October 2001 Bulletin

CMS auditing systems probe Medicare claims

Make sure records document appropriate decision-making, medical nesessity

By Margie Scalley Vaught

If you provide services to Medicare patients you probably are familiar with prepayment and postpayment letters. As of Oct. 1, 2000 the Centers for Medicare and Medicaid Services (CMS, which formerly was HCFA) initiated a new auditing system called Progressive Correction Action (PCA). Even though this auditing system went into effect last October (see program memo AB-00-72), many providers did not receive notification until this year.

This new system is a data-driven system. The data may be initiated as part of a general "surveillance" and reviews of submitted claims, or due to specific problems stemming from provider or beneficiary complaints or Fraud Alerts announced by the Office of the Inspector General. The audit "probes" are either from prepayment or postpayment claims. The probe consists of 20 to 40 claims for a single provider. There are specific guidelines regarding time frames, and if offices do not return the requested medical documentation within 30 days the claims are reviewed based on medical information that is available.

PCA also was developed to produce a "provider error rate." This error rate will help determine future steps that might need to be taken regarding provider training, administrative action such as sanction, etc. There are three levels in this provider rating: minor, moderate or major problems category. A minor problem may consist of a low error rate with no past history or low dollar amount. The recommendations that might follow this could be education/training. A moderate problem may consist of a low error rate, but a high dollar amount. The recommendations that might follow this could be initiation of prepayment audits. A major problem may consist of moderate error rate despite previous education or a very high error rate. This level could result in administrative action. CMS provided examples, which are:

PCA determines a provider error rating, however, a system was needed for a similar type of rating for carriers and contractors in the Medicare claims process. CMS established the Comprehensive Error Rate Testing (CERT) System effective August 2000, with full implementation in April 2002 (See program memos B-01-47 and AB-01-113). This system was developed to improve the processing and medical decision-making involved in the payment of Medicare claims. This program falls under the performance measurements for federal agencies outlined in the Government Performance and Results Act of 1993.

An independent contractor, DynCorp of Richmond Va., was selected to review random sample of claims processed by each Medicare contractor. The review staff, which consists of nurses, physicians and other qualified healthcare providers, will then verify the decisions a carrier made are accurate and based on sound policy. CERT is also a data-driven program. CMS is hoping that these random reviews will identify and determine underlying reasons for errors and denials with appropriate corrective measures taken.

On a monthly basis, DynCorp will request approximately 200 claims from each contractor. These claims will be followed through adjudication and the outcomes will be compared. CMS would like DynCorp to target claims denied for medical necessity or inappropriate application of medical review policies.

During this process, providers can be contacted to provide additional information such as medical records, certificates of medical necessity, etc. Even though these two auditing procedures are for two separate and distinct purposes, providers are involved in both. Providers need to make sure that their records document appropriate medical decision-making, based on the presenting problem, and that medical necessity is documented for tests, procedures and treatment plans. CMS has made it clear that medical decision-making and medical necessity must support the level of service being billed.

In the March 2001 report submitted to Department of Health and Human Services, the Inspector General stated, "However, continued vigilance is needed to ensure that providers maintain adequate documentation supporting billed services, bill only for services that are medically necessary, and properly code claims." To view the report, go to: http://oig.hhs.gov/oas/reports/afma/ a0002000.htm.

Margie Scalley Vaught, CPC, is an independent coding specialist in Ellenburg, Wash. She also is a member of the American Academy of Professional Coders National Advisory Board.

Answers to common coding questions may be addressed in future editions of the Bulletin. Fax (847) 823-8026.

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