HCFA's new hired guns: private billing auditors
The Health Care Financing Administration will hire private business and accounting firms to conduct billing audits and perform other anti-fraud activities once reserved for Medicare carriers and fiscal intermediaries, Health and Human Services Secretary Donna E. Shalala has announced.
The move was made possible by a new provision added to the Health Insurance Portability and Accountability Act of 1996, which gives HCFA both the authority to hire such contractors and to pay them using money from the Medicare Hospital Insurance Trust Fund. Until now, only insurance companies whose primary responsibility was processing Medicare claims have been allowed to conduct audits, medical reviews, and other anti-fraud activities.
The new regulation governing the hiring of private anti-fraud contractors appeared in the March 20 Federal Register (pages 13,590-13,608). According to the regulation, private contractors will provide Medicare with the following services:
s Medical reviews, to ensure that services billed to Medicare were medically necessary;
s cost report audits, to ensure that Medicare pays only for services and overhead costs that it is legally supposed to pay;
s secondary payer determinations, to ensure Medicare does not pay bills for Medicare beneficiaries that should be paid by another insurer;
s provider and beneficiary education about what can and cannot be billed to Medicare, and how to spot and report potential fraud and abuse;
s establishing a list of durable medical equipment, such as wheelchairs, that will require prior authorization before being billed to Medicare.
A source at HCFA says that since Shalala's announcement only days ago, the agency has already received inquiries from interested parties. And while HCFA isn't setting limits on what sort of organizations it will accept as anti-fraud contractors, it's likely that the mix will include accounting and even banking firms, as well as "other specialists in the business world."
Although it's not known how much contractors will be paid, HCFA says their payments won't be tied to how much revenue they generate.
Nancy-Ann DeParle, HCFA's administrator, says that she expects the competition among organizations for anti-fraud contracts will lead to "better results" for the agency. It might also lead to more zealous audits on the part of whatever private firm HCFA designates to conduct such audits, critics say.
"Contractors are going to have to believe that if they don't show results, they won't have their contracts renewed," says Sanford V. Teplitzky, JD, an attorney with Ober, Kaler, Grimes & Shriner in Baltimore. "In my view, there's going to have to be some pressure on them to find problems. Why else are they being hired?"
HCFA will consider comments on its proposed rule until 5 p.m., May 19. Written comments (one original and three copies) should be sent to: Health Care Financing Administration, Department of Health and Human Services, Attn: HCFA-7020-P, P.O. Box 26676, Baltimore, MD 21207-0519.
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