Medicare’s New Debt Collection Policies Hurts Providers

August 19, 2015

Medicare has amped up its efforts to collect debts related to alleged billing/coding errors, which is hurting providers in the pocket.

I have addressed the issue of responding to alleged billing/coding errors and overpayments many times in my blogs.  The process is never easy, but going through the administrative steps is a necessity for providers who are challenging recoupments by CMS contractors.

This past year the government seems to have made the process even more painful for providers, an observation based on what my colleagues and I witnessed over the past year related to the government’s collection efforts.  The change seems to be derived from the Affordable Care Act (commonly referred to as "Obamacare"), in which the government clearly outlined its intent to pay for costly healthcare and insurance mandates through increased healthcare fraud enforcement.

While the establishment of designated task forces and other stepped-up enforcement actions in order to comply with the reform law’s mandates was expected, the lengths to which the government is going to collect as much money as quickly as possible is shocking and unfair to providers.  

It’s important to understand that when a Medicare provider is ordered to repay funds to Medicare, the debt is referred to the Treasury Department if it's not collected within a certain period of time. The Treasury Department then outsources collection to private contractors. In past years, debts typically were only sent to collections once a physician exhausted all rights to appeal, whether he/she actually owed all or a portion of that debt.  As long as the physician followed the statute-specific appeal process, the debt generally would not be collected until the provider's rights were exhausted. 

One of my colleagues recently spoke with a debt collector for the Treasury Department and requested that any action be stayed, as our client had a hearing scheduled with Medicare to determine whether it actually was owed any of the funds it requested for recoupment.  While seemingly sympathetic, the collector shared that the Treasury Department was no longer willing to hold off collections pending appeal. He further confirmed that the current mandate is to collect, and that while in years past a pending hearing would have suspended the debt until resolution, this was no longer true. 

What this collection agent said has also become clear in many other instances. For example, Medicare ordered a physician client to repay in excess of $100,000 in allegedly unnecessary Medicare billings. More than one year later, there are some claims that have not been resolved, each in various states of appeal. Of the claims that have been resolved, the overwhelming majority have been decided in the physician's favor. Despite the pending appeals and the physician's likelihood of success, the physician receives weekly letters referring debts for collection. Neither the Treasury Department nor the collection agent were persuaded by the pending appeals; the doctor had the choice to either pay the debt now or have her credit ruined. Neither is an appealing choice. 

Providers must be aware that even if they avail themselves of the statutory appeals process, there may still be a demand for payment upfront.  If payment is made, the provider must hope that the government will pay back the funds in the event of a successful appeal (with no timeframe for return of such funds or reasonable interest).  Given the confusion and lack of communication between different contractors and CMS, we are not hopeful these amounts will be fully repaid without some additional legal action and expense. Alternatively, a provider can refuse to make payment pending appeal, however this could negatively affect the practice's credit and financial security. 

Unfortunately, it appears the government's current mandate is not only to identify and prosecute those true "bad actors" engaging in healthcare fraud, but simply to recover as much money as possible. It doesn’t matter if such collection efforts are handled in a fair or just manner.  This means innocent providers will certainly feel the sting of these new policies a “collect at all costs” approach which will do little to deter more doctors from leaving the Medicare program or opting-out of insurance completely.