CHICAGO—An effort to reduce overpayment for medical procedures and patient care by the Centers for Medicare & Medicaid Services is putting pressure on hospitals and health care providers to comply with new recovery audit rules and provide better patient care.

The federal government is grappling with ways to provide better, more affordable health care as it works to reform the U.S. system. One way they're looking to rein in costs is by reducing overpayments for care due to improper billing, which includes health care providers charging for hospital-acquired conditions, also known as "never events."

Effective April 1, 2008, CMS said it would not pay for care associated with hospital-acquired conditions proper documentation was provided of conditions that were present on admission.

These practices are aimed at providing better quality care, rather than collecting a fee for service, said Katherine M. Keefe, a King of Prussia, Pa.-based attorney who leads the health law practice for Marshall, Dennehey, Warner, Coleman & Goggin, during a session at the Professional Liability Underwriting Society's Medical PL Symposium in Chicago last week.

The move by CMS is going to force health care providers to "better coordinate care and develop better risk profiles," she added.

The government's value-based programs are going to force health care providers, particularly hospitals, to be even more vigilant in coding, billing and documenting claims to comply with CMS' recovery audit contractors, who will be looking to recoup overpayments on bills for Medicare patients, including those for so-called never events. Never events include an object left in the body after surgery, an air embolism and blood incompatibility.

"There are a lot of improper payments out there in a complex environment," said Bret S. Bissey, director of regulatory compliance for Philadelphia-based IMA Consulting. "Anyone that is a medical provider knows that this is a complex problem because we have the most complex system when it comes to billing health care," he said.

Mr. Bissey likened recovery audit contractors to bounty hunters, saying they are looking for "improper payments" by the government to hospitals, as they are paid on a contingent basis. He added that recovery audit contractors expect to find errors, but also said hospitals can mitigate those errors by updating processes to keep accurate documentation.

"Accurate documentation is critical to the success of our hospitals," said Kenneth Felton, Hartford, Conn.-based senior vp and clinical risk consultant for Willis HRH. "Identifying risks right at the time they occur can enlighten physicians about the criticalness of documentation."

Mr. Felton stressed the importance of having "key stakeholders" in the hospital's management-- including its risk manager--help gauge and quantify the hospital's risk and how to mitigate it. He added using enterprise risk management to comply with the hospital-acquired conditions rules and involving senior leadership in safety issues helps drive positive results.

"Inadequate risk management practices is part of the reason health care is part of the current crisis we're in" nationwide, Mr. Felton said, adding that complying with hospital-acquired condition payment rules is "not impossible, but it is going to be difficult and challenging."