This simply means that the account from which it pays has nothing in it until the checks are actually cut and mailed. Once the TPA knows the exact amount needed, it arranges with its clients to fund the account in that amount. This is a device whereby the TPA sends the list of approved payments made on behalf of its clients to the client's bank. The bank keeps the list and examines incoming checks presented against the client's account. The bank will only pay those checks that are on the list, and will not move the money into the client's account until an approved check actually shows up for payment.
Positive pay means almost no idle money.
It is almost impossible to defraud a positive pay arrangement, at least through a check-writing scheme, since only the approved checks will be paid. For the other types of fraud, these are best identified through a series of alerts-lists of factors that a TPA searches for among the incoming claims data. Alerts can include excessive or unusual medical treatment, a claim report unusually late and unwitnessed injuries. Excessive money means that the TPA paid too much. For example, most TPAs review medical bills for their validity and accuracy, but usually on a prospective basis.