Pre-Payment Reviews

Pre-payment reviews and post-payment audits have increased in frequency and intensity. With a post-payment audit, at least payment has been received up front, allowing an HME company to keep its doors open. Conversely, with a pre-payment review, the supplier does not receive payment until after the carrier is satisfied — and by the time that happens and payment is released, the company may have been forced to close its doors.

Why are reviews and audits on such a rapid increase? First, experience has shown that for every dollar CMS spends on fraud, overpayment detection and enforcement, it collects that amount many times over. Second, there is an increase in utilization of DME. Third, DME suppliers provide relatively expensive items. And last, the auditors themselves are becoming more sophisticated.

CMS contracts with three types of contractors to achieve the goal of reducing improper payments: Medicare Administrative Contractors (MACs), Comprehensive Error Rate Testing (CERT) contractors, and Recovery Audit Contractors (RACs). CMS also contracts with Program Safeguard Contractors (PSCs), now being converted to Zone Program Integrity Contractors (ZPICs), to identify and stop potential fraud.

Generally, an HME supplier becomes subject to a pre-payment review either because it provides an item that has been selected for pre-payment edit, or it has caught the attention of the DME MAC or ZPIC due to: the results of a prior audit; data analysis indicating that the supplier is outside the norm; or, complaints filed against the supplier.

The steps in the pre-payment review process are the following: The supplier submits the claim to the DME MAC; an Additional Documentation Request (ADR) letter is sent to the supplier; the supplier sends the additional documentation to the reviewer 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; and an Explanation of Benefits (EOB) is provided to the supplier. Each claim is normally reviewed within 60 days from the receipt of additional documentation by the DME MAC. It may take longer for claims reviewed by the ZPIC or PSC.