A 43-page congressional report from the Senate Special Committee on Aging offers an assessment of the Centers for Medicare and Medicaid Service’s (CMS) attempts to curb improper payments. According to a news report from the American Physical Therapy Association (APTA), the report notes that congress calls the organization’s attempt to curb improper payments mostly ineffective “pay and chase policies” that provide no reason for recovery audit contractors (RACs) to stop improper payments before they occur. The bipartisan report (.pdf) argues that the RAC incentive structure could possibly be viewed as an incentive to “keep improper payment rates high.”

The report notes that CMS has experienced an increase of just over 10% of the $604 billion spent in 2013, which is the “highest improper payment rate of the past 5 years.” The committee report says that while RACs were established to identify overpayments and underpayments, part of the undertaking of the contractors was to take action to reduce future improper payments, as indicated on the APTA news report. However, the way RACs are paid provides contingency fees for the number of improper claims identified, with rates ranging from 9% to 12.5%.

The findings of the committee also include an acknowledgement that CMS “does have a number of prepayment checks, or edits in the system which automatically deny payments that appear to be improper,” and the agency “should be congratulated on the development of prepayment review systems like the National Correct Coding Initiative and Medically Unlikely Edits,” according to the APTA news report.

Committee staff recommendations include the establishment of financial incentives for the reduction of improper payment rates rather than an exclusive focus on the identification of improper payments made. The APTA news report also noted that the recommendations also address the need for CMS to better define scopes and objectives of systems focused on improper payments and to better educate providers on improper payments.

[Source: APTA]