CMS Recovery Audit Prepayment Review Demonstration Project

The CMS announced that the Recovery Audit Prepayment Review Demonstration, which was delayed from its initial start date of January 1, 2012, is expected to move forward on or after June 1, 2012.  The Recovery Audit Prepayment Review will allow Recovery Audit Contractors, or RACs, to review claims before they are paid to ensure that the provider complied with all Medicare payment rules. The RACs will conduct prepayment reviews on certain types of claims that have been found to result in high rates of improper payments.  The demonstration project will focus on seven states with high populations of fraud- and error-prone providers (FL, CA, MI, TX, NY, LA, IL) and four states with high claims volumes of short inpatient hospital stays (PA, OH, NC, MO) for a total of 11 states. It is expected that the reviews will help lower the error rate by preventing improper payments on the front-end, rather than looking for improper payments after they occur, known as “pay and chase.”  As with the original RAC demonstration projects, if these reviews are successful, and it’s expected that they will be, other states will be included in subsequent roll-outs of the project.