Revenue Cycle

CMS announces official start date for Recovery Auditor prepayment reviews

Recovery Auditor Report, August 9, 2012

CMS officially announced the Recovery Auditor prepayment review demonstration this past November, but then in January decided to delay the program by three months. Since then—despite rumors that it could be coming soon —the official start date has been unknown to the public. This changed however, when CMS announced on Friday, August 3 that Recovery Auditor prepayment reviews will begin on August 27.

States included under the demonstration

In this demonstration, Recovery Auditors will conduct prepayment reviews on certain types of claims that historically result in high rates of improper payments. The following seven states, which have high populations of fraud- and error-prone providers, will be subject to the demonstration: Florida, California, Michigan, Texas, New York, Louisiana, and Illinois. In addition, four states with high claims volumes of short inpatient stays will also be subject to the program: Pennsylvania, Ohio, North Carolina, and Missouri.

Target areas and focus

Following the announcement of the program, CMS also released further details on the areas of focus for the program on a special open door forum call held on December 21. After CMS identified short hospitals stays as a problem area in its comprehensive error rate testing (CERT) report, the agency decided it would target these issues in its prepayment review demonstration. Specifically, it will focus on:

  • 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

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