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.

Under the second demonstration program, CMS in seven states will require prior authorization for certain medical equipment, starting with power mobility devices. Affected states are California, Florida, Illinois, Michigan, New York, North Carolina and Texas.

The third demonstration program, Part A to Part B rebilling, is open to 380 volunteer hospitals nationwide. CMS will enable these hospitals to rebill for 90 percent of the Part B payment when a contractor denies a Part A inpatient short stay because the hospital billed for the wrong setting. Such claims currently are denied in full.

More information on the demonstration programs is available here.


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