Long-term care providers have long argued to lawmakers that unnecessary audits hurt their operations and reduce the amount of residents they could care for. These arguments eventually persuaded the Centers for Medicare & Medicaid Services (CMS) to act and earlier this year it did so when it announced that it was temporarily suspending its recovery audit contractor (RAC) program because of concerns that it was contributing to Medicare’s sizeable backlog of claims appeals. Long-term care providers who had become increasingly frustrated with Medicare’s appeals process immediately hailed this decision and it was also described as a “welcomed next step” by Mark Parkinson, the CEO and President of the American Health Care Association/National Center for Assisted Living, who ultimately would like to see Medicare clear out its entire claims backlog and process appeals much quicker than it currently does. However, new information has recently come to light that could encourage CMS to lift the suspension and begin conducting audits under its RAC program again.

According to Congressional testimony from Gloria Jarmon, the Deputy Inspector General for the Department of Health and Human Services (DHS), due to recent budget cutbacks DHS’ Office of the Inspector General is projecting that Medicare and Medicaid oversight activities will decrease by 20% in fiscal year 2014. Long-term care providers welcomed this news the same way they welcomed the suspension of the RAC program because they feel that they often face unwarranted scrutiny from these programs. They argue that this forces them to spend time and resources responding to agency requests that would be better spent on resident care instead. However, most of the congressmen that attended the hearing where Ms. Jarmon made her statements had a different view of things. Furthermore, these views seemed to harden when Ms. Jarmon stated that her office expects revenue from audits and investigations for the first half of 2014’s fiscal year to be nearly $1 billion less than it was last year. The criticism of Medicare and Medicaid’s reduced oversight activities was bipartisan as demonstrated by comments from Republican Representative Jim Gerlach, who stated that the hearing’s witnesses should be “embarrassed” by their agencies allowing improper Medicare payments to reach $50 billion annually, and Democratic Representative Jim McDermott who expressed concerns that payment changes that are required under the Affordable Care Act could lead to additional fraud that will be hard to detect. Long-term care providers should take note of these comments as they indicate that some members of Congress clearly want to increase oversight of Medicare and Medicaid payments and possibly reverse CMS’ decision to suspend its RAC program as well.

As of today, it does not appear that Congress will be passing legislation anytime soon that would increase oversight of Medicare and Medicaid payments or require CMS to reinstate its RAC program; however, this could change in the future as additional information regarding lost revenue from improper payments is reported to Congress. Many legislators remain concerned about the size of the nation’s annual deficits and could push for increases in oversight and audit activity as a way to collect additional revenue to reduce these deficits. Accordingly, long-term care providers should stay abreast of the situation as any changes that Congress makes in this area could affect their operations and net operating income as well. In the meantime, long-term care providers should also continue to take advantage of the industry’s strong dynamics and today’s low interest rates to expand their operations and grow their portfolios. The Chicago-based financing firm Cambridge Realty Capital offers many different financing programs to facilitate these activities and interested parties should contact them today to learn more about these programs and what the firm has to offer.

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