GAO Report on Medicare Contractors

by Foley & Lardner LLP

On August 22, the U.S. Government Accountability Office (GAO) released a report calling for the Centers for Medicare & Medicaid Services (CMS) to improve the efficiency and effectiveness of its Medicare program integrity contractors. The GAO report emphasized a particular need to increase consistency among the contractors, noting how the differing claims review processes used by the contractors confuse providers and complicate efforts at compliance. The report, titled Medicare Program Integrity: Increasing Consistency of Contractor Requirements May Improve Administrative Efficiency (GAO-13-522), arose at the request of a bipartisan group of senators and congressmen examining the issue.

The report reviewed the extent to which the contractors' postpayment reviews are effective in detecting improper payments, weighed against the extent these reviews add an unnecessary and costly administrative burden to providers. The report focused on Medicare fee-for-service claims and providers.

The report also serves as a useful primer on Medicare contractors, as GAO made efforts to explain each contractor type (i.e., Medicare administrative contractors (MACs), zone program integrity contractors (ZPICs), comprehensive error rate testing (CERT) contractors, and recovery auditors (RAs)) to differentiate their varying roles and responsibilities.

GAO Findings

When conducting postpayment claims reviews, contractors are expected to apply the same criteria (i.e., regulations, coverage, and coding policies) to determine whether or not a claim was properly paid. The GAO report stated that ineffective or inefficient claims reviews pose the risk of generating false findings of improper payments, and can impose an unnecessary administrative and financial burden on the Medicare providers required to appeal these denials.

The report contained the following notable findings:

  • Due to past concerns with the RA program and subsequent reforms, CMS imposes greater limits on an RA's ability to submit additional documentation requests (ADRs). MACs, ZPICs, and CERTs are not subject to these same limits. Moreover, although RAs must grant at least one request for an extension, MACs, ZPICs, and CERTs have discretion in granting extensions (if any);
  • Providers have 30 days to respond to an ADR sent by a ZPIC, 45 days to respond to an ADR sent by a MAC or RA, and 75 days to respond to an ADR sent by a CERT contractor; and
  • The minimum qualifications of the contractor staff performing postpayment claim reviews significantly varies among contractor types. For example, medical necessity determinations at a RA must be performed by at least a registered nurse, whereas they may be performed by a licensed practical nurse at a MAC, ZPIC, or CERT. RAs and CERTs must use certified coders for coding reviews, but there are no specified minimum qualifications for the persons performing coding reviews at MACs or ZPICs.

GAO Recommendations

GAO recommended CMS take the following steps to address contractor inconsistencies:

  • Examine all postpayment review requirements for contractors to determine those that could be made more consistent without negative effects on program integrity;
  • Communicate publicly CMS' findings and its timeframe for taking further action; and
  • Reduce differences in postpayment review requirements where it can be done without impeding the efficiency of its efforts to reduce improper payments.

The U.S. Department of Health & Human Services (HHS) concurred with the recommendations in the GAO report, and noted that CMS has already been examining many of the issues identified in the report. HHS also stated it is considering an effort to standardize the ADR process among all Medicare contractors.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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