CMS FY 2013 Recovery Auditing Report to Congress Released

How CMS Continues to Mislead with Statistics

CMS continues to issue misleading and incomplete reports on the true condition of the RAC program. Click for a copy in PDF.

CMS continues to issue misleading and incomplete reports on the true condition of the RAC program. Click for a copy in PDF.

CMS posted their report to Congress on recovery auditing in Medicare for FY2013, including many tables, charts and limited explanations, plus a bevy of perhaps accurate but misleading figures and percentages, obviously intended to make CMS and the RACs look good, while avoiding the harsh reality of how broken the RAC program really is, and the enormous burden it places on the US healthcare system, today, September 29, 2014.

Entitled, “Recovery Auditing in Medicare for FY2013” the report attempts to declare both CMS and the RACs as heroes of the Medicare Trust Fund. While quoting dubious figures that only tell the story in that light, the report blasts providers by implying that they are both uncooperative and perhaps even devious, accusing them of either changing records after a denial is issued, and/or often only submitting complete records at the later levels of the appeals process.

How Many Denials Were Appealed?

Providers continue to be represented by CMS as filing few appeals, implying that RACs are indeed correct in the great majority of their denials, or why else would providers not appeal? On page 12 of the report, CMS claims that only  30.7% of denials were appealed at the first level. However, CMS later admits that “all levels of appeal” saw a much larger figure, with 51.3% appealed (1,632,658 denials, 836,849 appeals). Since an appeal must pass through Level 1 to get to any other level, I fail to understand how that could ever happen. Here’s the statement from page 12:


CMS strives to lower the appeal rate to decrease provider burden and administrative costs of the program. In FY 2013, providers initially appealed 500,629 claims, which constituted 30.7 percent of all claims with overpayment determinations. (Appendix K1). Throughout all levels of appeal, providers appealed 836, 849 claims. Of the total claims appealed, 151,645 claims were overturned with decisions in the provider’s favor (18.1 percent). Overall, only 9.3 percent of all Recovery Auditor determinations were challenged and later overturned on appeal in FY 2013 (see Appendix K5).

Misleading Percentages

You might understand CMS’s math if you glance at the tables in the appendices of the report – see page 45 in particular. CMS shows their math or at least the results that come out of their strange calculators, but I would argue that a different math should be used. CMS shows separate counts and percentages for the number of ALJ appeals that are remanded to the QIC, separate from the number that are overturned by the ALJ. If you combine the two figures – a sensible method of assessing the correctness of the denials in the first place – you get this result:

52.7% + 24.5% = 77.2%

Therefore, a total of 77% of all appeals that reached that level were said to be incorrect, for whatever reason, by the ALJs.  This *should* be a signal to CMS that something is wrong with the RAC process. But of course, CMS explains this away, subtlely, throughout the report, with constant jibes about how correct the RACs are, and how providers and the ALJs simply don’t follow the rules – or at least not the same rules that the hapless RACs are saddled with following.

Perhaps, instead, we should look at the overturn figures properly – by only counting the ones that have been decided, and not count the ones that are still in process? The obvious reason to count those not yet decided is simply to deflate the percentage of overturns. We don’t have published figures for what we really want to count, but we can still use what we have at hand.

Let’s use the number of appeals that CMS claims were “decided” at the first level of appeal, where all appeals must begin and enter the process. [Note: I find that number dubious, given that over 800,00 appeals now sit at level 3, but perhaps another 300,00 or so were filed in 2014?] Also, we should combine the number of claims overturned and the number of claims sent back down to a lower level, because the ALJ or DAB found fault with the lower level decision. If we do that, we find a FAR different figure for the number of denials” overturned”:

Total number of Appeals Decided = 500,629

Total number overturned or reversed = 172,160

Percentage Overturned or Reversed = 34%

Oh my! Of course, CMS would not want to submit such a number to Congress.

CMS Claims RACs Are Not to Blame

According to CMS’s logic, providers and the ALJs are to blame for the high rate of overturns, which CMS insists are inherently misguided or flatly “unfair.” See page 13 of the report, to view CMS logic used to make these points:

  • ALJs don’t have to play by the same rules as RACs – implying that the RACs are just fine, and that the Judges don’t understand what CMS really thinks.
  • Providers “change the claims” after a denial, applying modifiers and rebilling claims, in order to make them “payable.”
  • Providers often only give complete documentation late in the appeals process, despite multiple attempts by the RAC to get said documents, before they issue a denial.
  • RACs should not be held responsible for making “incorrect determinations” in these cases, since the RACs decide cases with a different set of rules, more to CMS’s liking.

Of course, all this can be viewed in the light of CMS fighting for its life, under increasing scrutiny of Congress, and now even it’s friends at the Citizens Against Government Waste (CAWG).

OMHA Delays “Exceed” 90 Days

In yet another smoke screen – I’d call it a prevarication but it’s actually accurate, in a way — CMS indicates that there is a delay in getting appeals settled at the ALJ level of appeal. On page 5, CMS phrases it all in understatement worthy of a DC politician being accused of wrongdoing:

Administrative Law Judge (ALJ):

ALJ appeals require a minimum amount in controversy (currently $140), and must be filed within 60 days of the reconsideration notice. Generally, ALJs must issue a decision, dismissal order, or remand to the QIC within 90 calendar days (if the ALJ does not act in a timely manner, the appellant may file a request for DAB review); however, due to increases in overall appeals filed, including increases in appeals of Recovery Auditor determinations, adjudication timeframes have generally been exceeding 90 calendar days.

(emphasis added)

CMS fails to mention that “exceeding 90 days” now equates to more like 900 days.  Is it a typo? I think not.

RAC Contract Extensions

Finally, after explaining the delay in issuing new RAC contracts – caused by someone else, so CMS is not really to blame, of course – there is mention of a 2-year contract extension/modification made to existing RAC contracts, for the purpose of “payment reconciliation.” All fine and good, but they then state that “…during this extension period, Recovery Auditors will not be able to review claims for improper payment during this time.”  So, not only is the statement redundant, it is utterly false.

Or are all these new Additional Documentation Requests (ADRs) and Automated denials coming from the RACs not authorized by CMS?

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