WASHINGTON — Medicare is all about overpayments, but underpayments? Not so much.
Members of the Practicing Physician Advisory Council wanted to know why a new demonstration program from the Centers for Medicare and Medicaid Services rewards contractors financially for finding money owed to the Medicare program, but not for finding money that Medicare has underpaid to physicians.
Under the program, known as the Recovery Audit Contractors program, three contractors hired by CMS look for overpayments and underpayments made by Medicare to physicians and hospitals, and try to recover the overpayments.
The program, which began last spring, operates in the three states with the largest Medicare beneficiary populations: California, Florida, and New York. Contractors review claims of at least a year old.
Contractors are paid a percentage of what they collect in overpayments, but there is no similar incentive for finding underpayments. That's because Medicare would have to pay out more money than the amount of the underpayment, “and that's money going out of the [Medicare] trust fund,” Gerald Walters, director of the financial services group at CMS, told PPAC members at a council meeting. He said CMS “believes it has found a way to incentivize” the contractors to target underpayments, but he did not elaborate.