Prepayment audits to start Aug. 27

The Centers for Medicare & Medicaid Services finally gave the official word on when hospitals should brace themselves for prepayment audits--Aug. 27, the agency quietly announced on its website.

CMS first announced the Recovery Audit Prepayment Review demonstration projection in November 2011 for a Jan. 1 start data and then delayed it to June 1, then again vaguely as the "summer of 2012."

The official launch date of Aug. 27 provides the timeline as to when CMS will target hospitals in states with high volumes of fraud or error-prone providers (Florida, California, Michigan, Texas, New York, Louisiana, Illinois) or many short inpatient stays (Pennsylvania, Ohio, North Carolina, Missouri).

The goal is to cut improper payments before they even happen. Shifting away from the pay-and-chase method, Medicare Recovery Auditors (RAC) will review claims before payment to ensure that providers comply with all Medicare payment rules.

President Obama in 2010 set three goals for cutting improper payments this year: curbing overall payment errors by $50 billion, cutting Medicare error rate in half and recovering $2 billion in improper payments, according to CMS. The prepayment review program is intended to play a big part in preventing fraud, waste and abuse and achieving those goals.

The demonstration project will last for three years.

To learn more:
- read the CMS demonstration website
- see the November announcement

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