WASHINGTON — Members of the Practicing Physician Advisory Council wanted to know why a new demonstration program from the Centers for Medicare and Medicaid Services rewards contractors financially for finding money owed to the Medicare program, but not for finding money that Medicare has underpaid to physicians.
Under the Recovery Audit Contractors program, three contractors hired by CMS look for overpayments and underpayments made by Medicare to physicians and hospitals, and try to recover the overpayments. The program, which began last spring, operates in the three states with the largest Medicare beneficiary populations: California, Florida, and New York. The three contractors, who work on a contingency basis, are PRG-Schultz International (California), Health Data Insights (Florida), and Connolly Consulting (New York). Contractors review claims that are at least a year old.
Although the contractors are paid a percentage of what they collect in overpayments, there is no similar incentive for finding underpayments. That's because it would require Medicare to pay money over and above the amount of the underpayment, “and that's money going out of the [Medicare] trust fund, not going back in,” Gerald Walters, director of the financial services group at CMS, told PPAC members at a council meeting.
Council member Dr. Peter D. Grimm, a radiation oncologist in Seattle, said he would gladly give some of the underpayment money he was due back to the contractor.
Mr. Walters said that idea had been suggested to him before, but under the terms of the demonstration program, “if even one person says, 'I'm not going to pay, give me my money,' I can't do it.”
Council member Dr. Barbara L. McAneny, a clinical oncologist in Albuquerque, noted that there is a “cottage industry” of companies that volunteer to review physicians' claims, find examples of undercoding, and help the physicians resubmit the claims for more money. “If you sell this as a service, it would be a reasonable business thing to do,” she said.
Council chair Dr. Ronald D. Castellanos, a urologist in Cape Coral, Fla., said he had spoken with one of the contractors who “definitely had sent out demand letters [to providers], but had not found any underpayments.” Mr. Walters said that CMS “believes it has found a way to incentivize” the contractors to target underpayments, but he did not elaborate further. Once an underpayment has been identified, the contractor must notify the appropriate Medicare carrier, which will adjust the claim and pay the provider.
Dr. Castellanos said he was happy that CMS officials had met with hospitals and physician organizations to explain the program, but he was concerned that the agency had not yet met with any carrier medical directors. The council passed a resolution urging CMS to meet with them. CMS will share data on the program with PPAC at a future meeting, and also will issue a report to Congress about the program, Mr. Walters said.