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GAO Evaluates Postpayment Claims Review Process by CMS Contractors


On August 13, 2014, the United States Government Accountability Office (GAO) released a report in which it evaluated the processes used by the Centers for Medicare and Medicaid Services (CMS) to prevent the duplication of postpayment claims by its contractors.  The report, entitled “Medicare Program Integrity: Increased Oversight and Guidance Could Improve Effectiveness and Efficiency of Postpayment Claims Reviews,” focused on the following questions:

  • Does CMS have data to assess whether its contractors conduct duplicative postpayments claims reviews?
  • Does CMS ensure that its contractors only conduct postpayment claims reviews when appropriate?
  • What are CMS’s requirements for contractor correspondence with providers that help ensure effective communication?
  • Does CMS use quality assurance processes to ensure that contractors’ postpayment claims review decisions are appropriate?
  • Does CMS have strategies for coordination of postpayment claims review activities among different types of contractors? 

The GAO report reviewed the postpayment claims review practices of the following four types of CMS claims contractors:  (i) the Comprehensive Error Rate Testing (CERT) contractor, which estimates Medicare’s improper payment rate based on its review of claims; (ii) Medicare Administrative Contractors (MACs), which process and pay claims; (iii) Recovery Auditors (RAs), which review payments that have been improperly made but not previously reviewed by other contractors; and  (iv) Zone Program Integrity Contractors (ZPICs), which review claims for potential fraud.   According to the report, in 2012, RAs conducted eighty-three percent (83%) of the postpayment claims reviews, while the CERT contractor, MACs and ZPICs conducted three percent (3%), six percent (6%), and eight percent (8%) of such reviews, respectively.

In connection with its report, GAO reviewed CMS’s requirements for claims reviews; interviewed CMS officials, certain contractors, and provider associations; analyzed CMS data; evaluated samples of contractor correspondence for compliance with CMS requirements; and evaluated CMS’s requirements and oversight against federal internal control standards. Based on the foregoing efforts and information, GAO found that CMS has implemented a number of measures to guide, oversee, and improve the coordination among its contractors.

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However, the report also concludes that additional efforts by CMS would improve the efficacy and efficiency of the contractors’ claims reviews.  GAO found that CMS does not have adequate information to estimate the number of duplicative claims reviews performed by its contractors.  For example, CMS maintains a Recovery Audit Data Warehouse, which enables the CERT contractor, MACs, and ZPICs to identify and exclude claims that have been reviewed so that the RA will not duplicate a review.  However, in some cases, GAO found that the contractors do not consistently log their claims review information, which can result in duplicate postpayment reviews by the RAs. 

GAO concluded that CMS has issued clear guidance to RAs and the CERT contractor about whether they may conduct duplicative claims reviews.  However, similar guidance has not been issued for the ZPICs and MACs, which may lead to confusion regarding whether duplicative claims reviews by these contractors are permitted in some circumstances. 

GAO also found that the contractors sometimes issued inconsistent guidance in their written communications to providers, which may have resulted in providers receiving less information about their responsibilities in responding to the contractor or their rights if their claims were denied

In response to these findings, the GAO recommended that CMS:

  • Monitor the Recovery Audit Warehouse to ensure that all postpayment review contractors are submitting required data and that the data the database contains are accurate and complete. 
  • Issue clear guidance regarding which contractors may conduct duplicative claims reviews. 
  • Implement more consistent requirements and better monitoring of contractors’ compliance with correspondence content requirements. 

Address the different requirements in postpayment claims reviews conducted by the contractors to increase uniformity of approach among the contractors.  In particular, GAO noted that increased coordination between ZPICs and RAs is necessary. 

After reviewing the report, the U.S. Department of Health and Human Services concurred with GAO’s formal recommendations and indicated that it intends to improve CMS oversight of the postpayment claims review process.

Rick Rifenbark ([email protected]) is a partner and health care lawyer with Foley & Lardner LLP. His practice focuses on health care compliance and transactions, as well as electronic health records. Rifenbark is a member of the firm’s Health Care Industry Team and the Government Enforcement, Compliance & White Collar Defense Practice.

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