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Tales abound regarding contractors’ errors negatively impacting providers. 

If you read my previous article on the audit by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) on billing of services by acute-care hospitals that were provided to patients who were inpatients at another facility, you will recall that because the Centers for Medicare & Medicaid Services (CMS) did not have properly functioning edits, the acute-care hospitals now will have to pay back millions of dollars for services they provided.

But situations like this are not rare. My reporting in this article includes two more examples of some of the ridiculous things that providers have to go through because of the incompetence of others.

I recently was contacted by a revenue integrity director at a hospital about an audit performed by their Medicare Administrative Contractor (MAC). They sent in the records as requested and then received denials. The denial code specified that the services did not meet the medically necessity guidelines outlined in the MAC’s local coverage determination (LCD). The hospital reviewed the charts and felt that the guidelines were in fact met, so they appealed.

After the appeals were submitted, they were informed that there was “a claims processing issue” and the denials had been issued in error. When they queried via the claims processing system, they could see that the claims were now paid in full. So at that point, they were not happy at having to take the time to write the appeals, but grateful that the claims were paid in full. Now, you would think that was the end of story.

Well, not so fast. A month later, they received a letter from the appeals department at that same MAC telling them that their appeal was reviewed and the decision was unfavorable, because the claim was already paid. Wait – what just happened?

Here’s what: Several claims were denied, so the hospital appealed. While their appeal was in the mail, the denials were overturned since they were denied in error. But since the appeal was already in process, it could not be cancelled, so the MAC reviewed the appeal and denied it.

Yep, the MAC issued an unfavorable decision on an appeal arguing that a claim was correct while at the same time agreeing that the claim was correct. Not only that, the decision letter provided instructions on how the hospital could appeal the unfavorable decision to the next level.

“But the hospital got all their money, so shouldn’t they just move on?” you might ask. Well, the hospital’s concern is that these unfavorable appeals now will be recorded at the MAC and will harm the hospital’s overall overturn rate, potentially leading to more audits. I am also concerned that the MAC will use the unfavorable decision with lack of further appeal as proof that they are doing a good job in their audits. So, what is the hospital’s next step? The hospital is going to try to work with the MAC and get those appeals off their record.

And in another example of providers suffering the consequences of a Medicare contractor’s poor work performance, NGS sent out a notice this past Thursday indicating that many Part B claims submitted in September did not properly cross over to the supplemental insurer because the Benefits Coordination and Recovery Center improperly applied edits that were not to go into effect until Oct. 1. A reasonable person might expect the MAC to go back and fix the claims by bypassing the edits and submitting the claims to the secondary payer.

But that is not what is happening. Providers who received a letter informing them of the error were also informed that they must submit the claim directly to the secondary insurer. And since these claims normally cross over automatically, these providers are unlikely to have these payers set up in their systems, requiring a lot of extra work. And when the secondary payers get claims directly from the provider and not from CMS, I suspect that the secondary payer is going to reject them because they did not come directly from CMS.

I understand that Medicare is a huge conglomerate with millions of moving parts, but why does it seem that providers always face the consequences when others are at fault?


Ronald Hirsch, MD, FACP, CHCQM, CHRI

Ronald Hirsch, MD, is vice president of the Regulations and Education Group at R1 Physician Advisory Services. Dr. Hirsch’s career in medicine includes many clinical leadership roles at healthcare organizations ranging from acute-care hospitals and home health agencies to long-term care facilities and group medical practices. In addition to serving as a medical director of case management and medical necessity reviewer throughout his career, Dr. Hirsch has delivered numerous peer lectures on case management best practices and is a published author on the topic. He is a member of the Advisory Board of the American College of Physician Advisors, a member of the American Case Management Association, and a Fellow of the American College of Physicians. Dr. Hirsch is a member of the RACmonitor editorial board and is regular panelist on Monitor Mondays. The opinions expressed are those of the author and do not necessarily reflect the views, policies, or opinions of R1 RCM, Inc. or R1 Physician Advisory Services (R1 PAS).

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