Statement of William J. Hall, M.D., President,
American College of Physicians-American Society of Internal Medicine

Testimony Before the Subcommittee on Health
of the House Committee on Ways and Means

Hearing on H.R. 2768, the "Medicare Regulatory and Contracting Reform Act of 2001"

September 25, 2001

I am Dr. William J. Hall, president of the American College of Physicians-American Society of Internal Medicine (ACP-ASIM).  ACP-ASIM, representing 115,000 physicians and medical students, the largest medical specialty society and the second largest medical organization in the United States, congratulates the Subcommittee for holding this hearing.  Internists provide care for more Medicare patients than any other medical specialty.  The most frequent complaint received by ACP-ASIM is that internists are subject to excessive paperwork and, as a result, do not have enough time to devote to patients.   ACP-ASIM thanks Congresswoman Nancy L. Johnson (R-CT), Chair of the Subcommittee on Health of the Committee on Ways and Means, for holding this important hearing to discuss H.R. 2768, the "Medicare Regulatory and Contracting Reform Act of 2001."

Impact of Medicare Paperwork on Clinical Practice

Time is the most valuable resource in diagnosing and caring for older adults, but it’s in short supply due to unnecessary paperwork. Research breakthroughs, new pharmaceuticals and improved diagnostic equipment are of limited value if doctors lack the time to spend with patients.

Visits from Medicare patients typically begin a surprisingly complex and time-consuming paperwork process.  Medicare requires that the physicians and their staffs complete a claim form with diagnosis and service codes, as well as authorizations for necessary equipment such as wheelchairs and services such as home health care.  The Medicare program assumes physicians know what it will and will not cover.  There is no single place to find Medicare's rules, however.  The regulations are more than 100,000 pages long and different carriers, who process paperwork for Medicare across the country, have their own rules.

Once a claim is filed, Medicare might delay payment because it tripped some random criteria.  If Medicare finally pays the claim, carriers have four years to change their minds and demand that the physician repay it.  Appeals require more paperwork and more importantly staff and physician time to present the case.

Medicare can also sample physician's records to determine if certain services, such as office visits, were paid incorrectly.  If a certain percentage were paid wrong, the carrier will demand repayment for similar claims — without looking at the records.

To keep their practices running, many internists simply repay these claims. Opening their practices to a post-payment audit can tie the physicians’ practices up for days—essentially shutting down patient care activities.  One physician tells of spending over $50,000 challenging an audit and in the final determination owing the government a mere $400.

Medicare patients are the ones who suffer when physicians and their office staff are diverted from patient care activities to unnecessary paperwork.  The result can be longer waiting time before being seen by the physician, because he or she is busy answering a demand from Medicare for more information at a time that could have been spent with patients.  It can result in the physician seeing fewer patients each day—meaning a longer time for a patient to get an appointment.  It can mean having less time to assess elderly patients and less time to answer questions and discuss new treatments with them.  And in the worst cases, it can literally shut down a practice for days.

H.R. 2768—A Good Start, but More Should Be Done

Fortunately, bipartisan legislation, H.R. 2768, the "Medicare Regulatory and Contracting Reform Act of 2001 has been introduced into the House of Representatives and we are waiting for a similar measure in the Senate.  ACP-ASIM appreciates the opportunity to comment on this bill.

Extrapolation

Although ACP-ASIM requests the elimination of extrapolation of alleged overpayment amounts to other non-audited claims the first time a physician or other health care provider is assessed an alleged overpayment, unless fraud is suspected, the H.R. 2768 provision on extrapolation is a step in the right direction.  H.R. 2768 indicates that in either consent settlements or larger audits, carriers cannot recoup or offset payments based on extrapolation unless it is sustained by a high level of payment error, as defined by the Secretary of Health and Human Services, or documented educational intervention has failed to correct the payment error (as determined by the Secretary).  ACP-ASIM strongly encourages the Subcommittee to develop report language to define a high level of payment error.  Without such a definition, problems with extrapolation could potentially continue.  ACP-ASIM also recommends that carriers should conduct a documented education effort before a provider receives an overpayment demand letter.

Physicians have always been concerned about the extrapolation process because it is a mechanism that auditors use to look at a small sample of Medicare claims and apply those results to a broader universe of claims that the auditors did not review.  Under the extrapolation process, auditors have the ability to take a small sample of 15 claims, determine that the Medicare contractor made an overpayment of several dollars per claim, then extrapolate that finding to hundreds of claims per year over several years and demand repayment of tens of thousands of dollars without following the due diligence of looking at those other claims.  This process is simply unfair.  Congress wouldn’t allow the Internal Revenue Service to extrapolate a calculation error in a taxpayer’s tax return from one year to other years without actually reviewing the returns from those years.  Congress shouldn’t allow the broad use of extrapolation either.

Appeals

ACP-ASIM is pleased that H. R. 2768 precludes carriers from requiring physicians and other health care providers to repay an “alleged” overpayment until after the first level of appeal.  However, ACP-ASIM believes that repayment should not occur until the administrative appeals have been exhausted.  It simply is unfair that Medicare providers are compelled to repay money to Medicare contractors when the dispute has not been settled.  We agree that interest should accrue if the provider is unsuccessful in appealing. 

Repayment plan

ACP-ASIM suggests that Medicare carriers and fiscal intermediaries give physicians who have received overpayments the option of either a three year repayment plan or offsetting overpayment recoupments against a percentage of the physicians’ future Medicare claims reimbursements.  ACP-ASIM is pleased that H. R. 2768 stipulates that the Secretary of Health and Human Services must promulgate regulations that would allow physicians and other health care providers to enter into a repayment plan of no more than 3 years, however we are concerned that as written this provision gives the Secretary the latitude to keep the 30-60 day repayment process intact without making any change to the program at all.  ACP-ASIM urges the Subcommittee to change this provision to a period of not less than 3 years if the aggregate amount of overpayments exceeds 10 percent of Medicare revenues for the previous calendar year. 

The current repayment process is particularly onerous to physicians and other health care providers with small practices.  A large repayment requirement over a short period of time could potentially bankrupt a physician practice and force it to close.  This in turn would deny Medicare beneficiaries access to medical care from that practice.  For practices in rural and underserved areas where patients have little or no choice of provider, such a repayment request could literally devastate access to health care in a community.

ACP-ASIM agrees with the provision that would prohibit repayment plans in cases where the Secretary suspects that the provider would file for bankruptcy to avoid repayment, cease to do business, or has committed fraud.  ACP-ASIM also agrees that if a provider fails to make a payment installment, there should be an acceleration in the repayment plan or immediate offsets.

Consent Settlement Process

ACP-ASIM believes that H.R. 2768 should afford physicians the ability to appeal a probe sample of claims without having to undergo a “statistically valid random sample” (SVRS).  A probe sample is a sample of a small number of claims.  H.R. 2768 indicates that when a provider appeals this probe, they must agree to a larger, time consuming, onerous audit (the SVRS).  This process encourages physicians to settle, even when they believe the probe sample findings are inaccurate, because in many cases the hassle involved with complying with the SVRS audits are more costly to the physicians practice than the cost of settling with a probe sample.  The current consent settlement process is ironic in that there is no true incentive for the auditors conducting the probe sample to perform the audit accurately because the penalty of appealing in many cases is more than the penalty of settling. 

Limit on Random Prepayment Audits

ACP-ASIM believes H.R. 2768 would be improved if the bill were changed to state that Medicare carriers could not demand additional records or documentation prior to paying a claim absent cause except when developing contractor-wide or program-wide claims payment error rates.  Random prepayment audits are troublesome to health care providers because they can disrupt cash flow in the practice and hinder the delivery of medical services to patients if the practice does not have the cash on hand to order supplies and equipment or pay its staff.  Random prepayment audits are particularly irksome to physician practices because it has long been recognized that the overwhelming majority of Medicare providers are honest and therefore these audits will randomly delay payment for legitimate services provided to Medicare beneficiaries. 

In addition, prepayment review should no longer potentially occur indefinitely after physicians and providers have submitted properly coded claims.  ACP-ASIM agrees with the H.R. 2768 provision that limits contractors to using random prepayment audits for developing contractor-wide or program-wide claims payment error rates.

Evaluation and Management (E/M) Documentation Guidelines

ACP-ASIM strongly supports the H.R. 2768 provision that requires the Department of Health and Human Services initiate three or four pilot projects to test E/M documentation guidelines.  ACP-ASIM is particularly interested in the peer-review pilot method.  Another pilot that ACP-ASIM believes should be explored is documenting encounter time with the patient and the “CPT basics/General Principles of Medical Record Documentation” (a one page document) as an alternative to other onerous documentation requirements (such as the 1997 guidelines which are more than 40 pages long).  ACP-ASIM is encouraged by the stipulation that pilot participants cannot be targeted for post-payment audits or overpayment demands.  This stipulation should enhance the viability of the pilot tests. 

Although ACP–ASIM is encouraged that the Centers for Medicare and Medicaid Services (CMS) is attempting to work with medical societies to improve the documentation guidelines for evaluation and management (E/M) services, the guidelines that were released in 1997 and currently in place dramatically increase the administrative burden for physicians.  The guidelines require physicians to spend a significant amount of time selecting which code to bill and documenting extensively to satisfy the comprehensive guidelines.  An internist who carefully reviewed the 1997 guidelines calculated the number of decisions that a physician must make before selecting a level of E/M service and billing Medicare include 11 decision points in categories to consider before selecting an E/M code.  Each decision point requires several choices. There are 42 choices a physician must consider before selecting the proper level of E/M service. There are 6,144 possible combinations representing the number of ways an office visit for a new patient can evolve and be classified.  A physician must spend time documenting in the patient’s record in addition to spending time deciding what is the appropriate level of service to bill.  The guidelines put an undue excessive documentation burden on physicians for the sole purpose of billing, not for quality medical care.  The guidelines force physicians to spend less time with their patients and more time with the patients’ charts. 

Carrier Responsiveness

ACP-ASIM is pleased that H.R. 2768 requires Medicare contractors to: (1) respond in a clear concise and accurate manner to specific billing and coding and cost report questions; (2) maintain a toll-free telephone number which provides information regarding billing, coding and other appropriate information; (3) maintain a system for identifying who provides referred information; and (4) monitor accuracy, consistency and timeliness of the information provided.  ACP-ASIM suggests that these provisions be further strengthened by requiring a written response within 30 days from the contractor to physicians and other providers who submit billing, documentation, coding and cost reporting questions to carriers or fiscal intermediaries.  Additionally, these written responses from the carrier must be adhered to during provider audits; health care providers should be held harmless from having claims denied by carriers in subsequent audits when the provider is simply following the original advice of the Medicare carrier.  It is unfair and unreasonable for physicians and other health care providers to be held accountable for mistakes made by Medicare contractors.

Ombudsmen Program

ACP-ASIM understands that the H.R. 2768 ombudsman program is designed to “provide assistance on a confidential basis to physicians (and others) about complaints, grievances, and requests for information about Medicare, resolve unclear or conflicting guidance given by the Secretary and Medicare contractors to physicians.”  The program would also recommend to the Secretary how to respond to “recurring patterns of confusion including suspending sanctions in these areas, and would recommend how to provide appropriate and consistent responses including not providing for audits where the self identified overpayment is returned.”  This provision will be helpful in resolving conflicting statements and may be an outlet for confidential complaints about carriers. 

Effective Balance Between Appropriate Claims Payment and Burdensome Paperwork

It is our understanding that the Department of Health and Human Services Office of Inspector General (OIG) in the previous administration had some concerns regarding recommendations to improve the Medicare audit and appeal process.  Essentially, the OIG was concerned that changes in the audit process could unintentionally allow unscrupulous health care providers to submit false claims to Medicare.  The suggestions above were developed in consideration of this concern.  ACP-ASIM believes that it is time for Congress to introduce more due process rights and fairness into the Medicare claims payment review system so that the overwhelming majority of physicians and other health care providers, who are honest and law abiding, no longer have to suffer from onerous and unfair Medicare rules. 

Conclusion

ACP-ASIM is pleased that the Subcommittee is addressing the serious problems that the Medicare regulatory burden poses for physicians and others attempting to care for Medicare beneficiaries.  We strongly urge the Subcommittee to report H.R. 2768 to the full Ways and Means Committee with the enhancements we have presented.  We also ask the Subcommittee to consider provisions from other pending regulatory relief legislation, such as H.R. 868, the Medicare Education and Regulatory Fairness Act (MERFA), which ACP-ASIM has enthusiastically endorsed.