GAO Investigation Unearths Flaws in CMS Audit Program; Confirms Complaints of Rampant, Out of Control Medicare Audits

“The GAO report confirms what the industry has been saying for years: the CMS auditing system is poorly managed, is forcing good providers out of business and needs to be significantly revised,”
Thomas Ryan, president of AAHomecare

A Government Accountability Office (GAO) investigation recently found that the Centers for Medicare & Medicaid Services (CMS) provides insufficient oversight to contractors auditing Medicare reimbursement claims. These inappropriate, multiple audits are crippling the operations of many home medical equipment providers.

The American Association for Homecare (AAHomecare) said the GAO report, which was released earlier this month, underscores the repeated complaints from providers that the rampant out-of- control CMS audit system is placing unfair burdens on their businesses.

“The GAO report confirms what the industry has been saying for years: the CMS auditing system is poorly managed, is forcing good providers out of business and needs to be significantly revised,” said Thomas Ryan, president of AAHomecare. “Hopefully, the GAO report helps create the changes needed to ensure that HME providers can stay in business and supply Medicare beneficiaries with the quality services and products that they deserve.”

Ryan noted that Congress is already working on a legislative fix to the audit system.  The recently introduced Audit Improvement and Reform Act (AIR Act), H.R. 5083, will increase transparency, education and outreach, and reward suppliers that have low error rates on audited claims. The AIR Act would apply to all contractors performing audits on durable medical equipment, prosthetics, orthotics, and supplies.

The extent of the audit problem was revealed last December when Administrative Law Judges suspended action on new audit appeals because of the backlog of cases. There are now more than 600,000 cases awaiting appeals. Previous to the suspension, providers repaid the government or didn’t get paid during the appeals process. But most appeals were ultimately won by providers and they received the money owed for providing home medical equipment to Medicare patients.

But closing down the appeals process left providers with no recourse and has forced many to shut their businesses or no longer service Medicare patients.

Another factor for providers is the amount of time and resources needed to comply with the army of auditors that CMS has unleashed without proper management.  CMS has hired a variety of contractors that conduct audits of providers – Durable Medical Equipment Medicare Administrative Contractors (DME MACs), Zone Program Integrity Contractors (ZPICs), Recovery Audit Contractors (RACs) and the Comprehensive Error Rate Testing Contractor (CERTs). And what GAO determined is that these entities are not coordinated and are wasting government resources by auditing the same claims, while needlessly burdening the providers.

“This audit process – from paying contractors a ‘bounty’ to open audits to shutting down appeals for providers – has done a major disservice to providers and to the Medicare beneficiaries who they serve,” said Ryan. “The GAO report is a major rebuke of CMS’ ability to adequately manage an audit system and provides further evidence that this is bad public policy must be fixed.”

Specifically, the GAO report found that:

  • A Recovery Audit Data Warehouse was created to track audits and prevent duplications. But GAO found that the database was not designed to provide information on all possible duplications, and that its data was not reliable because the contracts didn’t include the necessary information.
  • Contractors had a low compliance rate on requirements that they communicate to providers their rights during an audit.  This affected the ability of providers to exercise their rights.
  • A lack coordination and oversight by CMS regarding the activities of their audit contractors.
  • CMS has not established clear guidance prohibiting contractors from reviewing the same claims.

The flaws cited in the GAO report got the attention of many on Capitol Hill.

“The provider community has raised numerous concerns about the consistency and accuracy of the audit process over the past few years and this report is the first effort to determine what steps could be taken to improve the process,” said Rep. Diana Louise DeGette (D-CO). “The information in this report can now be used by Congress and CMS to help make improvements and ensure more consistent oversight of both the contractors and audit process.”

Ryan cautioned that the audit legislation won’t solve all the problems, but will help.

To learn more, visit www.FixMedicareAudits.org and follow @AAHomecare on Twitter.