Home Health & Hospice Week

 New medical review contractors get paid only for collecting overpayments.

The financial rewards for the new Recovery Audit Contractors almost guarantee they'll find a lot more Medicare overpayments to providers than underpayments - translating to a lot more money coming out of providers' pockets than going in.
 
RACs' sole payment method is collecting an undisclosed percentage of any overpayments they secure from providers, the Centers for Medicare & Medicaid Services confirmed in an April 28 Open Door Forum on the new three-year demonstration project (see related story, previous page).
 
RACs still will identify underpayments, CMS insisted. "While there is no financial incentive for the recovery auditors to identify the underpayments, there are other incentives that are even more important, such as the relationship with the provider community," said Connie Leonard, CMS project officer for the demonstration.
 
But providers weren't buying it. "It sounds a little bit naive to say that the incentive on the part of the RACs to find underpayments ... will come from the fact that they want to impress [providers] enough to eventually gain them as clients at some future date," noted one caller. "How hard are the RACs really going to look for underpayments?"
 
CMS was quick to point out that the language of the Medicare Modernization Act law that mandated the RACs specified that they be paid only for collecting overpayments. "That's just the way that Congress wrote the law," CMS' Melanie Combs noted in the forum.
 
An independent contractor will also evaluate the RACs' performance for the final report to Congress, and identifying underpayments will be part of that evaluation, Leonard said.
 
There are bound to be lots more overpayments to find anyway, CMS added. The Comprehensive Error Rate Testing (CERT) project has shown that overpayments significantly outstrip underpayments in a random sample of claims, Combs noted. When the RACs target known problem areas, CMS expects that trend be even more pronounced.
 
In response to a query by former CMS Administrator Tom Scully, CMS said it didn't have a projected recovery rate for the RAC project. However, looking at recent Medicare payment error rates, "the gross potential is pretty high," a CMS staffer admitted. The 2004 CERT rate was 10 percent.