CMS has revamped its approach to pursuing alleged improper payments. Its new audit strategy with Medicare Administrative Contractors (MACs) will target providers and suppliers with the highest error rates or the most significant deviations. This is a significant shift in strategy to focus on outliers when seeking recoupment.

Under the new audit process, through a process of data analysis:

  • MACs “will select claims for items/services that pose the greatest financial risk to the Medicare trust fund and/or those that have a high national error rate.”
  • MACs “will focus only on providers/suppliers who have the highest claim error rates or billing practices that vary significantly out from their peers.”

The process builds off earlier efforts, known as probe-and-educate reviews, that combined a review of a sample of claims with education to help reduce billing errors. Under the new audit process, if the education process does not correct high error rates, providers/suppliers “may be referred to CMS for additional action, which may include 100% prepay review, extrapolation, referral to a Recovery Auditor, or other action.”  CMS illustrated the new process through a flow chart.

Although the targeted approach should be good news for providers/suppliers who largely submit claims with low or no error rates, they will still be subject to the overpayments final rule, which includes an affirmative duty to proactively determine whether overpayments have been made.

CMS plans to launch the new audit approach in all MAC jurisdictions before the end of the year.