The Latest Development in Medicare Audits:
Supplemental Medical Review Contractor (“SMRC”) Audits

By Jessica L. Gustafson and Abby Pendleton, The Health Law Partners, P.C, Southfield, MI

Introduction

As healthcare providers and suppliers are very much aware, the Centers for Medicare & Medicaid Services (“CMS”) has adopted and implemented numerous Medicare auditing initiatives, each with a slightly different focus, and include the following:

• Comprehensive Error Rate Testing (“CERT”) audits to measure improper payments in the Medicare fee-for-service (“FFS”) program;¹

• Medicare Administrative Contractor (“MAC”) audits;

• Recovery audits (formerly known as Recovery Audit Contractor (“RAC”) audits) to identify and correct improper payments in the Medicare program;² and

• Zone Program Integrity Contractor (“ZPIC”) audits³ to prevent, detect and deter incidences of fraud and abuse in the Medicare programs (the benefit integrity functions of which to be rolled into the forthcoming Unified Program Integrity Contractor (“UPIC”) audits).⁴

Although this may seem to those in the healthcare provider and supplier community to be a sufficient number of auditing bodies protecting CMS from making improper payments (or assisting CMS to recover same),⁵ CMS recently has announced yet another “supplemental” Medicare auditing program: Supplemental Medical Review Contractor (“SMRC”) audits. Although CMS has been silent regarding the basis for its perceived need for an additional layer of auditing activity, CMS has contracted with StrategicHealthSolutions, LLC “to perform and/or provide support for a variety of tasks aimed at lowering the improper payment rates and increasing efficiencies of the medical review functions of the Medicare and Medicaid Programs.”⁶

SMRC Auditing Activity

SMRC audits have already begun, with providers and suppliers recently beginning to receive additional documentation requests from StrategicHealthSolutions, LLC over the past months. SMRC audits are being conducted on Part A, Part B and durable medical equipment (“DME”) providers and suppliers nationwide⁷ and are focused on vulnerabilities identified by data analysis, CERT audits and other sources (including professional organizations and federal oversight agencies). As of the present date, StrategicHealthSolutions, LLC’s website lists the following as areas of current medical review:

• Power Mobility Devices (focused on claims from those states not included in the Prior Authorization Demonstration program for power mobility devices (i.e., reviews will not focus on suppliers in CA, IL, MI, NY, NC, FL and TX));⁸
• E/M services (focused on codes 99214 and 99215);⁹
• Hyperbaric Oxygen Therapy services;
• Inpatient Rehabilitation Facility (“IRF”) services;
• Male Vacuum Erection Devices; and
• Transforaminal Epidural Injections.¹⁰

Note that the “Current Supplemental Medical Review Contractor Projects” page of the StrategicHealthSolutions, LLC website added IRF services and transforaminal epidural injections within the past few weeks. As it appears the areas of focus for SMRC medical review may be rapidly expanding, providers and suppliers ought to closely monitor the SMRC website for areas of audit focus.

In recent history, Part A inpatient hospital claims have been subject to aggressive auditing efforts, in particular by Recovery Auditors and Medicare Administrative Contractors.¹¹ It does not appear that SMRC audits will be seeking to duplicate these efforts, at least for now. However, given that SMRC audits are focusing medical review resources on Power Mobility Devices (another area of existing claims scrutiny notwithstanding SMRC audits);¹² hospitals and health systems may see Part A inpatient claim auditing by the SMRC at some point in the future.

Adding to the administrative burden faced by providers and suppliers already subject to significant auditing activity by numerous CMS contractors, StrategicHealthSolutions, LLC has advised that it is “not authorized to reimburse providers/suppliers for the cost of medical record duplication or mailing,”¹³ (in contrast to Recovery Auditors, which reimburse providers and suppliers for the cost of medical record duplication for certain claims),¹⁴ and there is no indication that SMRC audits will take into consideration the additional documentation limits in place for Recovery Audits in particular.¹⁵ Providers and suppliers are given the option to submit requested medical records via Electronic Submission of Medical Documentation (“esMD”),¹⁶ by fax or by mail. If requested records are submitted via mail on CD, StrategicHealthSolutions, LLC has requested that the documentation be provided in PDF format on a password-protected CD. Providers and suppliers are specifically instructed not to enclose the password to access the CD in the same mailing as the CD itself. Therefore, as a practical matter, providers and suppliers may choose against this method of documentation submission, as it seems that issues would undoubtedly arise with packages becoming separated, impacting the SMRC’s ability to access the information and creating a potential additional layer of administrative burden if this information needs to be re-submitted.¹⁷

Conclusion

All providers and suppliers (not just hospitals and health systems) must maintain a continued focus on compliance and ensure that services provided are medically necessary and appropriately documented pursuant to Medicare guidelines. The SMRC audit program is the latest addition to an already robust auditing environment. In addition to monitoring the yearly OIG Work Plan, CMS guidance materials, and the Recovery Auditors’ websites, providers and suppliers (and their legal counsel) are well advised to add the SMRC website to their list of resources advising them of the areas of CMS medical review focus and take steps to monitor these areas for compliance.

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