A hospital or physician’s billing department is a busy and often hectic place. Frequently, it is understaffed and overworked, caught up in the ever-changing whirlwind of the Centers for Medicare and Medicaid (CMS) reimbursement codes and regulations. These rules are complex and dynamic, making the already challenging task of correctly submitting claims to Medicare that much more difficult. Altogether, it’s a recipe for erroneous billing. 

According to the most recent Medicare and Social Security Trustee report, the projected date of Medicare’s Hospital Insurance Trust Fund exhaustion is 2024. The Recovery Audit Contractor (RAC) Program was implemented to identify improper Medicare payments and protect both providers and the Medicare Trust Fund from waste, errors and abuse. Healthcare providers, including physicians, hospitals, nursing homes, home healthcare organizations and durable medical equipment suppliers are subject to audits to determine if they have been overpaid by Medicare. The American Hospital Association (AHA) RAC Survey reported that through the first quarter of 2011, the RAC program has identified 26% of the selected claims as erroneous. The AHA reported that complex medical record reviews yielded an average overpayment amount of $5,469. In total, the AHA says that RAC programs have identified overpayments by Medicare adding up to $167 million.

For example, drug reporting and billing is often erroneous, because the hospital’s billing coders may make the mistake of billing based on the administered dose rather than the billing unit. One dose does not always equal one billing unit. This seemingly innocent error is estimated to cause Medicare to routinely overpay.

The terms “waste, fraud and abuse” may seem inflammatory but, in truth, most incorrect claims are made as the result of not knowing the right CMS reimbursement criteria or of just plain mistakes being made during the billing and coding process. In fact, rather than viewing RAC overpayment findings as punitive, it is the intent of CMS that healthcare providers learn from their errors and implement corrective actions. CMS endeavors for the RAC program to be a cooperative venture, with the goal of preserving the Medicare Trust Fund. Submitting claims that do not meet Medicare criteria is not only an unsound business practice, but could also be considered fraud if the practice is egregious. The damage to a provider’s reputation can be severe. Therefore, every billing coder dealing with Medicare reimbursement claims must be highly experienced in the medical field; their evaluations put the credibility of healthcare professionals on the line.

Ultimately, whether erroneous billing is labeled waste, fraud or abuse isn’t the most important part of the RAC inquiry – the bottom line is, the claim must be paid correctly. PRGX makes sure the provider gets exactly what they are due according to the CMS Guidelines - no more, no less. 

References
A Summary of the 2011 Annual Reports from Social Security and Medicare Boards of Trustees http://www.ssa.gov/oact/trsum/index.html.
Exploring the Impact of the RAC Program on Hospitals Nationwide Results of AHA RACTrac Survey, 1st Quarter 2011 May 20, 2011 Short name: AHA. (May 2011). RACTrac Survey. http://www.aha.org/aha/content/2011/pdf/52011-1st-qtr-2011-RACTrac-report.pdf