Forbes Magazine reports that the Centers for Medicare & Medicaid Services (CMS) will be conducting a preventative audit in 2012, before it pays out any tax-payer money for cardiology and orthopedic procedures. This comes after years of criticism that CMS has followed a policy of writing checks first and asking questions later. In eleven states, Texas, Florida, California, Michigan, New York, Louisiana, Pennsylvania, Ohio, North Carolina, and Missouri, CMS is starting what it calls Recovery Audit Prepayment Review in January 2012, which will “allow Medicare Recovery Auditors (RACs) to review claims before they are paid to ensure that the provider complied with all Medicare payment rules.”
CMS’s announcement of its new crackdown affected Wall Street almost immediately. Medical stock dropped rapidly, according to an article in Bloomberg News, seeming to indicate that investors are worried that the new regulations will diminish the value of their stock. The Florida Chapter of the American College of Cardiology issued a statement in which it noted the grave consequences of CMS’s new, stricter regulations. It said:
Hospitals will not be paid 100% for [cardiac and orthopedic] admissions pending record review. There will be a 30-60 day period during which the hospital records will be reviewed for whether they support medical necessity for procedures which occurred during the stay…If the determination is made that records do not support necessity, then the entire hospital stay will be denied. The physicians will receive a form letter which will be entitled a ‘Take-Back Letter’ requiring return of any funds paid in conjunction with the affected hospitalization.
The states targeted by the review are those that are prone to Medicare fraud and those that have a history of short-term hospitalizations. CMS’s goal is to prevent error before it happens rather than following its traditional method of making payment first and then spending millions to recover the improper payments. While the medical community may be disappointed and the medical investors nervous, CMS seems to be doing what is necessary to protect taxpayer funds. With the current state of the healthcare industry, CMS’s decision to audit its payment procedures could not have come at a more opportune time.
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