Medicare whistleblowers under attack

Monday, November 12, 2007

Medicare whistleblowers under attack

A day after legislation was introduced in the House calling for a moratorium on a controversial Medicare auditing program, the Atlanta-based company at the center of the California fight came out swinging. PRG-Schultz International officials, breaking their silence Friday for the first time since the controversy erupted this summer, disputed charges that it is mishandling the audits. They said that millions of dollars in overcharges they have identified at rehabilitation hospitals are returning money to the Medicare program just as Congress intended – and that only a fraction of its determinations are being overturned on appeal. Even so, they said the company has voluntarily agreed to forgo commissions that it is entitled to under its contract on decisions that are later overturned on appeal.

"They believe we are bounty hunters," N. Lee White, who heads U.S operations for PRG-Shultz International, said of California lawmakers and the California Hospital Association. "I don't appreciate the characterization."

California House members, prodded on the hospital association, have complained about the targeting of rehabilitation hospitals treating elderly patients recovering from knee and hip replacement surgery. More than 90 percent of those claims have been rejected by the auditors on grounds that they are not medically necessary. Auditor decisions have led to millions of dollars being withdrawn from the hospitals, putting some of them in financial jeopardy and altering treatment decisions for future patients.

On Thursday, Reps. Lois Capps, D-Santa Barbara, and Devin Nunes, R-Visalia, introduced a bill that would halt the program for a year while it is studied more deeply by CMS – the Centers for Medicare and Medicaid Services – which oversees it, and by the Government Accountability Office, the auditing arm of Congress. The two lawmakers charged that CMS has failed to answer questions about the program. The agency ordered a "pause" in PRG-Schultz's review of rehabilitation hospitals because of the concerns, but the lawmakers were unable this week to find out if the auditing has resumed.

White said the pause is still in effect, meaning that it has been extended longer than the month that was initially envisioned. The fact that the rejection rate has been so high, he said, is a reflection of how patients are being unnecessarily directed into the high-cost rehabilitation hospitals, taking money out of the Medicare program that otherwise would be going to serve other patients. But White noted that many of the 85 or so rehabilitation hospitals whose claims have been reviewed have had no rejections. "This implies that there are others who are doing it disproportionately wrong," he said. "Our charge is to find the people who have overcharged for whatever reason and recoup the money."

White also disputed critics' charges that it is the only for-profit company doing the audits. PRG-Schultz advertises itself as the largest recovery auditing company in the world, and White said it has many other government agencies and large companies among its client list. "We are a serious company, and we take this seriously," he said. The auditing program is part of a pilot project authorized by Congress that began in 2005 in California, Florida and New York. PRG-Schultz is the contractor selected for California, and it hopes to expand its work to other states when the program begins to expand nationally next year. The program was intended to help control skyrocketing Medicare costs by adding another tool to check for claims errors.

"To date, more than $230 million in overpayments to health care providers have been found in California alone," according to a recent handout the company said was distributed to California lawmakers. One criticism of the program is that it uses "recovery auditors" who are paid commissions. The hospital association said PRG-Schultz receives 25 to 30 cents on every dollar it recoups. In a two-hour meeting with McClatchy Newspapers on Friday, White declined to confirm that rate but didn't dispute it, either.

White acknowledged that auditors have focused heavily on rehabilitation hospitals' work with knee and hip replacement patients. He said that it is examining these claims because the GAO had identified the area as one likely to involve overcharges. "Although some joint replacement patients may need admissions to an inpatient rehabilitation facility, our analysis showed that few of these patients had comorbidities that suggested a possible need for the intensity of services offered by an IRF," the GAO said in an April 2005 report. Comorbidities are medical conditions in addition to the surgery that could complicate a patient's recovery. Because rehabilitation hospitals are prepared to handle the most needy of patients, their rates are much higher than alternative facilities such as nursing homes.

"The issue is not whether a joint replacement patient needs rehabilitation," White said. "It's the level of care needed. The issue is what is medically necessary for that patient."

Capps said in a statement Friday that she and Nunes introduced their bill because the auditing program was hurting health care for the elderly and the Centers for Medicare and Medicaid Services was refusing to answer questions about it. "I'm as concerned about ending Medicare fraud as anyone, but I'm also concerned when a poorly managed government program is running quality providers like the Santa Barbara Rehabilitation Institute out of business for no good reason," she said. Jan Emerson, spokeswoman for the hospital association, said, "We stand by our previously expressed concerns."