Auditors 'nitpick' providers

ALBANY, N.Y. - A private company hired by CMS to perform post-payment medical reviews of DME providers in New York began sending out "overpayment demand letters" March 19. Previously, Connelly Consulting, the Recovery Audit Contractor (RAC) for New York, had sent out letters to targeted providers requesting medical records and documentation. The whole process has made providers sick to their stomachs. The reason: CMS encourages the RACs to "nitpick," they say, by paying them contingency fees for identifying and recouping overpayments--$12 million in fiscal year 2006. "In the past, auditors would ask for 100 files then get back to you a month or two later and say, 'You have a problem with this and this,' but if you were more or less in compliance, they moved on and didn't bother you anymore," said one provider who's being audited. "They're trying to put small providers out of business." As part of its demonstration, CMS also has RACs in California (PRG-Schultz) and Florida (Health Data Insights). For fiscal year 2006, the RACs helped find and collect $68.6 million in overpayments and put an expected $232 million "in the queue." (They found and returned $2.9 million in underpayments.) Providers question the fairness of the audits. Let's face it, they say, how many providers have 100% bulletproof medical records? "Mistakes happen," said Jim Leedom, owner of Health Depot in California. "You can't look at every claim that passes through your store--you have to give some responsibility to your billers. You can only hope they're doing what you trained them to do." Vince DeStigter, CEO of Western Healthcare Industries in California, advises providers to fight the audits. Last fall, PRG-Schultz demanded Western Healthcare pay back $21,000, and he won back every dollar on appeal. "In each case, they were wrong," DeStigter said. "It was a ludicrous waste of money." CMS ends the RAC demonstration March 2008 and reports findings to Congress September 2008. But CMS may not stop there. In a status document released last fall, the agency stated: "Preliminary results indicate that the use of recovery auditors is a viable and useful tool for ensuring accurate payments."