The Centers for Medicare and Medicaid Services will start three new demonstration programs in 2012 designed to cut improper Medicare payments.

The Recovery Audit Contractor program will pilot prepayment reviews of claims, checking before they are paid that the provider complied with Medicare rules. The program will target certain claim types with historical high improper payment rates. The initial focus will be inpatient hospital claims for short stays, with CMS selecting additional claim types. The RAC prepayment audits will be conducted in 11 states: California, Florida, Illinois, Louisiana, Michigan, Missouri, New York, North Carolina, Ohio, Pennsylvania and Texas.

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