More Money for CMS Means More Medicare Audits

The CMS budget for fraud, waste and abuse has doubled in size from 2021 to 2022.

Two years ago, the federal government created a plan to audit Medicare Advantage (MA) insurers more aggressively: the MA Risk Adjustment Data Validation (RADV) program. But that plan has been sitting in regulatory limbo for two years – and not just because of COVID. The plan will claw back billions of taxpayer dollars, so there has been dread on the part of providers, and the delay has been welcomed by them. These MA audits may be extrapolated.

The Centers for Medicare & Medicaid Services (CMS) announced that the proposed rule from 2019, which was already delayed twice to give the industry more time to analyze it, “has not yet been finalized.” CMS did not say why action hasn’t been taken yet.

A lobbying group for smaller providers asked CMS to “suspend all RADV audits for the duration of the COVID pandemic.” The agency specifically declined.

About 40 percent of Medicare beneficiaries have a private Medicare Advantage plan. CMS pays these plans a lump-sum per-capita amount each month.

CMS’s budget for fraud, waste, and abuse mitigation has doubled from 2021 to 2022. CMS specifically proposed to “conduct greater levels of medical review in FY 2022” and sought a $50.5 million increase in funding for these activities. Medical review activities include pre- and post-payment audits, and also encompass the Targeted Probe-and-Educate (TPE) process. CMS also requested additional funding for modeling and analytic tools aimed at identifying fraud, waste, and abuse.

The funding increase also allowed CMS to hire more administrative law judges (ALJs) in an attempt to reduce the backlog at the third level of Medicare provider appeals, which currently sits at five years. For example, in September, I have an ALJ hearing for a client from a 2016 audit.

I always tell clients to not expect to win your appeals at the first or second level. It is not until you get to the third level that you have an independent tribunal, and “an impartial decision-maker is an essential element of due process.” Bowens v. N.C. Dept. of Human Res., 710 F.2d 1015, 1018 (4th Cir. 1983).

Inevitably, providers ask why they have to go through the hoops of appealing on the first and second levels, and the answer is that case law mandates an exhaustion of administrative remedies. The doctrine of exhaustion of administrative remedies says that a person challenging an agency decision must first pursue the agency’s available remedies before seeking judicial review. It was created by courts in order to promote an efficient justice system and autonomous administrative state. But does the doctrine create efficiency or burden on providers? I’d suggest the latter.

Although recently, on behalf of an oral and maxillofacial surgeon, at the very first level of appeal the auditor Public Consulting Group (PCG) reversed itself, and reduced its finding of an alleged overpayment from thousands of dollars down to $200.

Based on principle and the fact that the provider never wants to disclose a penalty on a re-credentialing application, we are appealing the $200. Interestingly, the reason that many of the claims were denied due to X-rays not being identified, when there is no rule or regulation mandating such. Sometimes auditors get it wrong, too; normally, however,  they don’t call themselves out.


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