ProPublica reporter Sharona Coutts follows up on the New York Times’ disclosure of a report from the Office of the Inspector General (OIG), Medicare’s criminal investigative arm, that Center for Medicare and Medicaid Services (CMS) officials supposedly pressured Medicare’s private auditors to ignore government accounting rules in a way that hid billions of dollars of fraud and grossly overstated Medicare’s success in detecting fraud. One of the private contractors now under scrutiny, AdvanceMed, played a curious role, performing audits for the Medicare Recovery Audit Contractor (RAC) program during its early test phase, while simultaneously serving as a validation auditor to confirm the success of the auditors during CMS’ consideration of whether to expand the RAC program nationally, as CMS ultimately did in 2006.
Some members of Congress are seething over the discovery of the falsity of prior claims of Medicare success in thwarting billions of dollars of fraud; Congressman Pete Stark called Medicare as “incompetent” and accused CMS of “cook[ing] the books” in order “[t]o look better to the public[.]” In the words of Senator Charles Grassley, “If heads don’t roll, you can’t change the culture of this organization.”
One of the issues to be investigated is whether AdvanceMed exerted improper lobbying pressure on CMS through its parent corporation, Computer Sciences Corporation, a major government contractor. Among the cited examples of manipulative handling of the data, auditors were instructed not to compare invoices from DME suppliers with physician records.
Recommended Action:
The suggestion of corruption—by the Medicare Program itself— highlights the need for thorough review of all Medicare auditors, including the RAC Program, for which PRG Schultz is the contractor in California. The various Medicare recovery auditors receive contingency fees for identifying and recovering supposed overpayments, incentivizing them both to invalidate provider claims and to overstate their success as a means of proving their effectiveness. Similar contingent compensation structures exist for the recovery audits performed by Palmetto (and its predecessor, NHIC, the former administrative contractor) and Safeguard, LLC, a subsidiary of EDS that acts as the “safeguard” (i.e. fraud-and-abuse prevention) contractor. As many providers have learned through direct experience, recovery auditors frequently employ unqualified personnel who review data inconsistently and incompetently, forcing providers to appeal to undo inaccurate results. This disclosure highlights the need for providers to call attention to abuse by the Medicare contractors themselves.
Harry Nelson is a partner in Fenton & Nelson, LLP. Fenton & Nelson counsels healthcare providers on compliance with– and represents providers in disputes against– the Medicare Program. For additional information, please contact him at harry@fentonnelson.com
©Harry Nelson 2008
