As part of the ongoing effort to reduce improper payments in Medicare and Medicaid, CMS announced on November 15 that it will launch a number of demonstration programs beginning in January 2012 that will target some of the most common factors that lead to erroneous payments. The top two issues that have the most dramatic impact on providers are the launch of a recovery audit prepayment review program and a Part B rebilling initiative.
In the prepayment review demonstration program, recovery auditors (formerly known as RACs), will be allowed to review claims before they are paid to ensure that the provider complied with all Medicare payment rules, according to the CMS release. The recovery auditors will conduct prepayment reviews on certain types of claims that historically result in high rates of improper payments.
The reviews will take place in seven states with high populations of fraud- and error-prone providers: Florida, California, Michigan, Texas, New York, Louisiana and Illinois. The demonstration will also focus on four states with high claims volumes of short inpatient stays: Pennsylvania, Ohio, North Carolina and Missouri.
This 11-state demonstration project aims to help lower the error rate by preventing improper payments rather than the traditional “pay and chase” methods of looking for erroneous payments are they’ve been made, according to CMS.
For some, the initial reaction to the announcement of prepayment review may be unfavorable, but it should actually be a positive development for providers, says Kimberly Hoy, JD, CPC, director of Medicare and compliance for HCPro, Inc.
“Post-payment reviews are so far after the fact that hospitals aren’t able to resubmit claims with correct information or submit denied inpatient stays for payment on 12X type of bills and they lose payment all together,” she says. “With prepayment reviews, the denials should be timelier to the submission of the claim, which will help to improve providers’ ability to correct and submit claims within timely filing requirements.
"This allows providers to be paid for services within the regular claims processing, rather than having to appeal after the fact and possibly be awarded the difference in payment from what they were paid and what they should have been paid, which is what they have to do now," she continues.
From the provider standpoint, this may help to ease the administrative burden of the recovery audit process. One provider—a managed care contractor and RAC point of contact at a hospital in Region C, who wished to remain anonymous—says that this should help in the long run if it helps to prevent the recoupment process.
Read more on rebilling for Part B payments and prior authorization for certain medical equipment.