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California hospitals overcharged Medicare


California hospitals overcharged Medicare by $367 million, audit says

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California hospitals and other providers overcharged Medicare by nearly $367 million in 2012, according to an audit report prepared for the federal Centers for Medicare and Medicaid Services on fiscal 2012 results.

More than 90 percent of that waste came from inpatient hospital claims, said an auditing group that is battling Congress over a pending 18-month hiatus in such reviews.

Nationally, the total amount for improper Medicare billings in fiscal 2012 was $2.4 billion, according to the Recovery Auditing report, based on audits of Medicare spending in fiscal 2012 by outside auditors, which was released March 25.

That $2.4 billion included $2.3 billion in overpayments (95.8 percent) and $109.4 million in underpayments (less than 4 percent). After subtracting fees and costs, $1.9 billion was recovered for the Medicare trust fund, the report said.

The study’s findings are being publicized by the American Coalition for Healthcare Claims Integrity, a group of auditing organizations unhappy because Congress last week authorized an 18-month halt to Medicare audits as part of the the “Protecting Access to Medicare Act,” commonly known as the Doc-Fix bill. Among other things, it postponed yet again a threatened huge pay cut for physicians who treat Medicare patients.

But hidden in the weeds, opponents say, was an 18-month hiatus in the external auditing of inpatient Medicare claims, from Oct. 1 of last year to March 31, 2015.

President Barack Obama signed the bill, with little or no fanfare, April 1.”There was no signing ceremony and the president offered no comments,” reported HealthLeaders Media.

But David Sayen, Medicare’s Region 9 administrator based in San Francisco, said the hiatus is actually a sign that the outside audit program is working, especially on the short-stay inpatient visits that were the primary subject of the legislation, as it involved Medicare audits.

Hospitals now understand better when it is and isn’t appropriate to admit a patient for certain types of orthopedic or cardiac conditions, he said.

The outside auditors’ retrospective focus saved Medicare lots of money, Sayen said, but sometimes left families and hospitals in tricky situations if payment for a short-stay visit were disallowed. Instead, he said, Medicare is now focusing on having its administrative contractors — the vendors who actually pay the bills, using Medicare funds — review these “short-stay claims up front.”

Still, that leaves the outside auditors fuming.

“Our members vehemently oppose this oversight holiday,” said Becky Reeves, a spokeswoman for the coalition of Medicare auditors. But the members themselves are precluded from commenting, because of contracts they signed with CMS, Reeves told the Business Times.

The year-and-a-half hiatus is “deeply concerning,” since the Medicare trust fund is under pressure and “rates of waste are going up across the country,” the group said in an April 7 statement.

The Recovery Audit Contractors or RAC program started as a CMS pilot from 2005 to March 2008, and was expanded after that as a national effort. Four RAC auditors won a competition to audit Medicare billings in four geographical regions.

California, which has more than 5 million Medicare beneficiaries, led the way on wasteful Medicare spending by a large margin, according to the report. Here are the top five states in terms of wasteful Medicare spending, according to the CMS “Recovery Auditing” report for 2012:

State Medicare over-billings in fiscal 2012

California $366.95 million
New York $138.5 million
Florida $124.1 million
Pennsylvania $107.1 million
Tennessee $96 million

It comes down to whether the outside auditors work in this area continues to have value or whether Medicare’s new approach is a better way to avoid overpayments, Sayen suggests. “It’s not advantageous to the RAC contractors to take something away,” meaning milliions in funding, he said, adding that Medicare’s new goal “is to pay the right amount the first time.”

“Congress seems to fail to recognize the savings the program has made since 2009,” which total more than $8 billion, Reeves told the Business Times.