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Prepayment Reviews Can Improve Quality of Care in the Medicare FFS Program

New CMS Final Rule Implements Prepay Reviews in Medicare Advantage & Part D Programs

Washington, D.C. – In April, the Centers for Medicare & Medicaid Services (CMS) issued a final rule (CMS-4182-F) that updates the Medicare Advantage (MA) and prescription drug benefit programs (Part D), providing new tools to improve quality of care. One of the notable program changes implemented within the new rule is the addition of more proactive program integrity efforts – prepayment claim reviews.

Prepayment reviews allow provider claims to be examined for billing accuracy before they are paid. Historically, Medicare and Medicaid have relied on “pay and chase” efforts to oversee the integrity of program payments. However, in recent years, CMS has discussed efforts to move away from “pay and chase” to better safeguard program resources and ultimately improve quality of care, and even successfully tested the concept of prepayments reviews.

“The Council for Medicare Integrity (CMI) urges CMS to apply these important principles to the fraud and waste control efforts within Medicare Parts A and B,” said Kristin Walter, spokesperson for the Council for Medicare Integrity.  “Proactive prepayment fraud and waste reduction activities lower the cost of care, reduce Medicare spending and ultimately, provide value to beneficiaries, the government and taxpayers. We ask CMS to seek the legislative authority to implement Medicare Recovery Audit Contractor (RAC) prepayment reviews within the Medicare Fee for Service (FFS) program as well.”

In FY2012, the Centers for Medicare and Medicaid Services (CMS) launched a three-year Prepayment Review Demonstration project allowing RACs to review certain error prone Medicare FFS claims before they were paid. The program was greatly successful, with RACs preventing more than $192 million in improper payments from leaving the program in error. Prepay claim reviews were completed accurately and quickly, within just 30 days, significantly reducing the burden providers say they endure via “pay and chase” efforts.

Due to the success of this demonstration program, the Government Accountability Office (GAO) has consistently recommended, both in reports and before Congress, that “CMS should actively seek legislative authority to have RAs conduct prepayment claim reviews.”

The GAO also found that prepayment reviews would impact providers more favorably. According to the GAO’s report, “Officials we interviewed from health care provider organizations told us that providers generally respond to prepayment and post-payment reviews similarly, as both types of review occur after a service has been rendered, and involve similar medical documentation requirements and appeal rights.” Medicare FFS prepayment reviews would ensure claims are paid accurately and quickly, without posing any new inconvenience to providers.

Unfortunately, the Medicare Fee-for-Service program loses more money to improper payments than any other program government-wide. An improper payment is made when a Medicare provider misbills a claim – often billing to the wrong code, duplicating the submission of a claim, billing for more medication than was provided to the patient or even providing services that are not medically necessary. Over the past five years, more than $200 billion has been lost from the Medicare FFS program due to these types of billing mistakes.

Historically, Recovery Auditors have reviewed a very small subset of Medicare FFS claims on a post-payment basis to identify improper payments made, recover those funds and return them to the Medicare Trust Fund. RACs have returned more than $10 billion in improper payments back to the Medicare Trust Funds. New RAC prepayment reviews would allow claims to be reviewed for billing accuracy before paying claims, ensuring proper Medicare FFS payments and retaining scarce program funds that would previously have been paid out in error.

“Medicare fraud and waste are absolutely patient safety and quality of care issues,” said Walter. “We ask CMS to apply the same important philosophy implemented within Medicare Advantage and Medicare Part D to similarly add prepayment claim reviews to benefit Medicare FFS program.”

For more information, please visit: www.medicareintegrity.org.

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About the Council for Medicare Integrity

The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments

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