Tag Archives: prepayment review demonstration project

RAC Roundup: Preparing for the Prepayment Review Demonstration Project

by Daniel E. Gospin and Amy F. Lerman

As part of continued efforts to expand the Medicare Recovery Audit Contractor (“RAC”) program, the Centers for Medicare & Medicaid Services announced in November 2011 the implementation of a demonstration project that will allow RACs to conduct prepayment reviews on certain types of Medicare claims that historically have resulted in high rates of improper payments.

The prepayment review demonstration project will focus these efforts in 11 states—seven of which were selected because they have significant populations of fraud- and error-prone providers, and four states were selected for having relatively high claims volumes of short inpatient (“one day”) stays. The demonstration project is expected to begin in the summer of 2012.

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HEALTH REFORM: RAC Roundup: Preparing for the Prepayment Review Demonstration Project

As part of continued efforts to expand the Medicare Recovery Audit Contractor (“RAC“) program, in November 2011 the Centers for Medicare & Medicaid Services (“CMS“) announced the implementation of a demonstration project that would allow RACs to conduct prepayment reviews on certain types of Medicare claims. This demonstration project is intended to lower error rates by preventing improper payments rather than identifying improper payments after they have been made.[1] Originally slated to begin in January 2012, the demonstration project is expected to begin in the summer of 2012.

The introduction of the demonstration project reflects an ongoing dilemma—balancing the importance of Medicare program integrity initiatives against the effect that prepayment review has on Medicare providers. Providers should consider that this demonstration project will not simply be a one-year trial; instead, it will evolve to become the new model for RAC reviews. As such, providers should take the necessary steps to assess, analyze, and, as needed, make investments to improve internal auditing and monitoring policies, procedures, and processes.

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