CMS Tightening the Screws on Unnecessary Procedures in Florida and 10 Other States

After years of criticism that it has paid billions of dollars for unnecessary procedures, the Centers for Medicare & Medicaid Services (CMS) will soon ramp up efforts to rein in costs for unnecessary procedures. In 2012 CMS will perform an audit before paying for several big ticket cardiology and orthopedic procedures in certain key states. The news has provoked strong reactions from cardiologists and Wall Street.

In Florida, in fact, 100% of stent, ICD, and pacemaker implantation procedures will undergo review before payment. Similar programs will take place in California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina, and Missouri, but the precise percentage and mix of cases that will undergo auditing has not yet been stated.

On November 15 the demonstration program was announced by CMS:

The Recovery Audit Prepayment Review demonstration will allow Medicare Recovery Auditors (RACs) to review claims before they are paid to ensure that the provider complied with all Medicare payment rules. The RACs will conduct prepayment reviews on certain types of claims that historically result in high rates of improper payments. These reviews will focus on seven states with high populations of fraud- and error-prone providers (FL, CA, MI, TX, NY, LA, IL) and four states with high claims volumes of short inpatient hospital stays (PA, OH, NC, MO) for a total of 11 states. This demonstration will also help lower the error rate by preventing improper payments rather than the traditional “pay and chase” methods of looking for improper payments after they have been made.

On November 21 Juan Aranda, Jr, the president of the Florida chapter of the American College of Cardiology (ACC), sent a letter to all ACC members in Florida about the “very serious proposed changes… that you need to be aware of immediately.” Arunda said that the Florida ACC “is fighting these onerous regulations” and that staff at the national ACC headquarters planned to meet with CMS officials.

Details of the CMS initiative only became widely known on Friday, when Wells Fargo analyst Larry Biegelsen issued a report summarizing the initiative in which he cited “reimbursement experts who have all indicated that this initiative seems onerous for hospitals and will likely reduce procedure volume because hospitals will begin making sure that every patient meets the coverage criteria.”

Reaction to the report on Wall Street was immediate. According to an article in Bloomberg News, hospital and medical device stocks plunged after the report was issued on Friday. Tenet Healthcare dropped  11% while Medtronic lost 6%.

Here is the position of the Florida ACC chapter, as stated by Jerold Saef, the chair of the Third Party Reimbursement committee of the chapter, in the letter to Florida cardiologists:

As of the first of the year, there will be 100% pre-payment audits on all inpatient hospital stays relative to 15 DRG’s.  11 of these are cardiac and 4 are orthopedic.  This means that all inpatient stays involving a listed DRG will trigger a hold on any payment associated with Part A reimbursement.  Hospitals will not be paid for 100% of these admissions pending record review.  There will be a 30-60 day period during which the hospital records will be reviewed for whether they support medical necessity for procedures which occurred during the stay.  The Part B (physician) payment will proceed.  If the determination is made that records do not support necessity, then the entire hospital stay will be denied.  The physicians will receive a form letter which will be entitled a “Take-Back Letter” requiring return of any funds paid in conjunction with the affected hospitalization.  This will affect all cardiologists and orthopedists involved in the care – both invasive and noninvasive.  This may include outpatient reimbursement for follow-up care related to the hospitalization.  It’s not clear whether other specialists or primary care physicians will also receive Take-Back Letters.

The premise under which this program is being initiated is that physicians are not adequately documenting the justification for their procedures and that as many as half the procedures performed may be unnecessary.  This estimate apparently arises from White House and Congressional concerns that unnecessary procedures are being funded.  They draw their conclusions from Comprehensive Error Rate Testing (CERT).

In our discussions with FCSO, we are told this is an instruction from The Center for Medicare and Medicaid Services (CMS), and that it is being implemented nationally.  We have confirmed via the National ACC that this is the case in at least 10 other states.  We are also told that if, after a matter of months, it appears that the scrutiny being used is unnecessary, there will be a shift in focus away from the initial DRG’s towards other, different DRG’s.

The Chapter leadership is concerned that the Pre-Payment Audit Initiative is being launched at all and, additionally, that it is being launched with little more than 6 weeks warning. The FCACC and the Florida Orthopedic Society both think that the previous Local Coverage Determinations (LCD) that were formulated should have provided FCSO with the necessary tools to fight over-utilization and fraud, and that no additional measures are necessary at this time. It occurs when holidays are imminent and end of the year finances are being addressed.  We consider this unfair and unprecedented.  We are concerned that cardiology practices, already subject to huge technical component cuts, loss of consult codes, increasing certification overhead, costs of implementation of electronic medical record systems and the Sustainable Growth Rate issue, will now be threatened by unjustified “Take-Back” strategies.

Here is the list of DRGs which will be subject to 100% prepayment medical review in Florida:

  • 226 — Cardiac defibrillator implant without (w/o) cardiac catheter with (w/) major complications or comorbitities (MCC)
  • 227 — Cardiac defibrillator implant w/o cardiac catheter w/o MCC
  • 242 — Permanent cardiac pacemaker implant w/MCC
  • 243 — Permanent cardiac pacemaker implant w/CC
  • 244 — Permanent cardiac pacemaker implant w/CC or MCC
  • 245 — Automatic implantable cardiac defibrillator (AICD) generator procedures
  • 247 — Percutaneous cardiovascular procedure w/drug eluding stent w/o MCC
  • 251 — Percutaneous cardiovascular procedure w/o coronary artery stent w/o MCC
  • 253 — Other vascular procedures w/CC
  • 264 — Other circulatory system or procedures
  • 287 — Circulatory disorders except acute myocardial infarction (AMI), w/cardiac catheter w/o MCC
  • 458 — Spinal fusion except cervical w/spinal curve, malign, or 9+ fusions w/o CC
  • 460 — Spinal fusion except cervical w/o MCC
  • 470 — Major joint replacement or reattachment of lower extremity w/o MCC
  • 490 — Back and neck procedures except spinal fusion w/CC/MCC or disc device/neurostimulator


  1. norman silverman md says

    “The premise under which this program is being initiated is that physicians are not adequately documenting the justification for their procedures and that as many as half the procedures performed may be unnecessary. This estimate apparently arises from White House and Congressional concerns that unnecessary procedures are being funded. They draw their conclusions from Comprehensive Error Rate Testing (CERT).” this is the critical issue, the validity of this statement. it is difficult to argue that this is onerous to providers if physicians are bilking the wealth and health of the public by doing unnecessary procedures. nuclear imaging has had a tremendous “haircut” and the post facto evidence of decreased volumes when pre approval criteria were more stringent in character and enforcement perhaps harbingers the need for such scrutiny. maybe a more palatable way of rolling this plan out would have been giving providers a trial period of clearer guidelines for documentation and a period of self policing to convince all parties that such actions are justifiable.

  2. Joshua Scholnick says

    I suspect there is a big spreadsheet at the Medicare administrative contractor which identifies some fraudulent interventional cardiologists and EPs in jurisdiction 9 beyond any real doubt. It’s too bad the vast majority of cardiologists practicing careful, evidence based care are subject to the audit but we aren’t really policing our profession.

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