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Medicare Medical Review Program

Pay It Right

The goal of program integrity is to "pay it right"

• pay the right amount
• to the right provider
• for the right service
• to the right beneficiary

Most medical review doesn't require medical records

• Often, medical review is conducted by simply examining the claim itself
• If more information is needed, the contractor reviews:
• • Attachments (e.g., Certificates of Medical Necessity)
  • Patient history files
• In a small percentage of cases, the contractor asks for and looks at medical records to confirm that the services were:
• • Rendered to the patient as reflected on the claim,
  • Coded correctly, and
  • Covered by Medicare.

Medicare pays more than 95 percent of the claims submitted to the program without obtaining medical records.

The vast majority of the improper payments Medicare makes are for services that look right on the claim form, but are determined by reviewers to be medically unnecessary after looking at the clinical record. According to Medicare's 2000 Chief Financial Officers' audit, paying for medically unnecessary services was the most common mistake Medicare made. However, looking at medical records to make a claim payment determination can be resource intensive for both the Medicare program and the provider, supplier, or physician. Medical review activities are important to ensure claims are paid correctly. HCFA continues to work to enforce a medical review philosophy that stresses a fair and consistent approach to medical review. Recently, the Program Integrity Group at HCFA issued contractor instructions entitled "Medical Review Progressive Correction Action." This medical review instruction provides the key concepts that are important for efficient and effective use of medical review resources and tools such as: 1) data analysis to identify potential billing errors; 2) validation of potential billing errors; 3) provider education and feedback; and 4) when necessary, administrative actions commensurate with the severity of the billing errors.

Providers may be selected for medical review based on several factors

• Providers are reviewed randomly to deter abuse
• Providers are reviewed when atypical billing patterns have been identified
• Providers are reviewed when a particular kind of problem (e.g., errors in billing a type of service) have been identified

Prepayment Review

We try to do most medical review on a prepayment, rather than a postpayment, basis. This ensures that we make an appropriate payment in the first place, rather than paying incorrectly and then "chasing" after the overpayments. Prepayment review also addresses concerns providers have with being required to return money already paid.  Providers who have been identified as having problems submitting correct claims may be placed on "prepayment review," in which a percentage of their claims are subjected to medical review before payment can be authorized. Once the provider has reestablished a practice of billing correctly, it is removed from prepayment review.

Postpayment Review

Postpayment review can be done on individual claims or a sample of claims, including a statistically valid random sample. The advantage of sampling is that an overpayment (if one exists) can be estimated without requesting all records on all claims from a provider. This balances our desire to reduce administrative burden and costs for both the Medicare program and the provider with our responsibility to compensate the trust fund for damages from past errors. We have established sampling guidelines to ensure that samples are drawn appropriately and an acceptable level of precision is obtained. Among the procedures we have established for sampling is the "netting out" of overpayments with underpayments, inclusion of claims denied as well as claims paid in the universe from which the sample is drawn, use of the lowest estimate of the overpayment, and a requirement for contractors to consult with statistical experts in developing the sampling method. Providers also have the right to appeal not only the individual determinations of the claims in the sample, but also the sampling method.

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