CMS Details Recovery Auditor Prepayment Review Demo

James Carroll for HealthLeaders Media, December 29, 2011

On November 15, CMS announced that it will launch a number of demonstration programs that are set to begin in January 2012, one of which is its recovery auditor prepayment review initiative.  On December 21, CMS held a special open door forum to further discuss the program.

Each year as part of its financial reports, CMS produces an estimate of its improper payments in the Medicare program. In fiscal year 2011, the rate of error in the Medicare program was 8.6%, which translates to roughly $29 billion in error, according to George Mills, director of provider compliance group at the office for financial management at CMS, who spoke on the call.

The goal of the prepayment recovery auditor demonstration, as stated on the open door forum by Amy Cinquegrani, Division of Recovery Audit Operations at CMS, is to prevent improper payments before they are made and to thereby lower this error rate.

Areas of Focus
CMS identified short hospital stays in its CERT (comprehensive error rate testing) report as a problematic area. The prepayment review demonstration will address these short stays.

Specifically, the three CMS focus areas of short hospital stays are:

  • Incorrectly coded claims
  • Patients who came through the emergency department but should have subsequently gone to observation rather than being admitted
  • Patients who received elective surgery during short-day stays when they should have been outpatient procedures

CMS extracted a number of short stay DRGs from analytics within the CERT report that present billing problems for providers that will come under focus in the demonstration project. These DRGs represent the first group of DRGs that will be held for prepayment reviews. As the project moves forward, there will be additional DRGs added to the list, according to Mills. The initial list is as follows:

  • January 1: MS-DRG 312, syncope and collapse
  • March 1: MS-DRG 069, transient ischemia and MS-DRG 377, gastrointestinal (GI) hemorrhage with MCC
  • May 1: MS-DRG 378, GI hemorrhage with CC and MS-DRG 379, hemorrhage without a CC or MCC
  • July 1: MS-DRG 637, diabetes with MCC, MS-DRG 638, diabetes with CC, and MS-DRG 639, diabetes without a CC or MCC
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