Deal vetoes bill on Medicaid audit contractors

This week’s vetoes by Gov. Nathan Deal included a little-noticed bill related to Medicaid.

House Bill 489 would have barred the state from paying a contingency fee to a contractor to recover Medicaid overpayments to doctors and hospitals. Implementing the bill would have put Georgia’s Medicaid program in conflict with federal law, Deal said in his veto message.

The legislation was one of nine bills vetoed by Deal.

The governor said the bill ‘’would also significantly impair Georgia’s ability to detect and deter fraud and abuse within its Medicaid program because it would eliminate an effective option of detecting overpayments.’’

House Bill 489 was a response to the health care reform requirement that states establish a Medicaid recovery audit contractor program, as they have done with the federal Medicare program.

For overpayments, states would pay audit contractors on a contingency-fee basis, whereby the contractor would receive a percentage of the amount recovered as an overpayment.

The state Medicaid program covers about 1.6 million poor and disabled Georgians. The Department of Community Health, which runs the program, said Thursday that it had no comment on the veto.

The Georgia Hospital Association, which supported the House bill, said it preferred that the state pay an auditor on a flat-fee basis, to guard against a company overzealously hunting for payment errors.

“The Georgia hospital community, along with other health care providers, are disappointed by the governor’s veto, but we abide by the governor’s decision,’’ said Kevin Bloye, a GHA vice president.

A website for the federal Centers for Medicare and Medicaid Services indicated Georgia had sent paperwork to the federal government on the audit contractor issue, and in turn had its ‘’plan amendment’’ on Medicaid audits approved. The website also said Georgia requested an ‘’exception’’ to the rules.

Community Health officials could not be reached for comment on the state’s plan for Medicaid recoveries.

The American Hospital Association in December sought relief from the Affordable Care Act’s requirement for Medicaid audit contractors, asking CMS in a letter to exempt states with existing Medicaid audit or managed-care programs.

Georgia has managed-care plans covering most Medicaid beneficiaries. And currently the state operates a task force on Medicaid fraud that has won praise from lawmakers for recovering millions of dollars in fraud.

Many physicians organizations, including the Medical Association of Georgia, also wrote to CMS in January voicing concerns about the Medicaid recovery initiative, citing the experience with the Medicare audit program.

“We continue to have concerns about the perverse incentive structure and burdensome nature of the Medicare Recovery Audit Contractor (RAC) program, and firmly believe that the best way to reduce improper coding is through Online CPC Classes and outreach,” the letter said.