Audit activity among Medicare and most third-party payers has increased in response to pressure to reduce healthcare costs. The return of billions of dollars to Medicare, Medicaid and third-party programs through these medical audit reviews has also increased. For example, the Government Accountability Office (GAO) 2014 Annual Report estimated that the Centers for Medicare & Medicaid Services (CMS) recouped $36 billion in improper payments from fee-for-service claims under both Medicare Part A and B. This is mainly attributed to the fact that payers have access to providers’ claims data, along with other software programs that allow payers to review claims and billing patterns in an effort to identify the potential for inappropriate billing and fraud.
Explore this issueJune 2018
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The most common reasons a provider might be audited include inadequate documentation, unbundling of services, upcoding, inappropriate balance billing and routine waiver of copayments, coinsurance or deductibles. Due to vulnerabilities in provider programs, the Office of the Inspector General (OIG) has requested ongoing investigations related to coding and billing. CMS created the Medicare contractor programs to assist other federal efforts in identifying and pursuing healthcare fraud and abuse. The five
Medicare review contractors include:
Medicare Administrative Contractors (MACs)
The MACs are responsible for processing and paying Medicare claims and establishing regional policy guidelines, called Local Coverage Determinations (LCD). Because MACs are in the thick of Medicare reimbursement, they are also tasked with identifying overpayments and providing outreach and education to prevent future inappropriate billing.
Recovery Audit Contractors (RACs)
The RAC program began in 2005 as a CMS demonstration program, and has since become permanent. RACs provide additional review of Medicare claims for payment. The goal of RACs is to identify and correct improper payments three years before the start of an audit. The document requests vary by provider type. RACs are paid on a contingency fee basis, and therefore, are highly motivated to identify and collect overpayments.
Supplemental Medical Review Contractors (SMRCs)
The SMRC has the primary task of conducting nationwide medical review as directed by CMS. Medical review is the evaluation of medical records and related documents to determine whether Medicare claims were billed in compliance with coverage, coding, payment and billing guidelines. CMS has contracted with StrategicHealthSolutions, LLC as the SMRC for the entire U.S.
Comprehensive Error Rate Testing (CERT)
The Medicare CERT program was implemented as a mechanism for CMS to assess whether MACs are properly paying claims. The CERT program determines the national Medicare fee for service improper payment rate, which is published on an annual basis.