Organized medicine leads the way to Medicare reform

AMA Leader Commentary. By Timothy T. Flaherty, MD Jan. 7, 2002.

AMA LEADER COMMENTARY

A few words about current events in medical practice

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A message to all physicians from Timothy T. Flaherty, MD, chair of the AMA Board of Trustees.

At the 2001 National Leadership Conference, the AMA and the Federation mounted an aggressive grassroots campaign to change how Medicare does business with physicians.

Today, less than a year later, important legislation designed to achieve this goal has been packaged and passed by the U.S. House of Representatives -- with a vote of 408-0.

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The overwhelming support for HR 3391, the Medicare Regulatory and Contracting Reform Act of 2001, shows us yet again how much organized medicine can accomplish in Congress -- and how quickly -- when we speak with a united voice in support of legislation that is timely, necessary and good.

This legislation provides a way to end some of the worst abuses associated with postpayment Medicare audits -- and to give physicians who are being audited due process protections.

But what does this mean to your practice, you ask? Let's start with a real-life story.

A carrier audited a sample of 80 claims and determined that the physician in question had made billing errors. From that information, the carrier extrapolated to the other claims submitted by the physician -- and projected that Medicare had overpaid the physician by $99,000.

Without receiving any notice that there were problems with his billing, the physician was told to pay back the entire $99,000. Within 30 days.

The physician managed to make the payment, but he also filed an appeal. Three years later, after much legal wrangling, a judge ruled that the physician had not been overpaid at all -- and that the $99,000 he paid was indeed rightfully his. The physician finally got his money back. But with no interest.

This is the way the system works for us (or against us?) today.

Under the legislation just passed in the House, however, this kind of scenario would no longer be possible. First of all, physicians who owed significant sums relative to their practice revenue would be able to pay this money back in installments over time -- not as a lump sum within 30 days.

What's more, physicians who appealed an alleged overpayment would not have to pay it until the appeal was heard and a decision rendered at the second stage of the appeal process. Physicians who continued the appeal process -- and ultimately won their appeal -- would not only get their principal returned, they would also get interest.

The Medicare Regulatory and Contracting Reform Act of 2001 would also require Medicare carriers to explain why a particular audit has taken place -- and give the physician an opportunity to respond and learn.

Audited physicians would have a 45-day period to challenge the carrier's explanation or to ask for clarification. Only after this exchange took place could a carrier estimate the amount of the overpayment.

Finally, this legislation proposes limits on the practice of extrapolation when the audit involves a large sample of claims. Under the House bill, extrapolation could only be used in circumstances where a high or sustained error rate was noted -- or where documented efforts to educate a particular physician or group had failed.

These provisions could have saved the physician in my story a good deal of time and trouble -- and money. And they may someday save you the same, provided we get similar legislation passed in the Senate.

What's more, the Medicare Regulatory and Contracting Reform Act of 2001 would also address other problem areas of Medicare.

Consider the prepayment review process -- that is to say, the review of claims before they have been paid. Today, if a carrier believes a physician is billing incorrectly, the carrier can hold up payment on every claim and subject each claim to manual review, thus suspending automatic claims processing. This situation can go on indefinitely and seriously disrupt a practice.

Under the legislation passed in the House, procedures will be developed to ensure that, if a physician fixes the problem the carrier has identified, the carrier has to suspend these manual reviews.

And the legislation's work doesn't end there either.

The Medicare Regulatory and Contracting Reform Act of 2001 requires insurance carriers to provide written answers to physician questions about billing -- and so help physicians prevent problems before they happen.

It also demands that the Centers for Medicare & Medicaid Services pilot test any new evaluation and management documentation guidelines -- before they are implemented, not after they have failed.

Finally, the Medicare Regulatory and Contracting Reform Act makes it clear that if EMTALA -- the Emergency Medical Treatment and Labor Act -- requires a service be provided, then Medicare must pay for that service.

That's a lot of accomplishments for one bill -- and we expect there to be more like it in the future. Leaders on Capitol Hill have let us know that they see this legislation as a first installment, and that with our help and insight, the reform of Medicare practices will continue.

In the meantime, we need to keep standing together, and make sure that companion legislation gets passed in the Senate -- and made into law.

Physicians -- and patients -- are demanding relief. Organized medicine has the power to get it. With specialty societies, state societies, and the AMA working together, we will see change. And fast.

AMA wants you -- to help shape the agenda.

Dr. Flaherty, a board certified radiologist from Neenah, Wis., was AMA board chair during 2001-02.