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Legislators, hospital officials move to stop controversial Medicare auditing program

Patient Financial Services Weekly Advisor, November 30, 2007

An auditor denies a Medicare claim by a hospital. The auditor gets money off the denial.

The pattern has drawn the ire of hospital officials in California, Florida and New York who claim the process is marred by self-motivated auditors, The Sacramento Bee reports.

And now, officials are supporting legislation by California lawmakers that would halt the auditing program for a year in order to investigate. The commission-based program is on an experimental basis. It began two years ago and is expected to expand to 20 states (from three) by March.

"We'd like to see this (program) scaled back substantially," Don May, the American Hospital Association's vice president for policy, told The Sacramento Bee.

May said recovery auditing - where auditors net a percentage of the money they recover for the Government on denied claims - "sets some incentives for these auditors to be overly aggressive and to make questionable decisions in their favor of denying claims."

The company hired by the Government, Atlanta-based PRG-Schultz International, defended its practice, saying it is simply following the rules of the Centers for Medicare & Medicaid Services.

"Our job is to review claims and determine if patients got the right service, not whether they needed services," N. Lee White, executive vice president of operations for the auditing company, told The Bee.

To read the full story in The Sacramento Bee, click here.

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