Medicare Recovery Auditors: What Anesthesiologists Need to Know

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Medicare recovery auditors have been evaluating the appropriate of Medicare claims across the country since 2010. While hospitals are on the receiving end of most audits, physician claims are also audited. Currently, there are four approved audit types for anesthesiologists claims. Any anesthesia group should be acutely aware of these four audit types and work to ensure their claims are compliant with the issues under examination.

RAC overview
The Medicare National Recovery Audit Program began as a demonstration in 2005 in six states and proved successful. It was then expanded nationwide in 2010.

Currently there are four contracted recovery auditors nationwide. The recovery auditor in each region is as follows:

  • Region A:  Performant Recovery
  • Region B:  CGI Federal, Inc.
  • Region C:  Connolly, Inc.
  • Region D:  HealthDataInsights, Inc.


Recovery auditors are paid on a contingency fee basis. The contingency fees range from 9.0-12.5 percent for all claim types except durable medical equipment.

The recovery auditors actively review Medicare fee-for-service claims on a post-payment basis in order to identify and recover improper payments. Improper payments may result from:

  • Incorrect payment amounts
  • Non-covered services (including services that are not reasonable and necessary under section 1862(a)(1)(A) of the Social Security Act)
  • Incorrectly coded services (including DRG miscoding)
  • Duplicate services

To identify and correct improper payments, recovery auditors follow three review processes to identify improper payments: automated, semi-automated and complex.

  • Automated: use claims data analysis to identify improper payments
  • Semi-automated: made through data analysis; however, the provider is allowed to supply supporting documents to substantiate the claim
  • Complex: review supporting medical records to determine whether there is an improper payment

Recovery auditors must comply with all national coverage determinations, coverage provisions in interpretive manuals, national coverage and coding articles, local coverage determinations, and local coverage/coding articles in their jurisdiction.

RAC audits, recoveries on the rise
Since the National Recovery Audit program began in 2010, the number of approved audits has skyrocketed from 215 to the current 2,467. Most of these audits are duplicated across the four regions. Also, most of the audits are complex and target hospitals. Physician audits are far fewer, and the majority is not complex.

  Performant CGI Connolly  HDI
Approved Audits        
2010 78 87 300 39
2011 372 61 73 433
2012 114 14 120 152
2013 97 55 189 68
Total 671 217 810 769

Physician Audits

37 8 34 ?
Semi-Automated 26 4 2 ?
Complex 5 4 20 ?
68 16 56 131
1 0 2 1
Overpayments collected have also skyrocketed. The total net collections in 2010 were $58.5 million, and this rapidly increased to $2.1 billion in 2012 before leveling off. The total net collection so far is about $5.0 billion. This fortunately represents an extremely small fraction of the $2 trillion in Medicare expenditures during the same period of time.

Fiscal Year (Dollars in Millions)        
2010 2010
2011 2012 2013 Total
Overpayments Collected  $     75.40  $  797.40  $  2,291.30 $  2,237.40 $  5,401.50
Underpayments Returned  $     16.90   $  141.90  $     109.40 $     101.90 $     370.10
Total Corrections   $     92.30   $  939.30   $  2,400.70  $  2,339.30 $  5,771.60    

It's important to note that providers can appeal recovery audit recovery notices. The current appeals process is a multilevel approach that allows providers to appeal a recovery auditor's overpayment determination. This process is exactly the same for all providers who want to appeal a Medicare claim decision. Only about 2 percent of claims collected have been both challenged and overturned on appeal.

Anesthesia-related audits
There currently four approved anesthesia-related audits in three regions. Two of the regions audit the submission of a separate evaluation and management on the same day as an anesthesia procedure. In one region, overpayments for medical direction are audited. All of the audits have a three year look-back.

Contractor Audit Description Date Approved
Performant Identification of overpayments associated with evaluation and management services billed the day prior to or day of anesthesia services by an anesthesiologist. 1) E/M services billed the day prior to or day of anesthesia services without modifiers 24, 25 or 57.    2) E/M services billed the same day as 01996 without modifiers 24, 25 or 57.    Feb. 11, 2011
Connolly  Anesthesia provided by a CRNA Anesthesiologist without a 50% cutback as per Medicare guidelines involving CRNAs supervised by anesthesiologists.  Oct. 1, 2007
Connolly  Anesthesia provided by an anesthesiologist and a CRNA without a 50% cutback as required by Medicare guidelines involving anesthesiologists supervising CRNAs.  Oct. 2, 2007

Anesthesia Care Package E&M Services Under NCCI Edit rules, the anesthesia care package consists of preoperative evaluation, standard preparation and monitoring services, administration of anesthesia, and post-anesthesia recovery care. Nov. 13, 2009

Anesthesiologists must remember that while few audits currently target them, the program is rapidly growing. Given the three-year look back, considering all current anesthesia-related audits nationwide as well as local coverage determinations is prudent. Prevention and vigilance is the best strategy for avoiding the costs and anguish associated with a recovery auditor action.

Rodney L. Trytko, MD, MBA  is the president of Spokane, Wash.-based Anesthesia Excellence LLC, and has worked clinically as a cardiac anesthesiologist in Spokane for over 25 years. He is currently a member of the ASA Committee of Economics, AMA delegate and chair of the Washington State Delegation, co-chair of the Washington State Medicare Carrier Advisory Committee and a board member of the Washington State Medical Association.

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