RAC Roundup: Preparing for the Prepayment Review Demonstration Project, as appeared in AHLA's Health Lawyers Weekly

As part of continued efforts to expand the Medicare Recovery Audit Contractor (RAC) program, in November 2011 the Centers for Medicare & Medicaid Services (CMS) announced the implementation of a demonstration project that would allow RACs toconduct prepayment reviews on certain types of Medicare claims. This demonstration project is intended to lower error rates by preventing improper payments rather than identifying improper payments after they have been made. Originally slated to begin in January 2012, the demonstration project is expected to begin in the summer of 2012.

The introduction of the demonstration project reflects an ongoing dilemma—balancing the importance of Medicare program integrity initiatives against the effect that prepayment review has on Medicare providers. Providers should consider that this demonstration project will not simply be a one-year trial; instead, it will evolve to become the new model for RAC reviews. As such, providers should take the necessary steps to assess,analyze, and, as needed, make investments to improve internal auditing and monitoringpolicies, procedures, and processes.