The Problems with Audits

Government waste is not something many tax payers favor. CMS made the Recovery Audit Contractor (RAC) program permanent in 2010, to recoup improper fee-for-service payments to health care providers.

While the concept may be sound, radiology practices are finding the majority of audits are improper and the multiple government audit programs lack coordination. At Congress’ request, the Government Accountability Office got involved last year. The office is analyzing what’s going on among the various audit programs, the alignment mechanisms, CMS supervision, and whether the methods are statistically valid, said Barbara Rubel, senior vice president of marketing and client services at Management Services Network, a medical billing company serving clients in 26 states. She worked with the Radiology Business Management Association (RBMA) to recommend to the GAO that the program be reformed.

“Multiple entities are now auditing the same or similar data elements,” said Rubel. “We spend an enormous amount of time researching issues that at the end of the day aren’t [valid] issues of concern.”

The time and resources practices expend on audits is substantial, said Doug Kraus, chief financial officer of South Texas Radiology Group in San Antonio. Kraus said over the past two years, his 60-person radiology practice received 50 RAC audits, plus another 10 Comprehensive Error Testing (CERT) Program letters in one year. He’s not sure if the volume varies by RAC auditor or practice, but he suspects that radiology practices with larger volumes of work would have more audits.

While RAC audit issues are first vetted by CMS, one problem is that the auditors may not have the proper understanding of radiology issues to proceed properly.

As an example, Kraus mentioned the place of service issue. CMS asked RAC auditors to find providers who were billing claims with a non-facility place of service, when it should have been facility-based (the payment rate in a non-facility location is higher).

“In our case, the contractor didn’t realize that in a facility setting you can have three place of service codes,” Kraus said. “None of those codes result in any payment differential. They all pay the same. The contractor began making a distinction between ER and hospital inpatient or outpatient, as if there were a payment implication.” Kraus had to involve the RBMA and Medical Group Management Association (MGMA) to stop the contractor for pursuing it further. “They could have buried radiology groups with letters.”

After several years dealing with these, Kraus realized that probably 95 percent of their RAC audits resulted in negative findings, because the auditor did not understand the nuances of radiology billing.

“But you have to go through the audit to prove that to them,” Kraus said. “You have to put a lot of pressure on them before they realize they’re misguided.”

He believes that radiology has a lot more nuances involved with the regulatory aspect of billing, facility and technical, and all those issues culminate in an atmosphere that is not easily understood. “That may be biased,” he said, “but the number of issues that have to be dealt with are fairly complex.”

Michael Mabry, executive director of the RBMA, added that auditors may not understand that radiology is practiced in a different way than primary care. “An auditor may apply a ’one size fits all’ approach, but what works for a family practitioner won’t work for a radiologist.”

Mabry added that imaging is a high profile part of Medicare expenditures. Over recent years, there’s been a lot of pressure on regulators and policymakers to curb the growth and expenditures of procedures, especially for radiology.
Another issue of concern is CERT audits. “I believe that the CERT audit requests are putting radiologists in a very difficult position,” Kraus said. “CERT audit contractors are asking radiology groups to… provide medical records from the referring physician, to basically substantiate the medical necessity.”

He said his group received a request for an attestation statement that the record was from a certain referring physician, because the records didn’t have a legible signature.

“That’s inappropriate all the way around,” said Rubel. “The radiologist is providing professional interpretation and maybe global interpretation. To provide documentation for a referring [physician], that’s not the purview of a radiologist.”

The issue of medical necessity is different for a radiologist, who is not usually the treating physician. Rubel noted that radiologists - like pathologists and anesthesiologists - provide a service to the ordering or referring physician, so it should not be incumbent upon a radiologist to prove medical necessity with the records.

Legal theory argues waiver of liability and provider without fault, said Jessica Gustafson, attorney with The Health Law Partners in Michigan. “If a provider did not know or have reason to know that payment would not be made, even if there’s an overpayment, then there shouldn’t be a collection of the overpayment,” she said. For radiologists, that means if you’re providing a service ordered by a different physician, then you can argue that there’s no reason to withhold payment because of medical necessity.

It’s worth noting that RAC auditors are paid on a contingency basis, which Rubel believes contributes to the problem. “They’re motivated to find money,” she said, whereas some Medicare auditors are not. Zone Program Integrity Contractors, which identify fraud and Medicare abuse, are paid performance bonuses, but not on contingency. CERT auditors are paid through Medicare.