Audits: Part 2

Sunday, January 22, 2012

Editor's note: This is Part II of a five part series. Part III will address post-payment audits; Part IV will compare post-payment audits and prepayment reviews conducted by DME MACs with those conducted by ZPICs; and Part V will discuss contractor abuses and the steps that AAHomecare and industry stakeholders are taking to correct the abuses.

What is a prepayment reviews

A post-payment audit can be conducted by a MAC, CERT, RAC or ZPIC. With a post-payment audit, the provider has previously received payment from the MAC, and the Medicare contractor is trying to determine if the MAC should have previously paid the claim. If the answer is "no," then the contractor will ask the provider to repay the money. While a post-payment audit is unpleasant, it is not "life threatening."

On the other hand, a prepayment review is more serious in the sense that the contractor will not initially pay the claim until the provider submits documentation confirming to the contractor (in its discretion) that underlying documentation is proper. Only MACs and ZPICs conduct prepayment reviews. If a claim is denied at the prepayment review stage, and the provider goes through the administrative appeal process and eventually ends up before an ALJ, then it may take the provider up to nine months to receive payment for the claim.

What can trigger a prepayment review?

One triggering factor is if the provider furnishes items that are selected by the OIG for prepayment edits. Another factor is if the provider has caught the attention of the MAC or ZPIC. This may result from (i) the provider faring poorly with prior post-payment audits and prepayment reviews; (ii) data analysis indicating that the provider submits claims that are "outside the norm;" and (iii) complaints from physicians and beneficiaries. To reduce the risk of the provider catching the attention of the MAC/ZPIC, it is important that the provider be successful in responding to prior post-payment audits and prepayment reviews. It is important that the provider have a good relationship with physicians and beneficiaries so as to reduce the chances of a complaint being filed.

How is a prepayment review conducted?

The provider will submit a claim to the MAC for a product that the provider has furnished to a beneficiary. Instead of paying the claim, the MAC/ZPIC will mail an additional document request ("ADR") to the provider. The provider will need to send the requested documentation to the contractor within 30 days. If the prepayment review falls under the category of "Medical Review," then the contractor must reach a determination within 60 days from receipt of the provider's documentation. Normally, it is the MAC (not the ZPIC) that conducts the medical review prepayment review. Conversely, if the prepayment review falls under the category of "Benefit Integrity," then the contractor (the ZPIC) does not have any set time line within which to make a determination.

What is the length of time for a prepayment review?

Normally, the provider will be on a prepayment review until its charge denial rate ("CDR") is less than or equal to 20%. Let's say that the provider is initially placed on 100% prepayment review. Once its CDR drops below 75%, then the review should be converted to a targeted review. In a targeted review, the contractor will review a portion of claims based on the provider's CDR. For example, if the provider's CDR is 40%, then 40% of the claims submitted in a month should be reviewed. This process should continue until the provider's CDR equals to or is less than 20%, at which time the prepayment review should terminate. 

How do I get off a prepayment review?

The goal of the provider is to reduce its CDR. The provider needs to thoroughly review its documentation to ensure that it supports the submitted claims. The provider should open up a line of communication with the contractor's auditor. If the provider is initially on a 100% prepayment review, then the provider should try to convince the auditor to limit the prepayment review to a set number of claims and/or to limit the review to a set time period. The provider needs to push the auditor to make claims determinations as quickly as possible. If necessary, the provider should go over the auditor's head and speak with the contractor's district/regional manager. If necessary, the provider should go over the contractor's head and speak with CMS (in particular, to the person in charge of supervising the contractors). If necessary, the provider should ask its elected officials (U.S. representative and/or U.S. senator) to contact the contractor on behalf of the provider. 

Jeffrey S. Baird, Esq. is chairman of the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. He can be reached at (806) 345-6320 or