CMS Calls a Halt to Two Improper Payment Demonstrations

Despite all the hype over President Obama’s 2010 announcement over three significant goals for cutting improper payments by 2012: (1) reducing overall payment errors by $50 billion; (2) cutting the Medicare fee-for-service error rate in half; and (3) recovering $2 billion in improper payments, and  CMS’  launch of several demonstration projects for January 2012, something has given CMS pause.

On November 15, 2011, CMS released the news that it would be conducting three demonstration projects beginning this month to strengthen Medicare by aiming at eliminating fraud, waste, and abuse. Now, it appears, they’ve decided to wait on two of those projects and allow a consideration period to review the many comments they’ve received since the news release.

In an announcement on December 29, CMS stated that it has “received many comments/suggestions on the demonstration,”  and “is considering these comments carefully. Therefore, CMS will delay implementation.” The agency quickly added that the Part A-to-Part B rebilling demonstration would remain as scheduled and to begin on January 1, 2012.

The Prepayment Review and Prior Authorization of Power Mobility Devices (PMDs) demonstration and the Recovery Audit Prepayment Review demonstration was set to begin January 1, 2012, but received much feedback from the public. While CMS reviews the comments, it will delay implementation of these two demonstrations. CMS has indicated that it will provide at least 30 days notice before the demonstrations begin.

CMS has described the Recovery Audit Prepayment Review Demonstration as a three year demonstration that will expand prepayment review of Medicare claims. It will allow Medicare Recovery Auditors to conduct prepayment claim reviews, which will assist in lowering the improper payment rate and should identify potential fraud and abuse, as opposed to the traditional “pay and chase” method. The demonstration will run be implemented in 11 states. States were chosen based on their high level of fraudulent claims and providers (FL, CA, MI, TX, NY, LA, IL) and based on having high claims volumes for short inpatient hospital says (PA, OH, NC, MO).

The other three year demonstration will help ensure that Medicare only pays for power mobility devices (PMD) that are medically necessary under existing coverage guidelines, thereby limiting fraud, waste and abuse. The Prior Authorization for Certain Medical Equipment Demonstration will be conducted in two phases, in seven states that have high rates of Medicare fraud (CA, TX, FL, MI, IL, NC, and NY).

During the first three to nine months, Medicare Administrative Contractors (MACs) will conduct prepayment reviews on certain medical equipment claims. And for the remainder of the demonstration, MACs will implement prior authorization, a tool utilized by private-sector health care payers to prevent improper payments and deter the fraudulent provision of items or services. This plan does not actually require any extra documentation, merely that the documentation be submitted earlier in the process. CMS believes that the prepayment review and prior authorization combined will affect approximately 325,000 PMD claims over the course of the three-year demonstration.

CMS has also listed email addresses and Twitter sites as a means of communicating with the public regarding these demonstrations, yet they have not made any further comments since the December 29 release.  CMS has yet to announce an implementation date for either program. It stated that it still plans to conduct the demonstrations “to strengthen Medicare by aiming at eliminating fraud, waste and abuse” and that it will provide at least 30 days notice before the demonstrations commence. Let the wait begin.