House Democrats Request Government Accountability Office Review of Medicare Recovery Audit Contractor Program

House Democratic leaders in a July 11 letter requested that the Government Accountability Office conduct a review of the Medicare recovery audit contractor program that led to the recovery of $694 million in Medicare overpayments to hospitals and other health care providers between 2005 and March, CQ HealthBeat reports (Reichard, CQ HealthBeat, 7/14).

Under the program, CMS pays auditors a portion of the amount of improper Medicare payments that they identify. Auditors reviewed $317 billion in Medicare claims and found $1.03 billion in improper payments, most of which involved claims filed in New York, California and Florida. Medicare overpayments accounted for $992.7 million of the improper payments, and underpayments accounted for $38 million. The cost of the program amounted to about 20 cents per dollar, with $187.2 million paid to auditors. Providers appealed 14% of the alleged Medicare overpayments and successfully challenged about 4.6% of the overpayments (Kaiser Daily Health Policy Report, 7/14).

Letter Details
In the letter, House Energy and Commerce Committee Chair John Dingell (D-Mich.), House Energy and Commerce Health Subcommittee Chair Frank Pallone (D-N.J.), House Ways and Means Committee Chair Charles Rangel (D-N.Y.), House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.) and Energy and Commerce Health Subcommittee Vice Chair Lois Capps (D-Calif.), wrote that GAO should review the program, scheduled to expand nationwide by 2010, to ensure that CMS makes improvements during the process. Lawmakers wrote that they received many reports of problems with the program, such as the use of unqualified personnel, reviews of claims that were not consistent with Medicare policies and overuse of contingency fees when auditors found improper payments.

Capps also said that CMS has overstated the amount of Medicare overpayments recovered through the program because a "significant number of health care provider claims are still going through the appeals process and have yet to be ruled on." She added, "Although CMS counts those pending claims as part of the overall program savings, based on the outcomes of previous appeals which were won by providers in significant numbers, we expect that many of the pending claims will ultimately be overturned in the providers' favor."

CMS officials said that the agency plans to revise the program during the expansion. CMS plans to hire an independent auditor to examine reviews conducted by auditors under the program, require auditors to hire a medical director and educate providers about the program and proper billing practices. In addition, CMS plans to limit the "look-back" period for audits to three years (CQ HealthBeat, 7/14).