WASHINGTON, D.C. – The Central Coast’s congressional representative is joining another California lawmaker in introducing legislation today that would put a one-year halt on a Medicare auditing program that critics say is hurting hospitals that care for the elderly.

The legislation by Reps. Lois Capps, D-Santa Barbara, and Devin Nunes, R-Visalia, would put a definite hold on a controversial program they say has put some rehabilitation hospitals in financial jeopardy for providing services to elderly patients recovering from knee and hip surgery.

It also would direct Medicare overseers and the U.S. Government Accountability Office, the auditing arm of Congress, to conduct a full appraisal of the program.

The legislation comes as the Centers for Medicare and Medicaid Services are gearing up to expand the auditing from a three-state pilot program in California, Florida and New York into a permanent program in all 50 states.

“These people are bounty hunters,” Capps said in an interview. But she said most of the blame lies with the agency that runs Medicare, which did not respond to a request for comment.

“We’re fed up, and we are not going to take it anymore,” Capps said.
She said the California congressional delegation has been trying for two months to get written explanations for the high rejection rates, and that the California Hospital Association is changing treatment options for elderly patients.

“I am embarrassed by this,” Capps said. “This is not the government I am proud to represent.”

Capps said she expects to sign most, if not all, of California’s 53-member House delegation onto the bill, as well as lawmakers from New York and Florida where complaints also are on the rise.

The program was authorized by Congress in 2002 to give the Medicare agency more tools to control escalating costs by contracting with recovery auditors to go over billings. Auditors are paid by commissions rather than set fees.

Complaints have been heaviest in California, where Atlanta- based PRG-Schultz International was awarded a three-year contract.
It is the only for-profit auditing company involved in the pilot program.
PRG-Schultz has focused heavily on more than 70 rehabilitation hospitals statewide that take patients after surgery and, through therapy and other services, help them recover to return home.

Auditors began demanding claim files as far back as five years and have rejected more than 90 percent of them.

The Medicare agency so far has defended the rejections based on old rules under which it said patients should have been shunted to nursing homes or out-patient therapy.

Those rejections have resulted in tens of millions of dollars being automatically withdrawn from the affected hospitals’ Medicare accounts, putting several in financial difficulty.

PRG-Schultz, meanwhile, was paid a commission of 25 cents or 30 cents of each dollar taken from the hospitals.

Under its contract, PRGSchultz is allowed to keep its commission even if its decisions were later reversed on appeal, as is beginning to happen now.

More than three dozen members of the state’s congressional delegation wrote the Medicare agency in May asking for a review of PRGSchultz practices.

Among their concerns is that the auditing program puts a huge paperwork burden on hospitals, many of which are nonprofit groups, and forces them to hire attorneys to contest PRG-Schultz decisions.

Facing mounting delegation pressure, the Medicare agency announced in September that it was doing a monthlong “pause” of PRG-Schultz hospital reviews.

The legislation today comes after the Medicare agency told Capps and Nunes that it would not be able to meet their Wednesday deadline to provide explanations about what the pause means and what, if any, problems it has encountered.

Jan Emerson, spokeswoman for the California Hospital Association, called the moratorium “appropriate and necessary.”

She said the high rejection rate in California is forcing rehabilitation hospitals to limit acceptance of Medicare patients because of financial risk.

“We are not afraid of auditing,” Emerson said. “But when you have 90 percent denials, it’s going to affect decisions of providers about when to refer patients to these types of in-patient services.”

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