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Steve Stang spoke before the United States Senate Special Committee on Aging in a roundtable discussion on how to strengthen the Medicare program by improving the post-payment claim audit process and reduce improper payments to providers.


CLA Advocates for Health Care Providers Before U.S. Senate

  • 8/5/2014

On July 9, 2014, Steve Stang was asked by the United States Senate Special Committee on Aging to represent the AICPA and speak at a roundtable discussion on how to strengthen the Medicare program by improving audits and reducing improper payment rates.

The committee tackles issues which potentially threaten the viability of the Medicare program, so the testimony addressed the Centers for Medicare and Medicaid Services' (CMS) approximate $50 billion in improper payments reported by the Government Accountability Office (GAO). Participants at the roundtable also included representatives from the American Hospital Association, one of the four recovery audit contractor (RAC) auditors, a large integrated health system, one member of the Medical Technology Assessment Committee, and other provider representatives.

Stang spoke to Congress on how RAC audits differ from audits performed under Governmental Auditing Standards. His opening comments addressed many concerns such as:

  • The contingent fees recovery auditors receive for their audit services inherently compromises the recovery auditor’s independence.
  • While recovery auditors assess inherent risk through comprehensive error rate testing (CERT) analysis, they do not appear to specifically consider control risks at each individual provider when designing their audits.
  • The CMS statement of work expressly prohibits recovery auditors from providing provider education. Thus, recovery auditors are not allowed to communicate findings and recommendations to improve the internal control environment. This removes the opportunity for critical education to the provider which could assist them in strengthening internal controls, and to reduce the likelihood of future billing errors.
  • All audits have an inherent level of variability that cannot be eliminated by the application of additional auditing procedures. Increasing the volume of Medicare audit activity will likely not significantly lower the rate of improper payment rates.

“Provider education is critical to eliminating errors before they happen. We need the recovery auditors to communicate their knowledge directly to the individual providers,” says Stang. “Sharing best practices could significantly improve the controls over the providers billing process.”

On the day of the roundtable, the United States Special Committee on Aging also issued a staff report titled Improving Audits: How We Can Strengthen the Medicare Program for Future Generations that explores the issues in depth and includes recommendations.

The United States Special Committee on Aging issued a staff report that included eight recommendations:

  1. The CMS should consolidate post-payment review activities as much as possible.
  2. The CMS should consider financial incentives aimed more at the reduction of improper payment rates in a given contractor’s jurisdiction, rather than solely on the amount of improper payments identified.
  3. The CMS should assess the reliability of data in the RAC data warehouse and correct any errors.
  4. Each pre-payment review program should have defined objective and a scope of operation related to the reduction of improper payments, including how they will work together to achieve the goal.
  5. The CMS should strengthen its review of contractor error rate reduction plans to ensure they target all CERT-identified problem areas in accordance with the Office of Inspector General's (OIG) recommendation.
  6. The CMS should ensure that local coverage decisions target high-cost, highly utilized services or items and do not create inconsistent access to care for beneficiaries.
  7. The CMS should determine the effectiveness of the pre-payment review processes in terms of reducing improper payments.
  8. The CMS should emphasize provider education as a means of reducing improper payments, and provide a way to systematically gather feedback from stakeholders to understand whether educational efforts are reaching their intended audiences.