Hospitals and other providers are concerned about the administrative burden that comes along with the administration's crackdown on improper payments. Through new pilots, Medicare will conduct prepayment reviews of certain claims, starting in January 2012, with the goal of reducing $50 billion in improper payments and cutting down on payment errors by half, reports American Medical News.
Currently, Medicare recovery audit contractors (RAC) conduct reviews after payment. However, effective January 2012, RACs in 11 states will conduct reviews of particular claims before payment. They will focus on inpatient hospital claims, according to the amednews article.
CMS selected the states, which have historically high populations of fraud- and error-prone providers (Florida, California, Michigan, Texas, New York, Louisiana, and Illinois), as well as those states with high claims volumes of short hospital stays (Pennsylvania, Ohio, North Carolina, and Montana). The aim is to avoid the traditional "pay and chase" method, according to a CMS announcement this month.
The reasoning for the change is not clear, according to American Hospital Association (AHA) Vice President Don May. The AHA has voiced concerns about the significant amount of RAC denials, noting that RACs are better equipped to handle coding errors rather than audit claims based on medical necessity, May said.
Medicaid error rates dropped from 9.4 percent in 2010 to 8.1 percent in 2011, saving roughly $4 billion since 2009. Thanks to the declining error rates, Medicare fee-for-service avoided $7 billion in payment errors and Medicare Part C saved almost $5 billion.
For more information:
- read the amednews article
- check out the CMS announcement
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