CMS to perform audits prior to payment for orthopedic procedures

The agency announced last year it is taking steps to help curb improper Medicare and Medicaid payments.

Controversy has arisen over a recent decision by the Centers for Medicare & Medicaid Services to perform audits prior to paying for some orthopedic procedures in specific states.

The program was scheduled to start Jan. 1, 2012 and be enacted in Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri — states that the Centers for Medicare & Medicaid Services (CMS) claims display high populations of fraud- and error-prone providers, as well as high volumes of claims with short in-patient hospital stays.

“In 2010, the President announced three goals for cutting improper payments by 2012: reducing overall payment errors by $50 billion, cutting the Medicare fee-for-service error rate in half and recovering $2 billion in improper payments,” CMS noted in a news release. “To help achieve these goals, [CMS] has announced it will launch demonstration programs beginning in January 2012 targeting some of the most common factors that lead to improper payments.”

Ramon L. Jimenez

The new system

One measure, the Recovery Audit Prepayment Review, will allow Medicare Recovery Auditors (RACs) to review claims before they are paid to ensure the provider complied with all Medicare payment rules. According to the CMS release, these RACs will conduct prepayment reviews on certain types of claims that historically result in high rates of improper payments. This process will reportedly help lower error rates by preventing improper payments rather than following the traditional “pay and chase” method wherein improper payments are tracked down after they are made.

Another measure being introduced in seven states requires prior authorization for certain medical equipment for all individuals with Medicare residing in states with high populations of fraud- and error-prone providers.

“This is an important step toward paying appropriately for certain medical equipment that has a high error rate,” the release noted. “This demonstration will help ensure a beneficiary’s medical condition warrants their medical equipment under existing coverage guidelines.”

The new process has been the target of criticism from physicians and other individuals.

“While we recognize the importance of safeguarding taxpayer money and eliminating waste in Medicare, we are concerned with the overly burdensome and subjective nature of the pre-payment documentation review process,” Fraser Cobbe, executive director of the Florida Orthopaedic Society (FOS), told Orthopedics Today. “Physicians hold all of the financial risk in this program. We render service and wait to hear if we can keep our reimbursement pending subjective chart review of auditors — auditors who are compensated by the number of claims they reject.”

Cobbe said the FOS is sharing documentation examples and reference checklists with its members. It is also warning its members of “the significant threat” posed by failing to properly review electronic medical record templates.

“We are concerned that procedures denied due to documentation review are labeled as ‘not medically necessary’ when many of these denials may simply be different interpretations of the documentation,” Cobbe added.

Ending fraud and abuse

Supporters of the changes, however, note the problem of improper payments has been rampant and costly for too long.

“I applaud CMS for their latest efforts in scrutinizing improper payments and looking for ways to decrease fraud and abuse,” Orthopedics Today Editorial Board member Ramon Jimenez, MD, said. “I believe that the majority of Medicare and Medicaid providers are ethical and moral, yet it is well known that there are significant monies lost and misspent secondary to fraudulent practices. Unfortunately there are some providers that will make efforts to game the system, and this added layer of oversight may result in no money being saved.”

He added, “Perhaps CMS should direct some pressure towards direct to consumer (DTC) advertising. This country is one of two in the world that allows DTC, the other being New Zealand. Senior citizens are targeted to ask their doctor for ‘free’ motorized scooter’, power-lift chairs, medications, and sleep apnea apparati resulting in millions of dollars in costs to the system.”

Jimenez, who said he was named to CMS’ first Physicians Advisory Board under President George H.W. Bush, noted CMS has a right to institute proactive authorization of certain procedures, and hypothesized that the rush to institute electronic billing and payment — despite its efficiency — may have resulted in a significant amount of money being paid out unnecessarily. More money is then spent chasing after the misspent money, and the cycle continues, he said.

“I appreciate and congratulate CMS for carrying out these new programs in a focused manner on those states where it appears that the problems are greatest,” Jimenez said. “I believe the pilot study will be effective.”

Furthermore, “It was readily apparent to the 11 physicians on [the first CMS Physicians Advisory Board] that the wheels of government ‘grind inexorably slow,’” he said. “Hopefully, under new leadership, CMS can crank up the wheels to make moves that help save the program for its deserving beneficiaries.”

‘Onerous’ regulation

Some detractors of the change noted that while the existence of problems within the current system is undeniable, the method with which CMS is pursuing correcting those problems is faulty at best.

“In my view, this is yet another attempt to chase after the symptom rather than address the disease,” B. Sonny Bal, MD, JD, MBA, told Orthopedics Today. “As long as we are paid for our service, and the consumer is relatively immunized to cost, no amount of government intermeddling will ever supersede the market efficiency of true supply and demand. To the extent that health care information is unavailable, or that pricing models are hard to come by, the emphasis should be on uncovering that information and disseminating it in the market.”

“That way, pricing mechanisms, resource utilization and medical decision making will follow the laws of economics and achieve some efficient equilibration,” Bal said. “But it is doubtful the public sector will ever give up the tool of health care as a method of control over the electorate.”

Bal, an Orthopedics Today Editorial Board member, said he feels the regulations add “another onerous layer of burdensome regulation” that could lead to higher costs, further regulation and inefficiency — as well as “the inevitable gaming of the system that follows every bureaucratic intervention, no matter how well intentioned.”

He said, “Of most concern to orthopedic surgeons, this new policing tool will not contribute anything to the improvement of orthopedic care for patients as medical decisions are subjected to remote second-guessing.”

According to Cobbe, the ultimate price for these programs could end up being paid by the patient.

“Physicians want to comply, provide quality evidence-based care and stamp out waste and abuse — however, the ever-increasing burden of audits jeopardizes the ability of physicians to focus on rendering care and threatens their economic viability,” Cobbe said. “Orthopedics has advanced so far it would be a shame if administrative barriers denied access to the best musculoskeletal care in the world for some of our senior citizens. We hope to work with CMS to find a better way to ensure program integrity.” – by Robert Press

Reference:

• www.cms.gov

• B. Sonny Bal, MD, JD, MBA, can be reached at Missouri Orthopaedic Institute, 1100 Virginia Ave., Columbia, MO 65212; 573-882-6762; email: balb@health.missouri.edu.
• Fraser Cobbe can be reached at Florida Orthopaedic Society, 17503 Mallard Ct., Lutz, FL 33559; 813-948-8660; email: fcobbe@cobbemanagement.com.
• Ramon L. Jimenez, MD, can be reached at Monterey Peninsula Orthopaedic and Sports Medicine Institute, 10 Harris Ct., Bldg. A, Suite A, Monterey, CA 93940; 831-643-9788; email: ramon@jimenez.net.
• Disclosures: Bal and Jimenez have no relevant financial disclosures. Cobbe is a paid employee of the Florida Orthopaedic Society.