Health Law Alert -- August 2012: Will Prepayment Audits Destroy Your Practice?


For years attorneys representing health care providers have warned their clients about the "pay and chase"; that is that the insurers may pay your claims today but chase you tomorrow to get their money back. Insurers, including Medicare, have decried a system that requires the payor to pay a claim within a reasonable time period, and then chase after the practitioner when fraud, abusive billing or erroneous billing is found. The Center for Program Integrity, a division of the Centers for Medicare and Medicaid Services ("CMS") has identified the pre-payment review of claims as a key strategy to prevent improper reimbursement, thereby moving CMS away from the "pay and chase" approach currently in place. The prepayment audit will enable CMS to suspend payment as it reviews claims and documentation submitted by the provider in support of its claims.

CMS has implemented a Fraud Prevention System (“FPS”), which is described as “a predictive modeling technology” that is designed to screen all Medicare feefor-service claims before payment is made. The FPS can generate profiles on beneficiaries, providers and suppliers, which profiles will be used by CMS in identifying unusual billing patterns and the likelihood of fraudulent or suspicious activity. The FPS is intended as a tool for CMS to examine claims pre-payment and to enable CMS to focus on the areas of highest risk.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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