Nominee Tom Price Wants Shift Away from Medical Necessity Audits To Anti-Fraud Audits

CMS should focus its billing audits less on verifying medical necessity and more on rooting out blatant fraud, the agency’s likely next secretary said Tuesday.

Rep. Tom Price, R-Ga., made statements to that affect while appearing before the Senate Finance Committee, which will soon vote on sending him to be considered by the full Senate for confirmation as the Trump administration’s new HHS secretary. He was replying to questioning from Sen. Orrin Hatch, R-Utah, about how the department can do more to protect Medicare and Medicaid from outright fraud and those who intentionally scam the program.

According to Price, regulators should work harder to monitor billing by “bad actors in real time,” apparently referring to data mining practices now being used by the CMS to identify suspicious billing practices before payments are made – prepayment audits.

This kind of real-time scrutiny, Price added, should be emphasized “instead of trying to determine whether every single incident of care is necessary.” That was a not subtle direct reference to CMS’ longstanding policies where auditors review medical records to evaluate medical necessity, which is hugely subjective, and leads to literally billions of dollars in erroneous denials and recoupments.

While RACs and other contracted auditors exist by statutes, and appear to deliver great sums of money to CMS – at least according to their carefully crafted reports to Congress on the subject – and therefore even more are not likely to just suddenly disappear under the new administration, the Nominee appears to be aiming to at least devote more resources to data mining and predictive analytics, and to more directly focus on those who likely intend to defraud the government, rather than those who simply bill in error or via misunderstanding of the whole process.

[Ed. Note: Would that he would choose to scrap the whole system and start over, but I suppose that’s too much to hope for?]

Since Price is a nonpracticing orthopedic surgeon and well known for opposing government control of physician charges and reimbursements, his comments about not focusing on medical necessity are not surprising and at least refreshing.

Many providers, both doctors and hospitals – but most often hospitals, since “that’s where the money is” – are frequently accused of billing for excessive or unnecessary care, or at least not explaining why in their documentation, leading to recoupment demands and even False Claims Act (FCA) cases. If he becomes the new Secretary, Price would be in a position to at least relax such audits and have more empathy for providers who appeal the results of these audits, perhaps even be more forgiving about what the more rabid auditors and regulators see as “material billing errors,” and hence grounds for action under the FCA.

Providers just may find a friend in Secretary Tom Price.

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