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Prepayment Review
Program
Integrity Manual (CMS Pub. 100-08), Ch. 3, §3.5
Prepayment review occurs when Fiscal Intermediary Standard System (FISS) edits suspend a claim for medical review before the claim is paid. Prepayment edits are designed to prevent payment for noncovered and/or not medically necessary services. Prepayment edits are established, modified and evaluated for effectiveness on an ongoing basis. A variety of different edit types may be employed for prepayment review:
- Automated Edits
- Beneficiary Specific Edits
- New Provider Edits
- Provider Specific Probe Edits
- Widespread Probe Edits
- Widespread Probe Results
- Referral Edits
- Provider Specific Targeted Review Edits
- Widespread Edits
- Error Rate
At any given time, a provider may have claims selected for medical review by one or more of the above edits.
Automated Edits
Cahaba currently uses an automated claims processing system called Expert Claims Processing System (ECPS). ECPS works within FISS to make decisions and resolves edits during claims processing. ECPS will automatically move claims to the Additional Development Request (ADR) status/location, and makes decisions on claims without human intervention. ECPS may pay, deny or send claims to Medical Review for further investigation.
Beneficiary Specific Edits
Beneficiary specific edits are used to prevent paying for services provided to a specific beneficiary when the services have previously been determined to be noncovered services. These edits will stop claims for medical review based on claim information specific to a given beneficiary.
New Provider Edits
The Centers for Medicare & Medicaid Services (CMS) provides contractors the option of performing prepay or postpay review of new providers as needed. If a contractor chooses to perform a pre or postpay review of a new provider, a limited review (i.e., 20-40 claims) to ensure accurate billing is completed.
Provider Specific Probe Edits
When data analysis identifies a potential problem in a provider's billing patterns, a provider specific probe edit will be placed to suspend claims for medical review. The provider will receive a letter notifying them that they have been placed on a probe edit, the service that has been selected for review, and the specific reason for such selection. The reason code for the edit will be given. A provider specific probe edit will select approximately 20 to 40 claims for medical review.
Widespread Probe Edits
This prepayment editing is the process of screening claims with the greatest risk of inappropriate program payment in an area that has been identified as a potential problem or "topic" through data analysis. Examples of widespread probe edits include, but are not limited to the following:
- Diagnosis alone or in combination with related factors such as ICD-9 codes with revenue codes
- Revenue and/or HCPCS code
- Charges relating to utilization
- Length of stay or number of visits
Widespread probe edits identify potential claims that might be questionable and are topic specific rather than provider specific. Therefore, providers do not receive prior notification about widespread probe edits. Notification of a widespread probe edit review will be posted on the News page of our Web site. A widespread probe edit will select approximately 100 claims for medical review.
Widespread Probe Results
Widespread probe edits identify potential claims that might be questionable and are topic specific rather than provider specific. Claims are selected from across the provider community that bill for services that meet the parameters of the edit. Once selected, the claims are reviewed for medical necessity (e.g., compliance with CMS guidelines, contractor local coverage determinations (LCDs), correct billing and coding). The following provides a list of the recent widespread probe results.
| Provider Type | Criteria |
|---|---|
| Hospice | Length of stay over 999 days |
| Hospice | General inpatient level of care |
| Hospice | Diagnosis of lymphomas and myelomas and LOS > 180 days |
| Hospice | Diagnosis 425.4, Primary Cardiomyopathy NEC and LOS > 181 days |
Referral Edits
Referral edits are based on information given to the contractor from other entities such as the state surveyor to identify potential inappropriate billing practices. Providers are notified by letter when they have been placed on a referral edit; however, the source of the referral will not be disclosed.
Provider Specific Targeted Review (TR) Edits
A provider may be placed on TR after a provider specific probe has been completed, and it is found there is a high incidence of inappropriate billing. This TR edit is specific for the provider, and may focus on an issue found in data and reviewed in the provider specific probe edit or may just pull a percentage of any claims billed by that provider. At the end of each quarter, the effectiveness of all TR edits will be evaluated and individual provider error ratewill be calculated. Based on error rate of claims reviewed during the previous quarter, a provider may be placed on TR. Providers will remain on TR for a three-month period.
The percentage of denials and the length of time that a provider has been on TR will determine the percentage of claims that will be selected for medical review. Providers are notified by letter that they will be on TR for an edit.
At the end of each quarter, the provider's error rate will be re-evaluated to determine if continued review is appropriate. If the provider's denial rate meets acceptable parameters in accordance with the Progressive Corrective Action Memorandum, they will be removed from TR.
If the provider remains on TR for more than three-quarters or does not improve their denial rate, the provider may be referred to the Program Safeguard Contractor for further investigation of potentially fraudulent billing practices.
Widespread Edits
This prepayment editing is the process of screening claims with the greatest risk of inappropriate program payment in an area that has been identified as a problem through data analysis, and a widespread probe edit on this topic. Examples of widespread edits include, bur are not limited to the following:
- Diagnosis alone or in combination with related factors such as ICD-9-CM codes with revenue codes
- Revenue and/or HCPCS codes
- Length of stay or number of visits
Error Rate
Denial detail from reviewed claims is calculated and reviewed at the end of every quarter. These statistics are extracted from claims reviewed and processed during the quarter, not based on dates of service during the quarter.
The denial rate is calculated based on the amount of reimbursement reviewed to the amount of reimbursement denied. For example, if a provider had $5,000 in reimbursement reviewed during the quarter and had $1,000 of those reviewed reimbursement denied, the denial rate for that edit would be 20 percent.
The denial rate is based on the original claim decision. Claims that have been appealed and reversed are not taken into consideration when calculating the denial rate; however, appeals reversal rates may be taken into account when determining the effectiveness of an edit. The provider should be sending the proper documentation to support the services billed when the claim is initially reviewed in Medical Review.
Page last updated: June 29, 2010
