Diagnostics & Imaging Week Washington Editor

Keeping a lid on the Medicare budget by cutting down on fraud and improper payments is an ongoing job at the Centers for Medicare & Medicaid Services, which announced last week that a pilot program that ran from 2005 to this past March saved taxpayers almost $700 million over three years.

Congress, however, is not wholly supportive of the program, and hospitals, which have been the principal targets of the program, also have problems with recovery audit contractors (RACs). Makers of implantable cardioverter defibrillators (ICDs) may also want to track the program, given that the agency has reclaimed tens of millions of dollars for what it sees as unnecessary use of the devices.

RACs are paid a contingency fee, which is alleged to have led to abuses, but a spokesman for the American Hospital Association (AHA; Chicago) also says that while the fees are congressionally mandated, CMS does have some leeway that could tamp down on some of the alleged abuses.

According to CMS, the first overpayment notices will address only no-brainer billing issues, such as when "a healthcare provider charged Medicare for conducting three colonoscopies on the same patient on the same day" due to coding errors.

The statement notes that providers appealed about 14% of the determinations roughly one third of which were overturned and that the program "has cost only $.20 for each dollar collected." The agency also claims that the rate of erroneous payments has dropped from 14.2% in 1996 to 3.9% last year.

The June 2008 report on the program identifies at least one area of interest to device makers, stating that the agency has deemed medically unnecessary more than 2,200 installations of ICDs, which has led to the recovery of more than $64 million. However, the RAC review has also led to reimbursement to hospitals for claims that were underpaid to the tune of almost $38 million.

Don May, vice president for policy at AHA told Diagnostics & Imaging Week that "hospitals are committed to doing the best we can at ensuring our billing and coding are accurate" and that the association is of the opinion that because a number of appeals are still pending, "these numbers are not done moving yet."

"While there are overpayments, we often disagree with the findings," May said. He also said: "We don't think RACs are the best body to assess medical necessity," and added contingency fees may warp decision making when a claim appears to fall into a gray area. However, he acknowledged that CMS is going to review any new areas of interest on the parts of RACs before any such audits can be performed and that RACs will themselves be audited by an independent contractor.

However, May said that there is little to be gained by internalizing the audit program to CMS. "I think it's more important that the process is fair," he said, alleging "the RACs were abusive in a lot of their behavior."

"They were aggressively denying claims in the demonstration program," May contended, noting "there was a hospital in Florida that had a thousand medical records requested in one month."

As for whether RACs should be paid a flat fee, May said "we think there's something to that," in part because getting rid of the contingency fee would bring the focus onto "more than just those high-ticket items in inpatient care." He said AHA would like to see an equal incentive to look for all errors, not just errors in a hospital setting."

The amounts of the contingency fees were confidential in the demo program, but CMS "has said moving forward that it will release those fees," May said. All the same, AHA opposes the fees. "We are asking our friends in Congress to get rid of the contingency fee," May said, referring to H.R. 4105, the Medicare Recovery Audit Contractor Program Moratorium Act of 2007, which would do precisely that.

Jerry Walters, the director of the financial services group at CMS, told D&IW, "I can understand" the stories of abusive practices by RACS, "but I do not believe they're true."

Walters said the RACs had to bid for the percentage fees that they charge and that they are not paid for claims that are overturned. He also pointed out that the RACs are paid the same fee for finding instances of underpayment to hospitals, adding "that symmetry is very important."

The number one complaint from industry, Walters said, was "transparency."

"They would like to know what the contractors are looking at" during the course of the audits so that hospital administrators know where to focus their compliance efforts. He declined to address H.R. 4105, but said "I believe that the results of the pilot program speak for themselves."

CT energy may interact with devices

FDA published a public safety statement yesterday that some pacemakers, defibrillators, neurostimulators and infusion pumps may present a hazard when exposed to X-rays during computed tomography (CT) imaging sessions in a small percentage of cases.

The July 14 statement indicated that the problem has been discussed in the medical literature and in the MedSun reporting system. According to FDA, "it is possible that this interference is being reported more frequently now because of the increased utilization of CT, the higher dose-rate capability of newer CT machines, an increase in the number of patients with implanted and externally worn electronic medical devices, and better reporting systems."

Among the potential hazards are "generation of spurious signals, including cardiac defibrillation pulses," and resets or reprogramming of device settings. However the interaction can work both ways, possibly causing the CT procedure to miss signals or otherwise cause misinterpretation of those signals.

GHTF publishes diagnostics guidance

The Global Harmonization Task Force (GHTF) has published a guidance for classification of in-vitro diagnostics (IVD) for those who want to market internationally.

The guidance describes four categories of classification, from A to D, and states that when an IVD that falls into more than one group, the manufacturer should allocate the diagnostic to the higher-risk classification. The guidance also states that if the regulations of a particular nation indicate a lower classification than is suggested by the new guidance, "this may be unacceptable to other jurisdictions."

Among the diagnostics that would fall into the highest risk group of D are those that detect the human immunodeficiency virus and the human T-cell lymphotrophic virus, which can cause leukemia and lymphoma. IVDs that test for sexually transmitted diseases other than acquired immune deficiency syndrome, such as chlamydia, would fall into the second highest risk category, C, while hormone assays qualify for the next lower group.