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CMS’ Special Open Door Forum on Recovery Auditor Pre-Payment Review Demonstration Program

On December 21, the Centers for Medicare & Medicaid Services (“CMS”) held a special Open Door Forum (“ODF”) for the Recovery Auditor Pre-Payment Review Demonstration Program announced on November 15 along with two other demonstration programs, all of which will become effective on January 1, 2012.

The ODF, in which 1600 callers participated, addressed the purposes and the operational aspects of the program. CMS explained that they developed the program in an effort to reduce the error rate for improper payments, prevent improper payments before they are made and to focus on claims with high improper payment rates.

The demonstration program will begin with the pre-payment review of short-stay inpatient hospital claims (two days or less) for hospitals located in the eleven states affected by the demonstration program. Specifically, one MS-DRG, 312 Syncope & Collapse, will be reviewed beginning January 1. In March and then again in May CMS will add two more MS-DRGs and in July CMS will add three more. Thus, by July there will be eight DRGs subject to pre-payment review under the demonstration program:

MS-DRGs for Review:

January 1: MS-DRG 312 Syncope & Collapse

March 1: MS-DRG 069 Transient Ischemia and MS-DRG 377 G.I. Hemorrhage W MCC

May 1: MS-DRG 378 G.I. Hemorrhage W CC and MS-DRG 379 G.I. Hemorrhage W/O CC/MCC

July 1: MS-DRG 637 Diabetes W MCC, MS-DRG 638 Diabetes W CC and MS-DRG 639 Diabetes W/O CC/MCC

Many of the questions asked by the callers revolved around the operational aspects of the program. CMS stated that even though the claims identified for pre-payment review are subject to pre-payment review, there will not be a 100% review of all of those claims. CMS would not, however, state what the percentage of claims reviewed would be. In addition, CMS explained that claims subject to pre-payment review will be suspended and then the provider will receive an Additional Documentation Request (ADR). Providers will receive the ADRs electronically and the ADR will state whether the provider should send the documentation to their MAC or to their RAC. Providers will have 30 days to submit documentation and will receive an automatic denial if they do not send the documentation within 45 days.

Another interesting development from the ODF arose from the relationship between the AB Rebilling Demonstration Program and the Recovery Auditor Pre-Payment Review Demonstration Program. In response to one caller’s question, CMS confirmed that if a participant of the AB Rebilling Demonstration Program is also located in a state subject to the Pre-Payment Review Demonstration Program, then that provider will be unable to appeal short-stay inpatient claims denied on pre-payment review, but they will be able to rebill for Part B reimbursement.

The most severe consequence of the pre-payment review demonstration program is the effect it will have on providers’ cash flow. As more claims and services are added to the list for pre-payment review, providers will be forced to absorb more costs from services that are denied. If a provider decides to appeal the denials, it could take over a year for them to reach the Administrative Law Judge hearing stage. Clearly, waiting a year for payment will have very serious implications on hospitals’ ability to provide services.

For assistance with a Medicare appeal or for more information on the demonstration programs announced by CMS, please contact a Wachler & Associates attorney at 248-544-0888.