Medicare Provider Education: Oversight of Efforts to Reduce Improper Billing Needs Improvement
Released: 2017-04-10T00:00:00

Letter

Background

Medicare Administrative Contractors

MACs process and pay claims, conduct prepayment and postpayment claim reviews, and provide Medicare fee-for-service billing education to providers in their jurisdictions. For each type of Medicare claim, the number of jurisdictions and the number of MACs that handle that type of claim vary. For Medicare Part A and B claims—handled by A/B MACs— there are 12 jurisdictions in which 8 MACs operated at the time of our review. Three of these MACs also processed home health and hospice claims in addition to Medicare A/B claims and therefore served as MACs for the four home health and hospice (HH+H) jurisdictions. For durable medical equipment (DME), including orthotics, prosthetics, and supplies— handled by DME MACs—there are four jurisdictions in which two MACs operated at the time of our review. A MAC can operate in more than one jurisdiction and handle more than one type of Medicare claim. For example, a MAC can operate as an A/B MAC in one jurisdiction and a DME MAC in another. (For maps of the 20 jurisdictions, see app. I.)

The provider education department is part of a MAC’s provider customer service program, which is intended to provide timely information, education, and training to providers on Medicare fee-for-service billing, as outlined in CMS’s provider customer service program manual. The costs for MACs’ provider education departments average 2.1 to 3.3 percent of their total annual costs.

MACs’ provider education department efforts are aimed at educating providers and their staff on Medicare program fundamentals, national and local policies and procedures, new Medicare initiatives, significant changes to the Medicare program, and issues identified through data analyses. Provider education departments provide education through a variety of methods, such as webinars, online tutorials available on- demand, ‘ask-the-contractor’ teleconferences, seminars at national conferences and association meetings, and website articles. These efforts are designed to educate many providers at the same time or individual providers via one-to-one education. Attendance at provider education department events is voluntary on the part of the providers. MACs are required to report their provider education department efforts monthly into the Provider Customer Service Program Contractor Information Database that CMS oversees and maintains. CMS also requires the MACs to submit a semi-annual Provider Customer Service Program Activities Report that summarizes and recounts Provider Customer Service Program activities, process improvements, and best practices during the reporting period.

MACs’ medical review departments identify areas vulnerable to improper billing, review medical records to determine whether Medicare claims are medically necessary and properly documented, conduct one-to-one education as a result of claim reviews, and provide referrals to the provider education department for further education. This department frequently works with the provider education department to conduct educational efforts focusing on correcting provider billing (see fig. 1).

CMS requires each MAC to identify areas vulnerable to improper billing in its jurisdiction(s) to guide MAC efforts in medical review and provider education. Areas identified by the MACs are listed in their IPRS reports. MACs’ medical review departments identify these areas by analyzing various internal and external data, such as data from CMS’s Comprehensive Error Rate Testing (CERT) program, issues identified by recovery auditors, Office of Inspector General reports, comparative billing reports, and internal MAC data. The objective of the CERT program is to estimate the payment accuracy of the Medicare fee-for-service program, which results in a Medicare fee-for-service improper payment rate. Improper payment rates are computed at multiple levels: nationally, by MAC, by service, and by provider type. According to CMS’s provider customer service program manual, MACs with improper payment rates a certain percentage above HHS’s target for determining progress toward one of its Government Performance and Results Act of 1993 (GPRA) goals may be required by CMS to submit quarterly or monthly provider education department status updates. However, CMS officials told us that they have never required any MAC to submit these quarterly or monthly status updates and they are considering removing this requirement from the manual.

Probe and Educate Reviews

The probe and educate reviews are a CMS strategy to determine the extent to which providers understand recent policy changes for certain areas vulnerable to improper billing and help providers improve billing in these areas through a review of a sample of claims from every provider. Under the reviews, MAC medical review departments, with varying levels of coordination with the provider education departments, sample and review a certain number of claims from each provider to determine whether the claims were billed and documented properly. These reviews are resource intensive, because they involve manual review of associated medical records by trained medical review staff. Because of the resources involved, manual reviews are done infrequently in the Medicare program, with less than 1 percent of all Medicare claims receiving manual review. Following the first round of review, providers are informed of their results and those who billed and documented a specified percentage of claims improperly are offered voluntary one-to-one education to learn why each claim was approved or denied. Providers that billed and documented a specified percentage of claims properly are excluded from subsequent rounds of review, if any. MACs may repeat this process for subsequent rounds of review using a new sample of claims. (See fig. 2.)

In addition to the areas vulnerable to improper billing identified by the MACs, CMS identified two areas vulnerable to improper billing—short- stay hospital visits and home health services—and required MACs to conduct probe and educate reviews for each of these areas. The first probe and educate review examined short-stay hospital claims to determine the extent to which certain hospitals were properly applying the “two-midnight rule” that CMS implemented effective October 1, 2013. Under the rule, hospital stays for Medicare beneficiaries spanning two or more midnights should generally be billed as inpatient hospital claims. Conversely, hospital stays not expected to span at least two midnights should generally be billed as outpatient hospital claims. From October 1, 2013, through September 30, 2015, 64,776 short-stay inpatient hospital claims were reviewed by the MACs over three rounds. Beginning on October 15, 2015, quality improvement organizations began conducting these reviews at the direction of CMS.

At the direction of CMS, MACs began conducting probe and educate reviews of home health agency claims on October 1, 2015, for episodes of care that occurred on or after August 1, 2015. Round 1 was completed as of September 30, 2016, and the second round began on December 15, 2016. The purpose of these reviews is to ensure that home health agencies understand the new patient certification requirements that became effective January 1, 2015. These requirements stipulate that the referring physician, also referred to as the ordering or referring provider, must certify a patient’s eligibility for home health services as a condition of payment. As part of the certification, the referring provider must document that a face-to-face patient encounter occurred within a certain time frame. In addition, the patient’s medical record must support the certification of eligibility.

MAC Officials State Their Provider Education Efforts Focus on Areas Vulnerable to Improper Billing; CMS Oversight and Requirements for These Efforts Are Limited

MAC officials state that their provider education department efforts focus on areas vulnerable to improper billing. We found that these efforts are subject to limited oversight by CMS. Additionally, CMS does not require MACs to educate referring providers on documentation requirements for DME and home health services.

MAC Officials State Their Provider Education Department Efforts Focus on Areas Vulnerable to Improper Billing

MAC officials told us that their provider education departments focus education on areas vulnerable to improper billing, including those they’ve identified and listed in their annual IPRS reports. There were 278 areas listed in the IPRS reports we reviewed, and based on our analysis, some of these areas, such as skilled nursing facilities, ambulance services, and blood glucose monitors, were identified by a majority of MACs. A detailed description of the problem areas may also be identified in these IPRS reports, as illustrated by the examples below.

Part A. A majority of Part A MACs reported claims from skilled nursing facilities and inpatient rehabilitation facilities as vulnerable to improper billing. Examples of reported problem areas within skilled nursing facilities included claims for individuals using an “ultrahigh” level of therapy and episodes of care greater than 90 days.

Part B. A majority of Part B MACs reported claims for evaluation and management and ambulance services as areas vulnerable to improper billing. Examples of reported problem areas within the evaluation and management category included the incorrect level of coding for office visits, hospital visits, emergency room visits, and home visits for assisted living and nursing homes.

DME. A majority of DME MACs reported claims for glucose monitors, urological supplies, continuous positive airway pressure (CPAP) devices, oxygen, wheelchair options and accessories, lower limb prosthetics, and immunosuppressive drugs as areas vulnerable to improper billing. An example of a reported problem area with oxygen billing was that the beneficiary medical record documentation did not provide support for symptoms that might be expected to improve with oxygen therapy.

HH+H. Half of the HH+H MACs reported claims for home health therapy services and home health or hospice stays that were longer than average as areas vulnerable to improper billing. An example of a reported problem area with home health therapy services included claims from home health providers reporting a high average number of therapy visits for their patients as compared to their peers within the state and the MAC’s jurisdiction.

CMS Collects Limited Information on MACs’ Provider Education Efforts Focused on Areas Vulnerable to Improper Billing

CMS collects limited information on MACs’ provider education department efforts that focus on areas vulnerable to improper billing. CMS officials told us that they oversee the extent to which MACs’ provider education department efforts focus on areas vulnerable to improper billing by reviewing MACs’ IPRS reports. Although the IPRS reports focus mainly on how the medical review departments will address the areas identified as vulnerable to improper billing, CMS’s instructions to the MACs state that they should also include information on related provider education department activities or provider education department referrals.

However, the IPRS reports we reviewed lacked specifics indicating how provider education department efforts focused on 74 percent of the 278 MAC-identified areas vulnerable to improper billing. We considered a provider education department effort to be specific if it included one or more of the following: the month, day, and year the event occurred or would occur; the type or number of providers attending; or a description of the event. As an example of a provider education department description that met our definition of ‘specific,’ one MAC reported its provider education department would conduct webinars focused on the top 5 to 10 denial reasons for oxygen equipment in the upcoming year. This MAC’s IPRS report in our analysis listed specific provider education department efforts for all areas vulnerable to improper billing. However, 74 percent of the areas vulnerable to improper billing listed in the 14 IPRS reports we reviewed lacked specifics—48 percent of the time the provider education department efforts listed were not specific and 26 percent of the time no provider education department efforts were included. As an example of a provider education department description that was not specific, one MAC reported that the medical review department would make provider referrals to its provider education department “as needed” for inpatient hospital and rehabilitation facilities admissions, but gave no additional detail (see fig. 3).

According to CMS officials, they do not require IPRS reports to have a certain level of specificity regarding how provider education department efforts focus on areas vulnerable to improper billing because they do not want to be overly prescriptive regarding MACs’ provider education department efforts. As a result, CMS receives limited and varying degrees of information on the extent to which provider education department efforts are focused on the MAC-identified areas vulnerable to improper billing. CMS’s collection of limited information is inconsistent with federal internal control standards related to information and communications, which state that management should use quality information to achieve the entity’s objectives—CMS’s objective in this instance being the education of providers about proper billing. Unless CMS requires sufficient MAC provider education department reporting, it cannot ensure that MACs’ provider education department efforts are focused on areas vulnerable to improper billing.

CMS Does Not Require MACs to Educate Referring Providers for Durable Medical Equipment and Home Health Services

CMS does not require A/B MACs to educate referring providers on documentation requirements for ordering DME and home health services because referring providers do not bill for any DME or home health services on these orders. DME suppliers and home health agencies are responsible for submitting a proper written order from the referring provider to receive payment, and DME and HH+H MACs are required to educate DME suppliers and home health agencies—but not the referring provider—on a proper written order. However, when a DME supplier or home health agency accepts a written order, its payment may be denied if the claim is reviewed and the referring provider’s medical record documentation does not support the supply or service provided. See figure 4 for an example in the case of DME.

Some MAC officials told us they have started working with other MACs voluntarily to provide education to referring providers regarding DME and home health services documentation requirements in some jurisdictions, although CMS has not specifically required this collaboration. As an example, officials from one DME MAC told us that they and three A/B MACs that operate within its jurisdiction co-hosted two webinars on documentation requirements when ordering durable medical equipment and prosthetics and orthotics in September 2015; these webinars focused on the medical records and orders that are part of the supplier requirement for documentation. However, this voluntary collaboration does not ensure that referring providers are always being educated. For example, two A/B MACs reported that they have done little collaboration with the HH+H MAC that serves their jurisdiction for referring providers on proper billing documentation for home health services. CMS officials stated that they have not explicitly required the MACs to work together on this activity because it has not risen to a level of significant concern.

If education were provided, officials from two DME MACs told us there would still be a lack of incentive for referring providers to bill properly for DME and home health services because they do not experience any repercussions for insufficient documentation—one type of improper billing. Instead, when DME or home health claims are denied due to insufficient documentation, from either the supplier or the referring provider, the DME or home health provider loses the payment, while the referring provider does not.

This education gap is problematic because insufficient documentation is the most common reason for improper payments for home health services and DME, which have high improper payment rates. As reported for fiscal year 2016, DME had a 46.3 percent improper payment rate with the Medicare program paying an estimated $3.7 billion improperly; home health services had a 42.0 percent improper payment rate with the program paying an estimated $7.7 billion improperly (see fig. 5.). Of these improper payment amounts, 81 percent and 96 percent were the result of insufficient documentation for DME and home health services, respectively. Although the DME improper payment rate has decreased somewhat in recent years, both the home health and DME programs’ improper payment rates remain higher than the overall Medicare fee-for- service improper payment rate of 11.0 percent.

Because referring physicians do not receive education from MACs for the required documentation to support referrals for DME and home health services, the risk is increased that DME suppliers or home health agencies will improperly submit claims with insufficient documentation from referring providers. Although both the A/B and DME MAC contracts contain a requirement for the MACs to share ideas and coordinate their efforts as necessary, they do not explicitly require collaboration between these MACs to address this education gap for referring providers. The absence of a requirement for MACs to educate referring providers about proper documentation for DME and home health claims is inconsistent with federal internal control standards, which state that in order to achieve an entity’s objectives, management should assign responsibility, and delegate authority. Without explicitly requiring that MACs educate referring providers, the billing errors that result from referring providers’ insufficient documentation may persist.

CMS Officials Consider Hospital Probe and Educate Reviews a Success, but Did Not Measure Effectiveness

Although CMS officials consider the MACs’ short-stay hospital probe and educate reviews to be a success, they did not measure the effectiveness of this new strategy in reducing improper billing. CMS officials consider the reviews to be a success based on feedback from providers who were happy with the education they received and based on the reduction in the number of providers from the first to third rounds who were billing and documenting claims improperly.

We found that the effectiveness of the MACs’ short-stay hospital probe and educate reviews cannot be confirmed because CMS did not establish performance metrics to determine whether the probe and educate reviews were effective in reducing improper billing. Although CMS stated the objective of the reviews was to determine the extent to which providers understood recent policy changes for certain services and were billing properly for those services, CMS officials told us they did not establish performance metrics that defined their objectives in measurable terms and would allow them to evaluate whether they met those objectives— for instance, specifying the percentage decrease they’d want to see in the number of providers reviewed from the first round to third rounds. This is inconsistent with federal internal control standards that specify management should define objectives in specific and measurable terms, establish appropriate performance measures for the defined objectives, and conduct ongoing monitoring to evaluate whether they are meeting those objectives.

We reviewed the data provided by the MACs to CMS about the inpatient short-stay probe and educate reviews and found that the reviews may not have been a clear success. For instance, the percentage of providers who continued to require review remained high throughout the three rounds—over 90 percent. Additionally, the percentage of claims denied in each round also remained high throughout the three rounds (see table 1). CMS officials told us that because providers billing properly were removed after each round, they could not determine how much the overall denial rate effectively decreased from the first to third rounds, noting that the decrease in the claims denial rate could be greater than results indicate. However, the number of providers removed after each round was small. It is too early to say whether the home health probe and educate reviews are successful because only one round of reviews had been completed at the time of our review. CMS officials told us they have not established specific performance metrics for the home health reviews either.

The probe and educate reviews are resource-intensive. Though their costs have not been quantified by CMS, the reviews require manual assessments of thousands of claims, as well as the offer of one-to-one education from the MACs to certain providers. The importance of measuring the effectiveness of these probe and educate reviews is highlighted by their resource-intensive nature, as well as by the fact that the percentage of providers requiring review and claims denied remained high throughout the three rounds of the probe and educate reviews of short inpatient hospital stays. Therefore, without performance metrics, CMS cannot determine whether future probe and educate reviews would be effective in reducing improper billing.

Conclusions

The MACs’ provider education departments play an important role in reducing the rate of improper payments by educating Medicare providers on coverage and payment policies so that they can bill properly. However, CMS has missed opportunities to improve the effectiveness and its oversight of those efforts. CMS needs sufficient reporting from the MACs to determine if their provider education department efforts are focusing on areas vulnerable to improper billing. Lack of detail in the MACs’ IPRS reporting provides CMS with insufficient information for oversight. Without sufficient reporting, CMS cannot assure that the MACs are focusing their provider education department efforts on reducing areas vulnerable to improper billing.

In order to reduce the high improper payment rates for home health and DME, education on proper documentation for providers who refer their patients for DME and home health services is necessary; however, MACs are not required to provide this education to the referring providers. To provide this education, collaboration is needed between the A/B MACs, which are the primary contacts for the referring providers, and the DME and HH+H MACs, which have expertise in the DME and home health billing areas. Without requiring MACs to work together to educate referring providers, CMS has little assurance that referring providers are being educated in order to help reduce improper billing in DME and home health services.

Finally, CMS has not determined the effectiveness of the probe and educate reviews. CMS does not have sufficient information to indicate whether the reviews help to reduce improper billing; establishing performance metrics would help CMS determine if the reviews are effective in doing so. Without performance metrics, little assurance exists that the probe and educate reviews are effective in reducing improper billing and whether they should be used for additional areas vulnerable to improper billing in the future.

Recommendations for Executive Action

To ensure MACs’ provider education efforts are focused on areas vulnerable to improper billing and to strengthen CMS’s oversight of those efforts, we recommend that CMS take the following three actions: 1. CMS should require sufficient detail in MAC reporting to allow CMS to determine the extent to which MACs’ provider education department efforts focus on areas identified as vulnerable to improper billing. 2. CMS should explicitly require that A/B, DME, and HH+H MACs work together to educate referring providers on documentation requirements for DME and home health services. 3. For any future probe and educate reviews, CMS should establish performance metrics that will help the agency determine the reviews’ effectiveness in reducing improper billing.

Agency Comments

We provided a draft of this product to HHS for comment. In its written comments, which are reprinted in appendix II, HHS concurred with our recommendations. HHS also provided technical comments, which we incorporated as appropriate. HHS acknowledged the role of referring providers in ensuring proper billing for Medicare services, stating it will ensure the MACs work together to educate referring providers on documentation requirements for DME and home health services. Further, HHS noted that it will work with the MACs on providing additional information related to their provider education department efforts. HHS also noted it is currently developing performance metrics to help measure the effectiveness of future probe and educate reviews.

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If you or your staff has any questions about this report, please contact me at (202) 512-7114 or kingk@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.

Appendix I: Medicare Administrative Contractor Jurisdictions

Appendix II: Comments from the Department of Health and Human Services

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Kathleen M. King, (202) 512-7114 or kingk@gao.gov.

Staff Acknowledgments

In addition to the contact named above, Lori Achman, Assistant Director; Teresa Tam, Analyst-in-Charge; Cathleen Hamann; Deborah Linares; Vikki Porter, and Jennifer Whitworth made key contributions to this report.