CMS expands contractors' claims denial authority

The Centers for Medicare & Medicaid Services broadened contractors' discretionary authority to deny claims related to other denials stemming from prepayment or post-payment review, JDSupra Business Advisor reported. And contractors need not make additional documentation requests (ADR) for related claims before automatically denying them, according to a newly-edited section of the Program Integrity Manual.

Effective on March 6, this change affects Medicare administrative contractors (MAC), recovery auditors (RAC) and zone program integrity contractors (ZPIC).

Claims are considered related if documentation for one can be used to validate another. CMS provides two examples: If documentation shows a claim for inpatient care is not medically necessary, then the corresponding physician claim may be denied as related. Or if documentation doesn't support the necessity of a claim for a diagnostic test, then contractors may deny payment for the test's professional component.

Though these examples involve physician claims, CMS emphasized that related claim denials are possible for other healthcare services. These may include skilled nursing facility care, home healthcare, hospice services and medical equipment rental, the article noted.

A spike in appeal requests may follow automatic denial of related claims, compounding the problem of an already-overloaded Medicare appeals system. The Office of Medicare Hearings and Appeals had a backlog of 357,000 pending beneficiary appeal requests as of January. Efforts to reduce this inventory led the government to announce a long-term suspension of work on provider appeals, as FierceHealthPayer reported.

New waves of RAC denials may not be well met by hospitals, as the American Hospital Association previously criticized RACs for making "excessive inappropriate denials." Further, hospitals appealed nearly 25 percent of all RAC denials between 2010 and 2011, and 71 percent of them got reversed, as FierceHealthFinance noted.

Finally, the Government Accountability Office found CMS could do a better job overseeing the performance of its ZPICs, since Medicare's complexity and scope make it a high-risk fraud target. Another GAO report faulted CMS and its RACs for letting improper payments persist.

For more:
- here's the JDSupra article

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