American College of Physicians: Internal Medicine — Doctors for Adults ®


Changes in Medicare audits are good news for physicians

From the March ACP-ASIM Observer, copyright 2002 by the American College of Physicians-American Society of Internal Medicine.

By Brett Baker

Q: Has Medicare stopped conducting random prepayment review of evaluation and management (E/M) service claims?

A: The Centers for Medicare and Medicaid Services (CMS) recently discontinued random prepayment reviews, in part because of advocacy efforts by groups like ACP-ASIM to reduce unnecessary burdens on physicians. The decision is important for internists because it eliminates the hassle of submitting documentation for an E/M service claim before it is even paid.

CMS ordered prepayment reviews after a 1997 study by the Office of Inspector General (OIG) showed a high payment error rate for physician services. Medicare carriers began randomly flagging certain E/M services for manual review. (They reviewed every 1,000th claim for code 99214, for example.) Carriers would ask physicians for supporting documentation that they would review before paying, downcoding or denying the claim.

Recently, however, CMS implemented the Comprehensive Error Rate Testing (CERT) program to measure how well Medicare carriers are processing claims. As a result, prepayment reviews are no longer necessary.

Q: How will CERT affect physicians?

A: While the CERT program has been set up to monitor the performance of Medicare carriers, physicians will be asked to provide documentation to support their claims. CMS has hired Virginia-based DynCorp to randomly audit 10,000 claims a month that have already been paid to Medicare providers: physicians, hospitals, durable medical equipment suppliers and home health agencies. DynCorp will audit 2,500 claims for physician services a month.

DynCorp will flag claims representing a range of services once carriers enter the claims into their processing system. Because E/M service claims account for approximately 40% of what Medicare spends on physician services, E/M services will likely be one focus of the CERT program.

As DynCorp audits claims, it will ask physicians for documentation so it can verify that the carrier paid the claim correctly. DynCorp will attempt to retrieve documentation from physicians multiple times. If physicians do not respond, DynCorp will determine that the claim in question was paid in error.

Independent reviewers working for DynCorp will review claims that Medicare carriers have both paid and denied. If a Medicare carrier has downcoded or denied a claim, DynCorp will review the information the carrier used to make its decision. DynCorp will record its assessment of the carrier's decisions in a tracking database.

Q: Should I comply with requests from DynCorp?

A: Yes. If you don't provide documentation, DynCorp will determine that your claim was paid in error. This error determination will be added to the CERT error rates, which CMS uses to decide whether it needs to take corrective action.

If DynCorp determines a claim was paid in error, it will inform the carrier so it can recoup payment from the provider. The good news is that if this happens, you will not automatically be subject to a more extensive audit.

Q: How is CERT better for physicians than random prepayment review?

A: CERT offers physicians a number of advantages. First, you will be asked to provide documentation for far fewer claims. Second, payments will not be delayed because documentation will be requested after physicians receive payment. Finally, CMS will make the CERT data available to the public. (The results of random prepayment audits have not been released.)

Q: How will CERT data be used?

A: DynCorp will use the data it collects to determine the following:

  • National paid-claims error rate. This rate is similar to the payment error rate the OIG releases annually, although it is based on a larger sample size. To determine this rate, DynCorp will compile decisions on whether claims for all services to Medicare beneficiaries have been paid or denied appropriately.

  • Claims-processing error rate. This figure shows how many claims Medicare carriers have inappropriately denied. The OIG's annual audit fails to account for this type of error.

  • Provider compliance rate. This figure shows the paid claims and error rates for each type of CMS provider: physicians, hospitals, durable medical equipment suppliers and home health agencies.

  • Paid-claim benefit-specific error rate. This will allow CMS to determine how efficiently Medicare carriers process claims by code or benefit category. For example, CMS might identify the accuracy of carrier payment determinations for E/M service claims.

The CERT program will also allow CMS to identify emerging trends and implement corrective actions. If, for example, DynCorp data showed that physicians in Ohio bill CPT 99214 more often than is supported by their documentation, the Ohio carrier might launch an education campaign.

CMS could also use the data to design its annual survey for 2003 to sample more claims from Medicare carriers that had a high error rate in 2002. CMS can also identify "best practices" and use the database to test data analysis tools.

Brett Baker is a third-party payment specialist in the College's Washington office. To ask a question about third-party payment or coding issues, contact him at 202-261-4533 or


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