Statement of the American Osteopathic Association, Chicago, Illinois

The American Osteopathic Association (AOA) thanks Chairwoman Nancy Johnson and Ranking Member Fortney “Pete” Stark for introducing the “Medicare Regulatory and Contracting Reform Act of 2001” (H.R. 2768).  We appreciate your holding this timely hearing.

Our members increasingly are frustrated with the complexities of Medicare policies and regulations.  It is well documented that there are now over 100,000 pages of Medicare rules, policies and regulations.   Physicians are forced to spend a growing amount of time completing paperwork and meeting administrative requirements set forth by Medicare and managed care organizations.  Time spent completing these tasks is time spent not doing what they were trained to do, providing care to patients.

We thank you for making this issue a priority for the Committee and for introducing legislation to reform the regulatory and contracting process at the Centers for Medicare and Medicaid Services (CMS).  Your legislation addresses the major concerns that the AOA has raised and establishes a system that will focus more on educating and assisting physicians and not on punishing them.  We especially support provisions you included on provider education and technical assistance and the inclusion of specific educational programs and technical assistance for rural providers.  As you know, rural practices often consist of less than ten employees and simply do not have the manpower to dedicate an individual(s) to Medicare compliance.  Your proposal recognizes and creates ways to assist these physicians.

We continue to be concerned about the use of extrapolation in post-payment audits.  It is our desire that the committee carefully evaluate the use of this practice.  Your legislation addresses this issue, but we request that you consider requiring documented educational intervention before extrapolation can be used.  This supports our desire to move from a system that assumes guilt to a system that offers compliance assistance.

Our priorities for regulatory and contracting reform legislation include:

Provider Education and Technical Assistance

The AOA strongly endorses a “change in attitude” at the CMS.  The AOA does not support fraud or those who defraud the government, but we are convinced that an overwhelming majority of the mistakes made are inadvertent.  It is our opinion that CMS generally operates with an assumption of guilt when dealing with providers.  This attitude is counterproductive and creates an environment of distrust between providers and CMS.  We believe that CMS should focus more effort on educating providers, especially those in rural and frontier areas.  One of the most important services CMS can provide is timely and accurate feedback on how to comply with policies and procedures.

The AOA believes that CMS and its Medicare contractors should:

• Create a national standard for provider education.
• Establish incentives for contractors who improve their provider education programs.
• Establish education programs exclusively for rural providers.
• Maintain a 24 hour toll-free phone line staffed by individuals capable of answering questions regarding the Medicare system.
• Maintain a web page dedicated to compliance with Medicare policies and procedures.  We recognize that addressing every potential question on the web page is impossible, but material addressing the most frequently asked questions could be maintained.
• Medicare contractors should respond to all requests in writing.  This would provide a written record that providers and contractors could rely upon if there is a future audit.
• Create a system that accurately documents each question or inquiry received, who handled the request and the information provided.  This will allow CMS and its contractors to create a valid database of frequently asked questions and points of confusions within the program.  Additionally, it will provide both the Medicare contractor and the provider with documentation of the inquiry.

Provider Appeals

The AOA believes that every provider should have an equitable and unbiased opportunity to appeal any decision handed down by CMS or a Medicare contractor when facing a post-payment audit.  Appeals should be conducted in a timely manner and governed by legal experts independent of both the provider and the Medicare contractor.  It must be emphasized that the purpose of the audit is to recover alleged overpayment, not to proceed against suspected fraudulent behavior, and that physicians and providers in these situations should not be “presumed guilty.”  The AOA supports the permanent inclusion of Administrative Law Judges (ALJs) in the Department of Health and Human Services (HHS).  We believe that their existence within HHS will speed up the appeal process and create consistency within the appeal process.

Recovery of Overpayments

Physicians/providers should not be forced to pay contractors for alleged overpayments before they have exhausted their administrative appeals.  The time it takes to complete the appeals and the high percentage of reversals of contractors’ overpayment allegations illustrate the inequity of these repayment demands.  If a physician or provider chooses to appeal and is unsuccessful in that effort, then the provider should pay interest on the amount in question.  We strongly believe that physicians and providers should have the opportunity to exercise their due process rights before assuming financial liability. 

Physicians should be entitled to repayment plans if their overpayments exceed a certain threshold that would severely impact the financial well-being of their practice.  Contractors currently give physicians and providers 30 days to repay overpayments in full.  We understand that there is concern that some providers may file for bankruptcy without repaying the overpayment amount.  Unless there is legitimate concern that this may occur or the provider has demonstrated in some manner that he or she is not a reliable source of repayment, all providers should be given flexibility in repaying overpayment amounts.

The AOA is concerned about extrapolation from probe samples.  Medicare contractors conduct these samples on 15-20 claims over a one to two year period and then use the alleged overpayment to extrapolate to all claims submitted during that one to two year period. 

Using 15-20 claims in a probe sample over such a long time period is not a valid method to determine an alleged overpayment for the rest of the claims.  Contractor errors regarding payment in the probe sample, which are often overturned through administrative appeal, can result in enormous extrapolated overpayment allegations.  Even more egregious, often the first notice that physicians and providers receive regarding alleged overpayments is a letter demanding this extrapolated overpayment amount.  We strongly urge the Committee to ensure that extrapolation does not occur unless the contractor has provided prior, documented education to the physician or provider.  We would even go so far as to suggest that extrapolation not be used in first time audits against a provider.

Voluntary Repayment

Physicians and providers receiving mistaken overpayments should be allowed to return the money voluntarily without fear that they will be audited by contractors.  These repayments, if they occur before they are noticed by the contractors, should be encouraged.  Physicians and providers should not have to fear that they will be audited for acting in good faith. 

Pre-payment Reviews

We strongly urge the Committee to direct the Secretary to establish uniform standards for random prepayment audits.  Currently, contractors have complete discretion regarding how to structure and implement random audits.  We believe that physicians and providers should be provided guidelines with the general conditions under which these audits may occur.  

Issuance of New Regulations

The AOA supports the concept of establishing stricter and more regimented time frames for the release of proposed, interim final and final rules.   Additionally, we believe failure to meet published deadlines should require the Secretary to publish an explanation as to why deadlines were not met and establish new deadlines.  This will prevent the Secretary from issuing continuations for interim final rules and thus avoiding a final decision on a proposed rule.

Compliance With Changes in Regulations and Policies

Providers should be given, at minimum, 30 days to comply with new regulations.  The 30 days should begin upon receipt of direct notification of policy changes from the Medicare contractors, not upon finalization of the rule.  Additionally, we believe that new policies impacting providers should not be applied retroactively, unless it benefits the provider or is necessary due to statutory requirements.

Contractor Accountability

CMS must address carrier fraud. The Office of the Inspector General (OIG) released several reports concerning carrier misconduct in Illinois, Connecticut, New Mexico, Colorado, Florida, Michigan, Pennsylvania, Massachusetts and California. CMS must be just as vigilant about preventing fraud and abuse among its contractors as it is with its providers.

The General Accounting Office recently reviewed contractor bulletins from 10 carriers.  The GAO found that the bulletins contained lengthy discussions with overly technical and legalistic language that providers may find difficult to understand. The bulletins also omitted important information about mandatory billing procedures.

The GAO found that in 85% of its phone calls, the answers were incomplete or inaccurate.  In addition, carrier Internet sites rarely met all CMS requirements and lacked user-friendly features such as site maps and search functions.  We frequently hear of such complaints from our membership. Our members also find that carriers at times are unwilling to put their communications with physician practices in writing.  This behavior is unacceptable.

For contractor reform to succeed, physicians and other providers must have a single point of contact who will be responsible and accountable for program administration.  Local carrier advisory committees (CACs) should be continued in each state to assure that local medical review policy reflects the consensus of the local physician community.

CMS should establish the highest possible standards to determine which organizations are most qualified to become new contractors in the program. Formal physician/provider feedback should be solicited regarding the establishment of performance criteria for contractors and whether the contractors’ actions have actually met those standards.  Physician/provider outreach, education, and service should be considered a priority for each contractor in the program.

In addition, CMS regional offices must be well versed in Medicare rules and regulations because their errors can have disastrous results. A case in point:

In the mid 1990s, three osteopathic physicians in Oklahoma wanted to establish rural health clinics in the towns of Morrison (population 900), Yale (population 1200), Pawnee (population 2500) and Fairfax (population 1800). They contacted HCFA’s regional office in Dallas, which guided them in establishing the federally designated rural health clinics. The regional office approved the clinics. Three years later, HCFA headquarters in Baltimore contacted the doctors and told them they were over paid.  HCFA requested a repayment of $980,000 and in its effort to recover the money, all Part A Medicare payments were stopped.  It was ultimately determined that the regional office provided the wrong information. The rural health clinics were forced into bankruptcy.  One clinic was shut down and the others are open on a part time basis – approximately one half to two half days a week.

The error caused by the Federal government’s regional office has had devastating effects in these rural low-income towns. Access to medical care has been severely limited and the doctors and their patients are paying the price. 

Limited English Proficiency

The AOA supports H.R. 969 that would rescind Executive Order 13166 “Improving Access to Services for Persons with Limited English Proficiency.”  The financial implications of compliance with this rule potentially could be devastating to providers, especially those in rural areas.  Fees for a professional interpreter average $40 per hour with a two hour minimum.  At this rate, providers will be forced to pay more for a mandated interpreter than they are reimbursed for the health care they provided.  Additionally, confusion still exists to whether this rule applies to written materials.  This rule, and the cost of compliance, would have an adverse effect upon access to care.

Evaluation and Management (E&M) Documentation Guidelines

E&M documentation guidelines have an extremely broad impact on physicians as they govern how physicians must document for office visits in order to receive Medicare reimbursement.  To date, CMS has been unable to set forth E&M guidelines that accurately reflect the services provided during a physician office visit. HHS Secretary Tommy Thompson stopped work on the E&M guidelines in order to address the many concerns within the physician community.  We support efforts to address physicians’ concerns about burdens caused by documentation requirements. The AOA asks that CMS not be allowed to implement any new E&M guidelines prior to the completion of at least four pilot programs, one of which should be focused on rural providers.  Until documentation guidelines are finalized, CMS should suspend all pre- and post payment audits of E&M services, since the agency has not arrived at the requirements that ultimately will be used.

Emergency Medical Treatment and Labor Act (EMTALA)

The extension of EMTALA to cover ambulances, free standing clinics and off campus facilities goes beyond the original intent of the law.  EMTALA requirements strain the ability of the medical profession to provide the quality of care that patients deserve.  Hospitals and physicians face overcrowded emergency departments, a lack of access to critical specialty emergency care, and the significant compliance costs associated with EMTALA that provide little, if any, added value to patient care. EMTALA discourages emergency departments from referring non-urgent patients back to their primary care provider. The CMS should not penalize or prevent hospitals from referring patients to continuity care clinics on the hospital grounds. There are varying interpretations of the EMTALA requirements among the regional carriers, making it all the more difficult to comply.  Regional carriers should have some degree of uniformity in the interpretation and enforcement of EMTALA.

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On behalf of the 47,000 osteopathic physicians (D.O.s) in the United States, we thank you for the opportunity to submit a statement on the important issue of Medicare reform.  The AOA stands ready to assist you in facilitating the enactment of H.R. 2768.

The American Osteopathic Association promotes public health, encourages scientific research, serves as the certifying body for D.O.s and is the accrediting agency for all osteopathic medical schools and health care facilities.