The United States Senate Committee on Finance Released a Comprehensive Report to Combat Waste, Fraud, and Abuse in Medicare and Medicaid

On January 31, 2013, the Senate Finance Committee released a report aimed at combating waste, fraud and abuse in Medicare and Medicaid. In May of 2012, the Senate Finance Committee invited interested stakeholders to submit white papers offering recommendations and innovative solutions to improve program integrity efforts, strengthen payment reforms, and enhance fraud and abuse enforcement efforts. In response, a variety of healthcare industry experts, including Wachler & Associates, submitted nearly 2,000 pages of input and recommendations. Wachler & Associates submitted instances of egregious contractor errors, including improper recoupment of alleged overpayments, contractors sending appeals correspondence to the wrong addresses and improper referral of alleged overpayments to the Department of Treasury. Based on the Finance Committee’s review, the white papers discussed five broad themes: improper payments, beneficiary protection, audit burden, data management, and enforcement.

Improper payment issues were discussed by 44 percent of health insurers and providers who submitted white papers. Solutions regarding improper payment issues included allowing reimbursement at the outpatient service level if inpatient status is denied or for certain types of complex cases; and clarifying the guidance on or abolishing outpatient observation status. Beneficiary protection was discussed by 57 percent of insurers and providers, many of whom discussed the use of outpatient observation status by hospitals to avoid recovery audit contractor’s (RAC) scrutiny of claims, as well as provider and patient frustration with payer documentation requirements, which may lead them to forfeit certain courses of treatment or care. Furthermore, 60 percent of providers and insurers discussed audit burden issues, and were specifically concerned with the number of audit entities involved, the volume and complexity of payment rules and regulations, whether payment rules are applied consistently and whether audit entities are inappropriately overturning medical necessity decisions, audit entities interactions with providers during the audit process, difficulty communicating with audit entities during the audit process, and financial burden of payment suspensions and the impact on business.

Ninety-four percent of white papers included recommendations to combat waste, fraud, and abuse. Some of the recommendations included were:

• Clarifying the circumstances in which use of care and the setting for care is appropriate such as when it is appropriate to use inpatient care versus outpatient
• Making numerous process changes to how the various CMS audit contractors operate to ensure they are doing so efficiently and effectively
• Balancing the incentives for Medicare contractors to identifying overpayments with penalties for contractors whose findings are overturned on appeal through the CMS administrative process; and
• Creating an advisory panel to provide clinical input as a component of contractor oversight.

In light of the increased attention to support initiatives to detect fraud and abuse, now is the time for health care providers to analyze their current compliance programs and policies. If you need assistance in developing an effective compliance plan or appealing an adverse Medicare audit determination, please contact an experienced health care attorney at Wachler & Associates attorney at 248-554-0888.