Fraud appeals ruining healthcare providers?

Lawmakers told officials from the Centers for Medicare and Medicaid Services (CMS) on Tuesday that the current fraud appeals policy treats healthcare providers as "guilty until proven innocent," and may be driving some of them out of business.

According to the Office of Medicare Hearings and Appeals, appealed fraud cases have skyrocketed between 2012 and 2013, and could reach a million cases by the end of the fiscal year, with many stalled in the system.

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During a House Oversight subcommittee on health, several lawmakers said they were concerned some fraud cases brought against medical offices may be due to simple administrative mistakes, and the appeals process can be too burdensome.

“I have some constituents caught up in this [Administrative Law Judge] backlog, which can be extremely difficult for small businesses and could put them out of business,” said Rep. Mark Meadows (R-N.C.). "The backlog is going to reach 1 million; at what point does it become a crisis?"

Meadows said the current policy treats providers as “guilty until proven innocent,” and that they are unable to appeal their cases in order to clear their names for months. He also noted 50 percent of the appealed cases were eventually overturned.

Subcommittee Chairman James Lankford (R-Okla.) echoed many of those concerns and said the cases brought against them by Recovery Auditors (RAC), who are hired by CMS, were putting undue administrative costs on smaller businesses.
 
Shantanu Agrawal, director of the Center for Program Integrity at CMS, defended the RAC program and said CMS audits less than 1 percent of all Medicare filings. He also said that the vast majority of Medicare providers are doing their jobs right and RACs are working within their authority.

But not everyone sees it that way.

Rep. Steven Horsford (D-Nev.) told the committee there seems to be a “perverse incentive” system for RACs to highlight the smallest infractions in order to write up Medicare providers.

Lankford touted the idea the RAC program may need to be paused until the current number of cases could be handled.
 
“If we have a million files waiting out there and more coming, we’re never going to catch up no matter how much we fund it,” said Lankford.
 
He closed the meeting with a warning that Medicare providers were dropping out of the system at a time when more seniors were joining it.

“We have an obligation to keep the providers who just made a mistake rather than push them out,” he said.