The Game Changer: Why CMS is Abandoning its Pay and Chase Model of Payment

Problem for CMS
The Centers for Medicare & Medicaid Services (CMS) is working hard to reduce improper payments by developing a new method of detecting inappropriate billing and payment before claims are paid alongside the current method of post-payment audits of providers.

Why is this important to providers? Legislation requires that most Medicare claims be paid within 30 days which traditionally has meant that CMS paid out claims before investigating them – what officials call the "pay and chase" model. CMS is under increasing pressure to move away from this model to a more proactive and preventative approach that scrutinizes providers claims before they are paid. Providers’ claims will now be analyzed and audited before a payment is made for services, therefore affecting revenue flow on a daily basis. ¹

Several features that are included in this pre-payment review methodology are: rigorous review of medical necessity and documentation, prior authorization certifications and physician reimbursement. CMS will incorporate a Predictive Analysis Model to prevent fraud and abuse which will utilize a claim pre-payment edit method. The predictive analysis may use a methodology that would include alerts for physician practices that routinely charge the highest amount for a procedure in a given zip code. High risk claims are flagged by the editing algorithms for providers who routinely over utilize certain services or items based on claim histories. As claims move through the CMS predictive analysis system, it will build profiles of providers, billing patterns, and utilization assigning risk scores to each provider. Providers with high risk scores will be flagged and their claims will undergo greater scrutiny. ²

Predictive analysis has been used in other business segments for a long time such as by lenders and credit card companies. Ever wonder how Amazon recommends items to purchase? Amazon uses predictive analysis data mining based on what you have bought before. Ever wonder why you were denied purchasing gas at a gas station three states away from home? Predictive analysis flagging potential fraud based on where you reside. One busy afternoon of shopping at the mall – or a whole day of shopping at the mall – warrants a call from your credit card company to check if the one doing all the spending is you. Predictive analysis is predicting you have had enough of treating yourself, with spending limits flagged and challenged at the point of purchase. This same method of predictive analysis has been applied to medical claims as of July 1, 2011 in 10 states that have the highest risk of waste fraud and abuse and will be rolled out to an additional 10 states by October 1, 2012.³

Problem for Providers
These types of payment pattern models cause a profound impact on physician practices as they struggle to keep up and adapt to reflect compliance with CMS guidelines, the looming ICD-10 changes and the ever more demanding meaningful use criteria of Electronic Health Records (EHRs) already burdening physicians.

How does a busy practice prevent improper payment and interruptions to revenue flow? As CMS moves to pre-payment claims review, physician practices are best served with utilizing a claims editing solution that also incorporates medical necessity checking with documentation alerts. The solution should also have the charges validated as being covered, non-covered and at Medicare Par and Non-Par rates.

While CMS has indicated that certain patterns determined through predictive modeling will be flagged and investigated, very little information is available regarding what those patterns or targets may be, therefore it is also a priority to be able to change and create edits quickly in a claims editing software as CMS alters any of its analytics metrics.

One suggestion is that providers should monitor their own claims for patterns and outliers that may raise a red-flag for CMS. Providers should be prepared to explain and demonstrate why such patterns and outliers exist. By applying pre-payment edits to the front of the practice workflow using a claims editing solution much can be accomplished before the claim is transmitted to CMS. Pre-payment denials can be avoided and the likelihood of additional audits can be decreased.

Solution
A solution that fits the prepayment schema is ClaimsEditor^®. Edits are displayed with messages and alerts and reports are provided that parallel CMS, RAC, OIG and the Fraud and Abuse predictive modeling. High cost services, or equipment by provider can be identified through your claims information. See what you‘ve been missing and how we can help you stay on your game at http://www.context4healthcare.com.

1. CMS Manual Pub 100-20 One Time Notification , dated February 24, 2012, Transmittal 1049 CR 7669
2. US Department of Health and Human Services Strategic Plan Fiscal years 2010-2015
3. CMS Small Business Jobs Act of 2010