WASHINGTON - In coming weeks, private audit companies will begin scouring mountains of medical records.
Their mission: Determine if health-care providers erred when billing Medicare and require them to return any overpayments to the federal government.
The contractors have shown they're pretty good at their work.
In just three years, they've returned more than $300 million to the federal government - and that's just from three states. That experiment is winding down. But a larger, national program soon will take its place.
The rollout of "recovery audit contractors" will be gradual. They'll monitor health-care providers in 19 states beginning this spring. In October, an additional five states will join.
Health-care providers are nearly unanimous in their dislike of the program's continuation, much less its expansion. Many lawmakers have similar sentiments, though it was Congress in 2006 that made the program permanent. A bill sponsored by Rep. Lois Capps (D., Calif.) calls for a one-year moratorium.
The program's critics say that contractors have too much incentive to question as many claims as possible. That's because they get to keep about 20 percent of the overpayments.
"What we have here is bureaucrats and government contractors coming in and trying to second-guess what doctors and nurses have done in a hospital setting," said Don May, vice president for policy at the American Hospital Association. "They're playing Monday-morning quarterback."
While the contractors are often described as overzealous, that's a compliment as far as one watchdog group is concerned.
"A little zealotry is what we're looking for on the part of the taxpayers," said Leslie Paige, spokesman for Citizens Against Government Waste. "We think it's about time."
The government will spend about $430 billion this year on Medicare, which provides health coverage to 44 million elderly and disabled people.
The sheer size of the program, with more than 1.2 billion claims filed each year, not only makes it ripe for fraud but for mistakes.
The Office of Management and Budget estimates that payment errors total about $10.8 billion a year.
To put the number of Medicare claims in perspective, that's 4.5 million claims each work day and 9,579 claims per minute.
Rarely does the government and its contractors give those claims a detailed review. The agency has contractors that process claims. It also has an inspector general. But, now, auditors will routinely review patients' medical records as well claims.
It's the contractors' job to find both overpayments - and underpayments. Besides returning overpayments to the government, they return underpayments to health-care providers. So far, they've returned $20 million, mostly to hospitals.
A report from the Centers for Medicare and Medicaid Services shows that contractors reviewed about 930 million claims in Florida, California, and New York during the program's first 2 1/2 years. They identified errors in fewer than 0.2 percent of the claims reviewed.
Hospitals appealed in about 11 percent of the overpayment cases. Only 5 percent were fully or partially overturned.
Those statistics tell Medicare officials that the program is working. "We've had substantial recoveries," said Kerry Weems, the acting administrator for the Centers for Medicare and Medicaid Services. "And if you look at the rate at which our decisions are overturned, that rate is pretty low."
Health-care providers say the CMS statistics are misleading. Many providers won't appeal because of the amount of money and time it takes.
"It costs at least $2,000 to run an appeal all the way through the process," Mr. May said.
When providers overcharge the government, they also have to refund any overcharged copayments or deductibles to the patient.
If providers need more time to repay, they can apply for a repayment plan. If a provider just refuses to pay, the Medicare contractor processing their claims will deduct from future payments until the debt is paid.