Medicare Pre-Claim Review Demonstration

Beginning no earlier than August 1, 2016, (start date has not been set), the Centers for Medicare and Medicaid Services (CMS) will begin a 3-year pre-claim review demonstration for Medicare payments to home health agencies (HHA) in Illinois. The purpose of this demonstration is to assist in developing improved procedures for identifying, investigating, and prosecuting Medicare fraud and other improper payments by HHA’s. Further, data collected from this demonstration will assist the joint Health Care Fraud Prevention and Enforcement Action Team (HEAT) Task Force’s general fight against Medicare fraud. In addition to Illinois, CMS will conduct the same reviews in Florida, Texas, Michigan and Massachusetts, all of which have their own start dates separate from that of Illinois.

CMS is moving forward with this demonstration because the improper payment rate for HHA claims has been increasing over the past several years. Specifically, internal agency data shows that a large portion of the fraudulent activity is likely arising from improper classification of face-to-face encounter documentation provided by HHA’s. While not all of the improper payments are related to fraud, a large portion are because of “insufficient documentation” in this area. In addition to combating fraud and improper payment generally, CMS has three secondary goals for this demonstration: 1) to test the level of resources that would be needed to implement a permanent pre-claim review program; 2) to determine the feasibility of performing pre-claim reviews to prevent payment for other services that have historically had a high rate of fraud and/or improper payment; and, 3) to determine the return on investment of pre-claim review for home health claims in general.

Once this demonstration begins, an HHA (or the entity billing for the HHA) are to submit a request for pre-claim review to a Medicare Administrative Contractor (MAC), along with all relevant documentation to support Medicare reimbursement claims. The MAC will review the pre-claim request to determine whether the service provided complies with relevant Medicare coverage and documentation requirements. The HHA should still submit the Request for Anticipated Payment before submitting the pre-claim review request and provide services while waiting for the decision from the MAC. The MAC will alert the HHA and relevant beneficiary of its provisional decision, within 10 business days of the initial submission. During this demonstration, HHA’s may still submit payment requests without ever requesting a pre-claim review. However, payments on these claims will be proactively halted for pre-claim review by the MAC, and relevant documentation will be requested from the HHA. Starting 3 months after the start of the demonstration, payment claims that are not submitted for pre-claim review will be subject to a 25% payment reduction. This reduction will not be subject to appeal.

Providers in Illinois, and other states as relevant, will be notified by the appropriate MAC prior to the start of the demonstration. Overall, the demonstration will encompass a 3-year review period. Outreach and other education efforts directed at HHA’s and relevant Medicare beneficiaries will be conducted throughout the demonstration via webinars, open door forums, FAQ pages on the CMS website(s), and other, unspecified, web postings.

If you would like more information on this topic, you can contact the author, Theodore McGinn, at (847) 705-7555 or