AICPA Participates in Congressional Roundtable to Explore How to Improve Medicare Audits

July 30, 2014

Steve Stang, CPA, participated on behalf of the American Institute of CPAs in the U.S. Senate Special Committee on Aging’s roundtable meeting on Medicare audits on July 9.  The purpose of the meeting, titled “Improving Audits: How We Can Strengthen the Medicare Program for Future Generations,” was to discuss the nature and effectiveness of the Medicare program’s efforts to reduce improper payments at a time when an increase in audits required by the Centers for Medicare & Medicaid Services (CMS) has not translated into a reduction of improper payments. 

Senate Special Committee on Aging Chairman Senator Bill Nelson (D-Fla.) noted that while “the federal government as a whole has made strides in reducing improper payments and, today, has a 96.5 percent accuracy rate when it pays out taxpayers dollars, unfortunately, CMS has not had the same success.”  He cited the Aging
Steve Stang, CPA testifies at Senate roundtable discussion.

Committee’s bipartisan staff report released on July 9 that found a greater than 1 in 10 error rate, which cost the program more than $50 billion in fiscal year 2013 alone.

Senator Susan Collins (R-Maine), ranking member of the Aging Committee, stated that the staff  report “examines the nature of the audit burden placed on Medicare providers, identifies areas of potential overlap between CMS’ audit and review mechanisms, and recommends ways to improve their effectiveness.”

Stang, a member of the AICPA’s Health Care Expert Panel and a partner at CliftonLarsonAllen LLP in Charlotte, N.C., where he leads the firm’s healthcare assurance practice, explained in his statement that most CMS program integrity audits are similar to government financial statement audits and follow Government Auditing Standards.  He further explained that while the Recovery Auditors don’t follow Government Auditing Standards, there are many similarities in how they plan and execute their audits.

However, Stang said, required auditor communications to providers is a significant difference from Government Auditing Standards in that CMS’ statement of work with the Recovery Auditors expressly prohibits them from providing provider education.  Instead, communications – often in a summarized form – are provided first to CMS and Medicare Administrative Contractors, and then to providers in the region.  This, in Stang’s view, “significantly diminishes the value of the information once it ultimately reaches the individual providers.”

In addition to Stang, other attendees included representatives from the American Hospital Association, the Government Accountability Office, healthcare providers, Medicare oversight contractors and the durable medical equipment sector.

Those around the table recognized that the number of CMS program integrity audits has continued to increase in recent years.  However, Stang said that “increasing the volume of Medicare audit activity at providers will likely not significantly lower the rate of improper payment errors.”

Stang offered suggested improvements for consideration, which largely align with those made by the staff report.  “Provider education is critical to eliminating errors on the front end – before they happen. Allowing Recovery Auditors to communicate their ‘boots on the ground’ knowledge directly to the individual providers, as well as sharing best practices they observe at other providers, could significantly improve the controls over the provider’s billing process,” he said.  “Consideration should be given to enhancing CMS’ evaluation and reporting of the effectiveness of provider education programs, including the percent of expenditures each program spends on provider education, and the methods of delivering the education directly to individual providers.”