CMS Resumes RAC Audits, Other Medical Review Activities

CMS recently resumed medical review activities, including pre- and post-payment reviews conducted by Medicare Administrative Contractors (MACs) and Recovery Audit Contractors (RACs), which were paused earlier this year due to the COVID-19 public health emergency.

According to the American Hospital Association (AHA), CMS ended the suspension of most Medicare fee-for-service medical reviews on August 3rd despite HHS Secretary Alex Azar extending the COVID-19 public health emergency late last month.

CMS said it will resume Medicare payment audits and other medical review activities regardless of the status of the public health emergency, AHA said.

But the audits could take away from hospitals’ COVID-19 response efforts, the leading hospital group told CMS Administrator Seema Verma in a July 29th letter calling for the continued suspension of medical review activities.

“The AHA is deeply concerned about CMS’s decision to resume these burdensome audits during a pandemic,” the group wrote. “COVID-19 cases continue to increase and the number of hospitalizations is now on par with those in April. Requiring hospitals on the front line to divert their time, attention and resources away from patient care toward managing medical reviews – especially in the case of reviews conducted by RACs, which are paid on a contingency fee basis and thus incentivized to make inappropriate denials – will have a detrimental effect on their ability to manage the pandemic for their communities at the very time when it is needed most.”

Restarting audits could also stymy progress made with reducing the Medicare appeals backlog, AHA pointed out.

“Moreover, CMS is finally making some progress in reducing the backlog of Medicare appeals caused by aggressive and inaccurate RAC audits; restarting these audits could exacerbate the problem and reignite unacceptable and illegal appeals delays,” the group wrote.

“These delays – during which CMS retains the funds attributable to improperly denied claims – could force hospitals and health systems to make increasingly difficult decisions about providing quality patient care with less and less money, at a time when they are already losing billions of dollars due to the pandemic. With a novel disease raging, about which we still know so little, this is not the time to empower contractors to question the medical judgment of health care providers,” the letter stated.

HHS reported last month that it reduced the Medicare appeals backlog by 43 percent, putting the department ahead of a court-ordered schedule to eliminate all pending appeals at the Office of Medicare Hearings and Appeals by the 2020 fiscal year.

The Medicare appeals backlog has been a priority for HHS ever since the Government Accountability Office reported in 2016 that the increasing number of pending appeals showed “no signs of abating,” particularly at higher levels of the appeals process.

A federal judge ordered HHS in 2018 to reduce the Medicare appeals backlog and provide regular updates on its progress.

The latest progress report showed that OMHA adjudications, which included resolution of RAC cases, drove the most recent reduction in the Medicare appeals backlog.

Resuming MAC- and RAC-initiated audits could dampen HHS’ progress with reducing the Medicare appeals backlog, and extending the suspension of medical review activities would align with CMS’ efforts to give providers flexibility during the pandemic, AHA said.

“[W]hile we appreciate the numerous waivers and flexibilities CMS has issued nationwide, including those that have allowed hospitals and health systems to focus on reacting and adapting swiftly to patient care needs, demands and decisions, it is unclear why the agency views audit flexibility as sufficiently different so as to withdraw it,” the group wrote.

“In fact, the waivers CMS has provided – both in terms of flexibilities in providing care as well as the provision of regulatory relief – have been essential to our members’ ability to manage the pandemic and provide high-quality outcomes for their patients.”

AHA urged CMS to “refrain from differentiating between medical review audits and the other flexibilities you have created, and instead ensure all of the relevant waivers remain active during the pandemic.”