The Centers for Medicare and Medicaid Services (CMS) announced Tuesday it will begin automatic audits of providers in South Carolina for certain Medicare billing codes.
This is just the beginning of nationwide audits under Medicare's Recvovery Audit Contractor (RAC) program.
The audit contractors, Connolly Consulting, will first target physicians and hospitals in South Carolina, then include other states and territories in its designated region, which consists of Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, Puerto Rico and the U.S. Virgin Islands. Other areas of the country will fall under the jurisdiction of three other contracted auditors.
According to CMS officials, the RAC program is a cost containment effort aimed to reduce improper payments in Medicare programs as well as identify process improvements to reduce or eliminate future improper payments.
For this first round of edits in South Carolina, Connolly Consulting will review blood transfusions, untimed codes, IV hydration therapy, bronchoscopy services, once-in-a-lifetime procedures, pediatric codes exceeding age parameters and injections of pegfilgrastim for 6 mg.
Connolly Consulting will issue letters to hospitals and physicians as soon as this month who may have billed Medicare incorrectly for these particular codes. Notified providers will have to prove they billed Medicare correctly or return the reimbursements.
The government reportedly recovered nearly $700 million in improper Medicare payments through its RAC pilot program, conducted from 2005-2008. The RAC program was made permanent under the Tax Relief and Health Care Act of 2006, which requires the Department of Health and Human Services to expand the program to all 50 states by no later than 2010.
"The RAC demonstration program has proven to be successful in returning dollars to the Medicare Trust Funds and identifying monies that need to be returned to providers," CMS officials have said. "It has provided CMS with a new mechanism for detecting improper payments made in the past and has also given CMS a valuable new tool for preventing future payments."
CMS officials said the RAC pilot program had "a limited financial impact on most providers," with most hospitals in the pilot states impacted by less than 2.5 percent to their bottom line.
Providers and coding experts are concerned that RAC contractors are motivated to find errors that may not even be errors, because of the way they are rewarded by the government. Coding experts have warned that providers will need to take special care to document their services correctly, because without adequate proof of the service, CMS will ask for its reimbursement money back.