Life's Constants

For years, there has been a debate about the three constants of life. The main two, death and taxes, are universally accepted, but the third has always been a matter of contention. I believe, after much thought, research and soul-searching, that I have identified the third as Medicare audits.

While there have always been audits, lately they have been increasing in frequency and intensity. Let's look at two types of audits, the CERT (Comprehensive Error Rate Testing) and the RAC (Recovery Audit Contractor) audits. These are two very different kinds of audits designed to achieve very different results. In fact, an argument could be made that one could be used to “feed” the other as you will see.

The CERT audit has been around since 1996, although not in its present form. It was initially designed to measure the overall FFS (fee for service) error rate for carriers, DMERCs, fiscal intermediaries and quality improvement organizations. Then CMS decided to audit these entities individually for compliance error rates and paid claim error rates, and published its first findings in 2003.

The CERT audits randomly select thousands of claims a year to check for provider compliance and payment errors. While the audit is not itself designed to detect fraud, it is able to identify billing patterns that could indicate fraudulent behavior. It has also been found useful in determining fraudulent behavior in cases where providers can't be located after medical records have been requested. In such instances, a lack of a response causes a CERT “no documentation” error.

In the CERT May 2007 report, which looked at 144,345 claims in the 12-month period ending Sept. 30, 2006, audits determined that the national payment error rate is 4.2 percent. You might think that percentage is so small that it could not be significant, but in this case, 4.2 percent equates to improper payments in the amount of $10.4 billion. Now that is a very significant number. When you look at only the DMERCs' total overpayment of $900 million, or 10 percent of the entire FFS amount, you can easily see why these error rates are being monitored so closely.

The top error for DME was “no documentation.” Three-quarters of all FFS no-documentation errors came from DME providers, and of that number, the majority came from Florida. Most of the DME claims scored this error because the supplier was unreachable after the company's claims were sampled for a CERT audit.