The U.S. Department of Health and Human Services (HHS) is putting forth stricter interventions and penalties aimed at curbing acts of careless billing by physicians it refers to as “recalcitrant providers.” Webster’s defines recalcitrant as “obstinately defiant of authority or restraint…difficult to manage or operate.” According to Medicare, these “recalcitrants” are providers who routinely and repeatedly overcharge for services billed through Medicare, despite proper training on how to bill appropriately for these services.1
Medicare has long battled the issue of finding and curbing overcharging and overpayment. CMS estimates that such defiance accounts for up to $6 billion a year in unnecessary Medicare costs, which makes up about 10% of all physician fee payments, given the fact that total Medicare Part B payments are about $65 billion a year.2
Medicare has systems in place to prevent, detect, and/or mitigate improper payments, whether they result from mistakes or from intentional fraud. In 2011, CMS’ Center for Program Integrity implemented sophisticated technology, called the Fraud Prevention System (FPS), which uses predictive analytics to detect provider irregularities warranting further inspection. According to their 2012 report, the FPS generated 536 new investigations, assisted in providing additional information for 511 active investigations, and initiated thousands of verification interviews of beneficiaries and providers to validate the legitimate receipt of services and items. The center estimates that in the first year of this program, FPS prevented about $115 million in payments.3
So what is Medicare’s response to providers who are identified as outliers? For overpayments from mistakes, CMS generally aims to recover the overpayments and educate the providers. Tactics range from educational letters and phone calls to on-site reviews and “prepayment medical reviews.” For fraud, on the other hand, Medicare (obviously) pursues more disciplinary sanctions, including criminal or civil penalties.
A New Paradigm
Now CMS is stepping up its expectations of provider accountability, adding heftier penalties for infractions, including higher financial penalties and even expulsion from Medicare, Medicaid, and other federal programs. In addition to these disciplinary actions, the agency plans to utilize recently changed laws to maximize public transparency around provider billing practices.
As of March 2014, Medicare will be able to publicly report all federal payments that have been paid out to individual providers. Although it has not yet disclosed how or when these will be reported, CMS now has the authority, for the first time since 1979, to display this information publicly. The history on this topic is that a federal district judge in Florida in 1979 prohibited the disclosure of individual payments to physicians, based on the contention that such disclosure would be an invasion of physician privacy. This longstanding mandate, which was reversed in May 2012, now allows Medicare to weigh the risks and benefits of individual requests for information on charges/payments by individual physicians. According to a New York Times article, Medicare is now being pressured by advocacy groups (insurers, employers, consumers) to release as much of the data as possible, to aid in data dissection and analysis and prompt early identification of abusive providers.4
Understandably, many physician advocacy groups, such as the American Medical Association, are concerned that such unfiltered access to this raw data may lead to inaccurate and unnecessary conclusions about physician practice and billing patterns.