audit Program to challenge hospitals and practices that are allegedly asking for excessive Medicare payments. The problem with the current system is that the contractors who are responsible for assessing these claims are still working on reports that were filed when the program began in 2012, Bloomberg BNA reported.

Currently, the CMS recovery audit contractors (RAC) system only applies to 11 states that are have shown to have larger amounts of short, in-patient stays or higher risk of fraud. Take into account that practitioners apply to appeal more than half of these denied Medicare claims, it causes a significant amount of backlog for accounts receivable services and RACs.

"It is important that CMS transition down the current contracts so that the Recovery Auditors can complete all outstanding claim reviews and other processes by the end date of the current contracts," CMS announced last month. "In addition, a pause in operations will allow CMS to continue to refine and improve the Medicare Recovery Audit Program."

In 2012 alone, more than 1 million claims were filed, accounting for about $9.9 billion in payments that may be up for grabs, according to the online publication Fierce Health Finance. Based on how the audit system stands, practices will have to wait over a year before they even have a hearing on the alleged Medicare claim.

"[The delay] won't address the multi-year backlog that inappropriate RAC denials have created in the Medicare appeals system and won't provide hospitals with long-term relief from the substantial burden of RAC audits," Melissa Jackson, senior associate director of policy at the American Hospital Association, said in a statement on CMS' decision to delay taking RAC appeals.

Hospitals and doctor offices that are in limbo with CMS' audits can recoup on some of its other accounts. Outsourcing medical claims management can help get to some of these patients faster, improving the practice's bottom line.