According to health care attorney Jeff Baird of Brown & Fortunato, post-payment audits are not fun, but they are normally not fatal.
"At least with a post-payment audit, the HME supplier receives payment up front, thereby allowing it to pay its light bill and meet payroll. It is only after the fact that the supplier and the carrier argue about whether the supplier should have been paid in the first place," says Baird. However, he continues, "A prepayment review is a different animal. Before receiving payment, the supplier must submit documentation to the carrier and the supplier will receive payment months later only if the carrier is satisfied with the supplier's documentation.
"The carrier's determination can be subjective. While the supplier is waiting for the carrier's decision, the supplier must still pay its day-to-day expenses. This can be difficult to do if there is no money coming in the front door. By the time the carrier gets around to paying the supplier, the supplier may have had to close its doors."
Question: Why are prepayment reviews on an increase?
Answer: CMS has determined that for every dollar it expends in pursuing fraud cases, or simply collecting repayments, it receives many dollars in return. Instead of relying on recouping dollars previously paid, CMS has determined that it is cost-effective to "attack the problem" on the front end by requiring suppliers to justify payment before payment is made.
Secondly, as baby boomers age, there is an increase in demand for DME. Third, suppliers provide relatively expensive items. Any item that carries a high dollar reimbursement or, as a whole, accounts for significant dollars paid out on claims, becomes more likely to be the subject of post-payment audits and prepayment reviews. Lastly, auditors themselves are becoming more sophisticated. As this occurs, the auditors become stricter in deciding whether medical necessity has been established for a given piece of DME.
Question: What types of contractors does CMS contract with to conduct audits and reviews?
Answer: CMS contracts with five types of contractors: Medicare Administrative Contractors, or MACs; Comprehensive Error Rate Testing (CERT) contractors; Recovery Audit Contractors, or RACs; Program Safeguard Contractors, or PSCs; and Zone Program Integrity Contractors, or ZPICs. (PSCs are being converted into ZPICs.) MACs conduct prepayment reviews and post-payment audits; CERT contractors conduct post-payment audits; PSCs and ZPICs conduct prepayment reviews and post-payment audits; and RACs conduct post-payment audits.
Question: What causes a supplier to become a target of a prepayment review?
Answer: Generally, a supplier becomes subject to a prepayment review either because it provides an item that has been selected for prepayment edit; or it has caught the attention of the MAC or ZPIC due to the results of a post-payment audit, data analysis indicating the supplier is outside the norm or complaints filed against the supplier.
Question: What are the steps in the prepayment review process?
Answer: The supplier will submit the claim to the MAC. An Additional Documentation Request (ADR) letter will be sent to the supplier. The supplier will send the additional documentation to the auditor within 30 days. (The claim will automatically deny if documentation is not received within 45 days). The claim is reviewed by the medical review nurse and a determination on whether to pay or not is made. An Explanation of Benefits (EOB) is provided to the supplier.
Question: What is the timeframe for the review of each claim?
Answer: The MAC should review the claim within 60 days from the receipt of additional documentation. The timeframe may be longer if the review is by a PSC or ZPIC.
Question: How long will the supplier remain on prepayment review?
Answer: Normally, the supplier will be on prepayment review until its charge denial rate (CDR) is less than or equal to 20 percent. If the supplier is subject to prepayment review due to specific items being placed on a prepayment edit and the supplier provides a high volume of such items, then the supplier may be able to work with the auditor to limit the number of claims subjected to prepayment review.
Question: Will 100 percent of the supplier's claims be reviewed until the CDR reaches 20 percent?
Answer: No. When the CDR drops below 75 percent, a targeted review is initiated.
Question: What is a targeted review?
Answer: A targeted review is a review of a portion of claims submitted based on the CDR. For example, if the supplier's CDR was 40 percent, then only 40 percent of the supplier's average number of claims submitted in a month would be reviewed.
Question: What steps should a supplier take to get removed from prepayment review as soon as possible?
Answer: If the supplier is subject to a prepayment review due to specific items being placed on a prepayment edit and the supplier provides a high volume of such items, it should contact the auditor and request to limit the number of claims subjected to prepayment review.
Question: Where can a supplier look to determine areas likely for prepayment reviews?
Answer: MAC listserv; Quarterly Advisory Newsletter; OIG reports; CERT reports; OIG work plan; Office of Evaluation and Inspection reports; Office of Audit Services reports; Supplier Manual; and Medicare Learning Network.
Question: What are some practical tips in handling prepayment ADRs?
Answer: Read the ADR letter carefully. Note the due date given in the letter (denials will often occur if a response is not received within the stated timeframe). Note where to send the response, and be sure to respond to the correct office (delays and possible denials will occur if the response is to the wrong office).
Put the request letter on top of the documents that are included in the response (this helps ensure that the documents are routed appropriately when received by the contractor). Respond only one time. Do not send the response multiple times (duplicates can delay the contractor from making a decision).
Do not combine responses. If the request letter asks for documentation on just one claim, only include documentation for that claim in the response (delays can occur if the supplier combines request letters and sends them as one response). Send all response documents at one time; do not send a portion now and a portion later (delays and denials will occur if the supplier does not send everything in one response).
Do not file duplicate claims. The supplier should keep track when it has received a request for additional documentation on a prepayment claim. Do not file another claim for the same items just because the supplier has not received a response as quickly as a claim where documentation was not requested (duplicate claims can delay the contractor from making a decision).
Jeffrey S. Baird, Esq., is chairman of the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. He represents pharmacies, infusion companies, home medical equipment companies and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization. He can be reached at 806/345-6320 or jbaird@bf-law.com.
