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AHA targets 'serious problems' in CMS hospital audits, urges modifications

Group's general counsel says OIG's understanding and application of Medicare rules are flawed.

Beth Jones Sanborn, Managing Editor

The American Hospital Association is pushing hard to compel CMS to change how it conducts its hospital compliance reviews, citing serious problems with the audits that they say regularly include flaws and inaccuracies that result in "vastly overstated repayment demands, unwarranted reputational harm and diversion of hospital and physician leaders' time" from their primary mission of serving patients.

Melinda Hatton, who serves as general counsel for the AHA, penned a five-page letter to the CFO of CMS Jennifer Main this week. She slammed the OIG audits, saying the organization's understanding and application of Medicare rules was erroneous and , as are the procedures used in the audits, resulting in uneven application of Medicare payment rules.

[Also: CMS hospital overall star ratings methodology flawed, Health Affairs says]

"The audits frequently do not provide a basis for making further improvements to a hospital's practices or procedures because auditors too often review obsolete standards and include large numbers of incorrect claim denials. Moreover, many of the claim denials that are not appealed by hospitals typically involve complex medical judgments that OIG audits are not well equipped to evaluate," Hatton wrote.

Hatton argued that the negative effects of the audits are worsened because the OIG regularly applies its findings to all claims in the audit period, despite that fact that many hospitals have successfully appealed most or almost all of the identical claim denials in the audit. This makes CMS repayment demands [premature, and at risk of being significantly inflated, forcing hospitals to appeal each claim.

[Also: Quantros study challenges reliability of CMS hospital star ratings]

Hatton also said the situation yields a major, long-lasting financial and reputational impact on the hospital.

Among her suggestions, only extrapolate from claims if there is a "significant error rate" and all appeals have been exhausted and put off extrapolation until the appeals process is complete. She also suggested that, in cases where CMS accepts the OIG's ruling that hospital services were improperly billed as Part A inpatient claims, the hospital should be allowed time to re-bill under Part B for any covered care and services, no matter the expiration date of the one-year filing deadline.

She also wants CMS to provide feedback to the OIG when errors are corrected by the Medicare Administrative Contractor or an administrative law judge, so that the public audit report can be corrected, and a process for such actions can be developed. Hatton argued that legal issues raised by hospitals should be reviewed and addressed before an audit is undertaken and a repayment demand made. Doing so avoids wasting resources and ensures accurate application CMS rules.

Finally Hatton urged CMS and the OIG to consider the claims categories to be audited and the accurate interpretation of Medicare rules before the process gets underway.

"Although we recognize that the OIG has ultimate authority to decide what to audit, we believe that the OIG's meaningful consultation with CMS before performing an audit would significantly reduce unnecessary and costly appeals," she wrote. "Moreover, it would help focus payment review activities on areas more prone to fraud, waste and abuse, rather than gray areas in the law where even the most careful providers are likely to make mistakes."

Twitter: @BethJSanborn
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