The Centers for Medicare and Medicaid Services (CMS), a division of the Department of Health and Human Services (HHS), is responsible for administering the Medicare program. CMS has many roles, which include protecting the Medicare Trust Fund, reporting and correcting improper payments, and targeting healthcare fraud. To complete its numerous statutory requirements, CMS has established the Medicare Review and Education Program. Under this program, it uses a variety of contractors to complete medical and improper payment reviews. Targeted probe and educate (TPE) reviews, a major part of the CMS Medicare and Review and Education Program, combine claim reviews and provider education. As part of those reviews, CMS permits Medicare Administrative Contractors (MACs) to exercise wide discretion in determining the design and scope of TPE audits; the percentage decrease in billing errors required to be excused from subsequent rounds of reviews; and the benchmarks for measuring the program’s success. Each MAC independently determines those areas most vulnerable to improper payments.
Although the TPEs are intended to improve claim accuracy, their definition of claim types most vulnerable to improper payments has significant consequences for providers that are difficult to overturn. Rather than focusing appeals of MAC decisions on individual claim denials, a broader attack on the lack of oversight of MACs by CMS and HHS as a whole would be more effective. This article asserts a basis for challenging targeted probe and educate reviews by arguing that the MACs’ wide discretion to design, implement, and define the metrics of the program’s success is inconsistent with CMS’s statutory duty to oversee its provider education program.
The duties and scope of review conducted by Medicare contractors have expanded. Originally, when the process was implemented, TPE reviews were limited to home health providers and short stay hospital claims. Over time, the scope of reviews has expanded to the point where reviews now cover all Medicare services and items. The TPE review process is intended to improve the accuracy of providers’ billing and coding, through a combined claims review and education process. However, a provider’s failure to achieve a reduction in the percentage of billing errors defined by the MAC can result in administrative penalties that include pre-payment review and revocation of participation in the Medicare program.
TPE audits involve up to three rounds of review conducted by a MAC. The process may be conducted as either a pre-payment or post-payment review of a sample of twenty to forty claims. At the end of each round of reviews, providers’ billing performance is re-evaluated to determine whether their error rate has been reduced to meet the benchmark set by the MAC. A subsequent increase in their error rate above the MAC-determined acceptable rate will result in further reviews. Providers who are not compliant after three reviews are referred to CMS for further action.
The strategy currently taken to overturn adverse outcomes of the reviews takes two forms: an appeal of individual claims, or, where extrapolation of the error rate has occurred, an appeal of the individual sampling amounts to either require recalculation of the error rate or to require readjustment of the overpayment. However, the timeline for appeals of denied claims, even if pursued on an expedited basis, may not be concluded prior to administrative penalties being imposed. Additionally, there are certain areas where no appeal is permitted: the Final Results letter issued by the MAC at the end of each round of reviews, and the decision by CMS to impose pre-payment review of provider claims or revoke provider participation in Medicare. The structure of the TPE review program presents an opportunity for another strategy for appealing adverse outcomes. Challenging CMS’s lack of oversight of its MACs is an alternate strategy with potential to be more effective than appealing individual claims denials.
Although CMS has stated in a frequently asked questions (FAQ) fact sheet that favorable outcomes will be considered after referral of the provider for further action, where pre-payment review has been put in place or revocation of participation in Medicare has already occurred, there is no recognized right of appeal, and no CMS regulation or policy that provides otherwise. A provider placed on pre-payment review will be reassessed by the MAC on a quarterly basis to determine if the provider’s behavior has improved sufficiently. There is no defined standard for measuring the provider’s improvement. Revocation of a provider’s participation from the Medicare program can only be reviewed after one year from its imposition, and it can extend as long as ten years, depending on the severity of the offense. After the revocation period has ended, the provider is required to reapply to the program.
By law, the Secretary of HHS is required to provide effective oversight of its contractors’ TPE programs. The Secretary’s lack of oversight of MACs’ provider education efforts, and the manner in which MACs identify risks vulnerable to improper billing, falls short of its duties.