Medicare Audits at California Rehab Hospitals Suspended
CMS notified California hospitals on Wednesday that it temporarily has suspended PRG-Schultz International, an auditor that has come under scrutiny from hospitals and elected officials for its reversal of tens of millions of dollars in Medicare claims, the Sacramento Bee reports (Whitney, Sacramento Bee, 9/27).
Under a contract with CMS, PRG-Schultz reviews Medicare claims submitted by hospitals to help root out improper payments. In 2005, the practice began as a pilot program in California, Florida and New York and plans to become permanent in all 50 states by 2010.
Government records show that PRG-Schultz has rejected about $100 million in claims since its contract began (California Healthline, 9/17).
Patricia Blaisdell, vice president of medical rehabilitation services for the California Hospital Association, said that PRG-Schultz is "denying cases that were appropriate, and it will cause a hardship on providers and create a lack of access for patients."
Blaisdell said that the suspension is expected to last at least through October and that CMS will hire an independent contractor during the pause to review PRG-Schultz's audits.
The decision by CMS to freeze the audits comes as administrative law judges are reversing many of the claims because it is illegal for auditors to review cases more than one year old without good cause.
PRG-Schultz is paid up to 25 cents to 30 cents for each dollar of a Medicare claim it rejects. The company's contract with CMS permits it to keep its commissions if its findings are sustained through the first two levels of an administrative review process. The recent ruling by administrative law judges came in the third level of reviews.
However, PRG-Schultz told CMS that the company would return its commission for all decisions reversed on appeal, according to Andrew House, a spokesperson for Rep. Devin Nunes (R-Calif.).
Rep. Lois Capps (D-Calif.) plans to introduce legislation that will place a moratorium on the auditing program before it expands nationally in 2010, arguing, "We are not going to allow it to become permanent until all the problems that appear to be developing are fixed" (Sacramento Bee, 9/27).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.