Medicare Compliance & Reimbursement

P4P train 'has left the station,' CMS says.

Providers who thought they were safe from the Recovery Audit Contractors need to start worrying again.

Congress appointed the RACs to investigate claims in Florida, California and New York, and they receive compensation based on how many overpayments they find. The RACs had been focusing on hospital claims, but now they're starting to turn their attention toward physician claims.

But there's good news: the Centers for Medicare & Medicaid Services changed the rules for the RACs, CMS officials reassured the Practicing Physicians Advisory Council at its recent meeting. Now instead of just receiving a percentage of the overpayments they find, RACs will also receive a percentage of the underpayments they find. That means they have an incentive to find money that Medicare owes providers.

"We have no problems with them doing what they do," says Ronald Castellanos, a Cape Coral, FL urologist who chairs the PPAC. "We just wanted to make sure they were incentivized to look for underpayments as well," he explains.

The RACs will look primarily at outpatient and surgical procedures, including radiology, pathology and general surgery, Castellanos clarifies. But they'll have the capability to look at evaluation and management claims if excessive overbilling jumps out at them.

P4P Could Cost Providers Thousands

One CMS official told the PPAC meeting that "the train had done left the station" for pay-for-performance, according to Joe Johnson, a Paxton, FL chiropractor and PPAC member.

Some PPAC members raised concerns about P4P plans that could provide small rewards in exchange for obtaining information technology that could cost $42,000 to install and $16,000 per year to maintain. Others raised questions about what measures CMS would apply and how Medicare would collect information on them.

At first, providers would receive more money for meeting P4P guidelines. But Johnson worries that a few years down the line, doctors who fail to follow quality guidelines could actually incur punishment with reduced reimbursement.