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California Hospital Association questions CMS numbers from demonstration project

Recovery Auditor Report, September 18, 2008

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As we reported in the last edition of The RAC Report, CMS released its “Summary Evaluation Report” on the RAC demonstration project, where it said it identified $992.7 million in overpayments. We shared with you two of the CHA’s main concerns in its July memorandum to CMS.

Here are two more:

• CMS states that only 4.6 percent of total funds collected have been overturned as the result of appeals. This assertion is premature. At the time of the report, millions of dollars in claims were still pending decisions at various levels of appeals. The appeals process can take as long as two to three years to achieve resolution. Based on our experience thus far, we anticipate that many of these appeals will ultimately be decided in favor of the provider. The amount of reimbursement that will be returned to providers will consequently grow steadily over the next two to three years.
• The net amount of recovered funds will also be reduced by re-billing certain claims. Guidance for re-billing of certain one-day stays as observation was not provided until April of this year. As a result, these outstanding claims are not reflected in the report.

Regarding these concerns, Rep. Lois Capps, D-California, wrote a letter to Tim Hill, Office of Financial Management director at CMS, September 5 asking for a response to concerns such as these of the CHA. Capps wrote he is concerned with what the CHA calls a lack of communication between CMS and providers during the demonstration project. Capps asked Hill to respond by September 22.

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