Tuesday, July 15, 2014 CMS Criticized Over Rate of Improper Payments A recently issued congressional report offers a grim assessment of the Centers for Medicare and Medicaid Service's (CMS) attempts to curb improper payments, calling them largely ineffective "pay and chase policies" that provide no reason for recovery audit contractors (RACs) to stop improper payments before they happen. In fact, the bipartisan report (.pdf) from the Senate Special Committee on Aging argues that the RAC incentive structure "could be viewed as an incentive to keep improper payment rates high." While other parts of the US government have dramatically reduced their rates of improper payments since 2010, the report states, CMS has experienced an increase, to just over 10% of the $604 billion spent in 2013, "the highest improper payment rate of the past 5 years." The 43-page report states that while RACs were established to identify overpayments and underpayments, part of the mission of the contractors included "taking action to reduce future improper payments." The ways RACs are paid, however, provides contingency fees for the number of improper claims identified. These rates have ranged between 9% and 12.5%. The committee regards Medicare administrative contractors (MACs) in a somewhat more favorable light, writing that MACs "have done a great deal to reduce improper payments, including implementing many local coverage decisions." The committee findings, also subject of a recent report in Modern Healthcare, include an acknowledgement that CMS "does have a number of prepayment checks, or edits in the system which automatically deny payments that appear to be improper," and the agency "should be congratulated on the development of prepayment review systems like the National Correct Coding Initiative and Medically Unlikely Edits." Committee staff recommendations include the establishment of financial incentives for the reduction of improper payment rates, rather than an exclusive focus on the identification of improper payments made. The recommendations also address the need for CMS to better define scopes and objectives of systems focused on improper payments, and to better educate providers on improper payments. The report comes after a CMS report in late June that touted the use of predictive analytics in its Fraud Prevention System, which the agency claims prevented over $210 million in improper payments in 2013. APTA has worked exhaustively with CMS officials to try to produce more effective review systems, by urging them to reduce administrative burden, improve communication among their contractors, focus their investigation and review on the highest risk cases, and minimize disruption to providers. The association also is helping physical therapists and physical therapist assistants understand regulations and payment systems through its Integrity in Practice campaign that puts them in touch with tools and resources to promote evidence-based practice, ethics, and professionalism. Check out the latest addition to the Integrity in Practice webpage: Preventing Fraud, Abuse, and Waste: A Primer for Physical Therapists (.pdf) is a free guide that examines not only the laws around these issues but the ways to avoid fraud, abuse, and waste with payers, referral sources, and patients.