(Medicare Program Integrity Manual)

This section applies to MACs, CERT, RACs, SMRC and UPICs, as indicated.   The MACs, CERT, RACs, SMRC, and UPICs shall adhere to the rules found in CFR 405.980 through 986 when conducting automated or postpayment medical record reviews. High error rate and/or potential overutilization, identified by data analysis, are reasons to perform postpayment review and represent sufficient cause to reopen claims in accordance with 42 CFR 405.986. See Pub. 100- 04, chapter 34 for more information on good cause for reopening.  3.5.2 - Case Selection  (Rev. 10365; Issued: 10- 02-20; Effective: 08 -27-20; Implementation: 08 -27-20)  This section applies to M ACs, CERT, SMRC, and UPICs, as indicated.   Case review and development provisions:   The MACs and the SMRC shall not perform postpayment review of unassigned claims. A claim submitted for a service or supply by a provider who has not accepted the Medicare fee schedule is an unassigned claim.    The MACs, SMRC, and UPICs have the discretion to select cases for postpayment  review on a claim -by-claim basis or use statistical sampling for overpayment  estimation.   o When MACs, SMRC, and UPICs conduct claim -by-claim postpayment review, they shall only collect or refund the actual overpayment or underpayment amount.  o When MACs, SM RC, and UPICs conduct statistical sampling  for overpayment estimation as specified in PIM chapter 8, they shall extrapolate the sampling results to the known universe of similar claims when calculating the projected overpayment or underpayment amount.   The MACs, RACs, SMRC, and UPICs have the discretion to conduct the postpayment review onsite at the provider or suppliers location.   MAC staff shall review their provider tracking system, using RAC Data Warehouse (RACDW) data,  and consult with the UPICs to ensure non- duplication during the process of selecting providers for postpayment review.    To prevent duplicate claim reviews, the MACs, SMRC, and RACs shall use the RACDW to identify, and exclude from review, claims that wer e previously reviewed, or that are under current review, by another contractor.   CERT shall duplicate another contractors review, when appropriate, if those claims are chosen as part of a statistically valid random sample to measure the improper payment rate.   This instruction does not prevent the UPICs from reviewing a claim that has been reviewed by another contractor in order to support their case development or other administrative action.    When the MACs, CERT, RACs, SMRC and UPICs choose to send the provider an ADR for a postpayment review, they shall do so in accordance with PIM chapter 3, 3.2.3.2. The contractors may grant an extension of the submission timeframes at their discretion or in accordance with their SOWs.    The MACs, CERT, RACs, SMRC and UPICs make coverage,  coding, and/or other determinations when re- adjudicating  claims.    The MACs, CERT, RACs, SMRC and UPICs shall document all incorrectly paid, denied, or under-coded (e.g., billed using a procedure/supply or other code that is lower than what is supported by medical documentation) items or  services.    Services newly denied as a result of re- adjudication shall be reported as positive values.   Services that were denied, but are reinstated as a result of re-adjudication shall be repor ted as negative values.    The MACs, CERT, RACs, SMRC and UPICs shall document the rationale for denial and include the basis for revisions in each case (important for provider appeals). MACs, CERT, and UPICs should include copies of the NCD, coverage provis ions from interpretive manuals, or LCD and any applicable references needed to support individual case determinations. RACs and the SMRC shall include detailed rationale as outlined in their  SOWs.    The MACs have the discretion to deny payment without the r eview of the claim with a medically unlikely service  edit.  3.5.3 - CMS Mandated Edits  (Rev. 721; Issued: 06- 09-17; Effective: 07 -11-17; Implementation: 07 -11-17)  In past years, CMS created mandated edits that suspend certain claims for medical review coverage and coding review.  However, more recently, CMS has given the contractors the discretion to prioritize workload to effectively lower the error rate.  CMS is n ow in the process of removing such mandated coverage and coding review edits from CWF, pricer, grouper, fee schedules, etc.   Contractors may override CMS mandated edits that suspend for medical review coverage and coding review without performing review if  one or more of the following conditions apply:   1. The contractor does not have MR responsibility for the claim, or    2. The contractor's data analysis/priority setting/ MR strategy does not indicate this service is a problem in their jurisdiction, or   3. It is no t a skilled nursing facility (excluding swing beds) or a home health demand bill (these demand bills must be reviewed).   3.5.4 - Tracking Medicare Contractors'  Prepayment and  Postpayment Reviews  (Rev. 11933; Issued: 03- 30-23; Effective: 04 -01-23; Implement ation: 04 -03-23)  Shared System Maintainers shall create a pre -payment claim file that is automatically uploaded to the RACDW by the VDC. Medicare Administrative Contractors (MACs) shall input all postpayment complex reviews into the Recovery Audit Data Wa rehouse.  All claims chosen for review by the MAC where an additional documentation request letter was issued to the provider before or after payment was made shall be included.  MACs shall include all reviews, even those that did not result in an improper payment.   Claims may be manually uploaded into the data warehouse or submitted by flat file. The Shared System Maintainers and MACs shall use the file layout provided by CMS for claims uploaded to the Recovery Audit Data Warehouse. Postpayment claims sha ll be submitted to the Recovery Audit Data Warehouse by the 20th day of every month for the previous month. Prepayment claims shall be submitted to the Recovery Audit Data Warehouse daily.   MAC staff who need access to the Data Warehouse shall contact RAC@cms.hhs.gov.  3.6 - Determinations Made During Review  (Rev. 10365; Issued: 10-02- 20; Effective: 08 -27-20; Implementation: 08-27-20)  This section applies to MACs, CERT, Recovery Auditors, and UPICs, as indicated.   A. General   The MACs, CERT, Recovery Auditors, and UPICs shall be able to differentiate the type of determination made, ensuring that limitation of liability determinations are appropriate.  When the MAC determines, through prepayment data analysis or postpayment review, that an inappropriate claim has been submitted; or the Recovery Auditor determines, in post-payment review, that an improper payment has been made, the MAC and Recovery Auditor shall verify that the error represents an unacceptable practice and not just an explainable aberrancy. Some legitimate reasons for anomalous data include:    The provider may be associated with a medical school, research center, or may  be a highly specialized facility, for instance, the facility may be a Medicare- dependant hospital or CAH, which might skew the type of claims submitted; or   The community in which the provider practices may have special characteristics such as socio -economic level or a concentration of a specific age group that leads to an apparent aberrancy in the use of certain  services.   The MACs, CERT, Recovery Auditors, and UPICs have the discretion to make other determinations during the review of a claim to avoid or identify improper payments for such things as duplicate claims, etc. Other examples are listed below:   Example 1: A Medicare policy states that when three (3) procedures are performed during the same operative session, Medicare pays 100 percent for the first, 50 pe rcent for the second and 25 percent for the third. A claim is identified where all three (3) procedures were paid at 100 percent.  Example 2: A claim was paid using the fee schedule from the prior year.   Example 3: A Medicare payment policy states that in order to pay for a capped rental item, consideration shall be given to whether the item was in continuous use by the beneficiary for a specified time period. A claim is found to have been paid out of compliance with this policy provision.  If, at any time, the medical review detects potential fraud, MACs, CERT, and Recovery Auditors, shall refer the issue to the appropriate UPIC.  3.6.1 - Determining Overpayments and Underpayments  (Rev. 10365; Issued: 10-02- 20; Effective: 08 -27-20; Implementation: 08-27-20)  This section applies to MACs, and UPICs. It does not apply to CERT or Recovery Auditors.  A. General   The results of the re-adjudication are used to determine the overpayment or underpayment amount for each claim. Re- adjudicating claims may not result in a payment correction. Where statistical sampling for overpayment estimation is used, refer to instructions in the PIM chapter 8, 8.4 and to Exhibits 9, 10, 11 and 12 for projection methodologies based on FFS claims. For claims paid under PPS rul es, MACs and UPICs shall develop projection methodologies in conjunction with their statisticians that are consistent with the requirements found in PIM chapter 8, 8.4. MACs and UPICs shall net out the dollar amount of services underpaid during the cost accounting period, meaning that amounts owed to providers are balanced against amounts owed from providers.  Amounts of the following overpayments are to be included in each provider's or suppliers estimate for the reviewed sample:    According to the provisions of 1879 of the Act, the provider or supplier is liable for the overpayment of initially paid claims that were later denied on re - adjudication if :   (1) The basis for denial is by reason of 1862(a) (l) or (9) of the Act   (2) The provider or supplier knew or could reasonably have been expected  to know that the items or services were excluded from coverage,  and   For denials of non-assigned claims make a1842(l) determination on denials for 1862(a)(1)   The provider or supplier was not without fault for the overpayment as defined  in 1870 of the Act.  For appeal purposes, overpayment estimations applicable under 1879 of the Act will be identified separately from denials in which 1879 of the Act does not apply. Where both types of denia ls occur in the sample, MACs and UPICs calculate and document separate under/overpayments for each type of denial. For recovery purposes, however, both denial results are combined.   3.6.2 - Verifying Errors  (Rev. 10365; Issued: 10-02- 20; Effective: 08 -27-20; Implementation: 08 -27-20)  This section applies to MACs, CERT, and UPICs, as indicated.  Understanding the characteristics of the service area of the provider is a key element of claim data analysis. The areas selected for review by the contractor (e.g. , providers, services) must be deemed high priority and contractors must be able to document the rationale for selection.   3.6.2.1 - Coverage Determinations  (Rev. 10365; Issued: 10-02- 20; Effective: 08 -27-20; Implementation: 08-27-20)  The MACs, CERT, Recovery Auditors, and UPICs shall deny an item or service if it does not meet any of the conditions listed below:   The item or service does not fall into a Medicare benefit  category.    The item or service is statutorily excluded on grounds other than 1862(a) (1) (A) of the  Act.   The item or service is not reasonable and necessary under 1862(a) (1) (A) of the Act.    The item or service does not meet other Medicare program requirements  for payment.  3.6.2.2 - Reasonable and Necessary Criteria  (Rev. 10365; Issued: 10-02- 20; Effective: 08 -27-20; Implementation: 08-27-20)