Revenue Cycle

CMS announces major efforts to help reduce Medicare, Medicaid improper payments

Recovery Auditor Report, November 17, 2011

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 this 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.  According to CMS, 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.

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