[Federal Register: October 7, 2005 (Volume 70, Number 194)]
[Proposed Rules]
[Page 58649-58654]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07oc05-21]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 421
[CMS-6022-P]
RIN 0938-AN31
Medicare Program; Termination of Non-Random Prepayment Review
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would implement the statutory requirements
regarding the termination of non-random prepayment review under the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
This proposed rule provides the criteria for terminating a provider or
supplier from non-random prepayment review.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on December 6, 2005.
ADDRESSES: In commenting, please refer to file code CMS-6022-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/regulations/ecomments.
(Attachments should be in Microsoft Word, WordPerfect, or
Excel; however, we prefer Microsoft Word.)
2. By mail. You may mail written comments (one original and two
copies) to the following address ONLY: Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Attention: CMS-6022-
P, PO Box 8012, Baltimore, MD 21244-8012.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-9994 in advance to schedule your arrival
with one of our staff members.
Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD 21244-
1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Lieutenant Commander Marie Casey,
(410) 786-7861 or Daniel Schwartz, (410) 786-4197.
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on all
issues set forth in this rule to assist us in fully considering issues
and developing policies. You can assist us by referencing the file code
CMS-6022-P.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. CMS posts all electronic
comments received before the close of the comment period on its public
website as soon as possible after they have been received. Comments
received timely will be available for public inspection as they are
received, generally beginning approximately 3 weeks after publication
of a document, at the headquarters of the Centers for Medicare &
Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244,
Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule
an appointment to view public comments, phone 1-800-743-3951.
I. General and Legislative History
Medicare contracting authority has been in place since the
inception of the Medicare program in 1965. Section 1874 of the Social
Security Act (the Act) authorizes the Secretary to perform Medicare
program functions directly or by contract.
On August 21, 1995, the Congress enacted the Health Insurance
Portability and Accountability Act of 1996 (Pub. L. 104-191) (HIPAA).
Section 202 of HIPAA added section 1893 to the Act that establishes the
Medicare Integrity Program and allows us to contract with eligible
entities to perform program integrity activities. Specifically, we
contract with intermediaries as specified in section 1816(a) of the
Act; and carriers as specified in section 1842(a) of the Act; and
program safeguard contractors (PSCs) to perform medical, fraud, and
utilization reviews, and cost report audits of Medicare claims.
(Hereinafter, intermediaries, carriers, and PSCs that perform medical
review functions are referred to as contractors). This program is
funded by the Medicare Hospital Insurance Trust Fund for activities
related to Medicare Part A and Part B.
[[Page 58650]]
On December 8, 2003, the Congress enacted the Medicare Prescription
Drug, Improvement, and Modernization Act of 2003 (MMA). Section 934 of
the MMA amended section 1874A of the Act by adding a new subsection
regarding random prepayment reviews and non-random prepayment reviews
including the termination date of non-random prepayment reviews.
Although section 934 of the MMA specifies requirements regarding
random prepayment review, contractors do not perform random prepayment
review. However, contractors do perform non-random prepayment review.
For purposes of this regulation, we are proposing the following
definitions related to medical review activities:
Allowable charges means the dollar amount (including co-pay and
deductibles) that the Medicare program will pay for a particular item
or service.
Complex Medical Review means review of claim information and
medical documentation by a licensed medical professional, for a billed
item or service identified by data analysis techniques or probe review
to have a likelihood of sustained or high level of payment error.
Error rate means the dollar amount of allowable charges for a
particular item or service billed in error as determined by complex
medical review, divided by the dollar amount of allowable charges for
that medically reviewed item or service.
Initial error rate means the calculation of an error rate based on
the results of a probe review prior to the initiation of non-random
prepayment complex medical review.
Medical review means the process performed by Medicare contractors
to ensure that billed items or services are covered and are reasonable
and necessary as specified under section 1862(a)(1)(A) of the Act.
Non-clinician medical review staff means specially trained medical
review staff that do not possess the knowledge, skills, training, or
medical expertise of a licensed medical professional.
Non-random prepayment complex medical review means the prepayment
medical review of claim information and medical documentation by a
licensed medical professional, for a billed item or service identified
by data analysis techniques or probe review to have a likelihood of
sustained or high level of payment error.
Non-random prepayment medical review means the prepayment medical
review of claims for a billed item or service identified by data
analysis techniques or probe review to have a likelihood of a sustained
or high level of payment error.
Provider-specific probe review means the complex medical review of
a small sample of claims, generally 20 to 40 claims, from a specific
provider or supplier for a specific billing code to confirm that the
provider or supplier is billing the program in error.
Quarterly error rate means the calculation of an error rate based
on the results of non-random prepayment complex medical review for a
specific billing code for a specific quarter.
Service-specific probe review means the complex medical review of a
sample of claims, generally 100 claims, across the providers or
suppliers that bill a particular item or service to confirm that the
item or service is billed in error.
Termination of non-random prepayment complex medical review means
the cessation of non-random prepayment complex medical review.
II. General Overview of the Medical Review Process
A. Medical Review
We enter into contractual agreements with contractors to perform
medical review functions. One of the functions of a contractor is to
ensure the fiscal integrity of the Medicare program by conducting
medical review of claims to determine whether items or services are
covered and are reasonable and necessary. When a claim is submitted for
payment, it may be subject to medical review before payment is made.
There are three types of non-random prepayment medical review:
Automated, routine, and complex. A non-random prepayment automated
medical review is when decisions are made at the system level, using
available electronic information, without the intervention of
contractor personnel. A non-random prepayment routine medical review is
limited to rule-based determinations performed by specially trained
non-clinical medical review staff. Automated and routine non-random
prepayment medical review does not create an administrative burden on
the provider or supplier since additional medical documentation does
not need to be submitted for these types of medical reviews and
payments for covered, reasonable and necessary items or services are
not delayed. Therefore, these types of reviews pose no discernable
administrative burden on the provider or supplier because there is no
interaction between the contractor and the provider or supplier during
the medical review process. As indicated above, non-random prepayment
complex medical review is the evaluation of medical records or any
other documentation by a licensed medical professional prior to
Medicare payment. Complex medical review determinations require the
reviewer to make a clinical judgment about whether an item or service
is covered, and is reasonable and necessary. In order for this
determination to be made the provider or supplier would submit a copy
of the medical records that indicate that the items or services billed
are covered, and are reasonable and necessary for the condition of the
patient. This type of review delays payment until the contractor is
able to make a determination that the items or services billed are
covered and are reasonable and necessary. This proposed rule only
applies to terminating a provider or supplier from non-random
prepayment complex medical review. (A detailed description of the
concepts for performing the different types of non-random prepayment
medical review functions are located in our manual instructions at
http://www.cms.hhs.gov/manuals/108_pim/pim83toc.asp).
The contractor employs data analysis procedures to identify claims
that may be billed inappropriately. These procedures may be based on
claims data (national and local) beneficiary complaints, and alerts
from other organizations (for example, Office of Inspector General and
Government Accountability Office). When a contractor identifies a
likelihood of sustained or high level of payment error, the contractor
may request supporting medical record documentation. Examples of a high
level of payment error include unusual patterns such as prescribing the
same items or services for a high number of patients, consistently
prescribing inappropriate treatments, unexplained increases in volume
when compared to historical or peer trends, or any other reasons as
determined by the Secretary or his designees.
Before a contractor places a provider or supplier on non-random
prepayment complex medical review, the contractor would perform a probe
review (that is, complex medical review of a small sample of claims for
a specific billing code, generally 20 to 40 claims to confirm that the
provider or supplier is billing the program in error). In the case of a
widespread ``item or service-specific'' problem, a larger sample of
claims (generally 100 claims of the item or service in question) would
be subjected to complex medical review. Performing medical review on a
sample of claims for a specific billing code before placing the
provider or supplier
[[Page 58651]]
on non-random prepayment complex medical review allows for a
determination as to whether a problem exists and ensures that
contractor medical review resources are targeted appropriately and that
providers and suppliers are not unnecessarily burdened.
When a probe confirms that a provider or supplier is billing the
program in error, and those billing errors present a likelihood of
sustained or high level of payment error (for example, a high billing
error rate or errors on claims representing high dollar value) this may
result in the provider or supplier being placed on non-random
prepayment complex medical review. Contractors target medical review
activities at providers, items or services that place the greatest risk
of making improper payments from the Medicare trust funds.
This activity may involve complex medical review. Complex medical
review involves the application of clinical judgment by a licensed
medical professional in order to evaluate medical records to determine
whether an item or service is covered, and is reasonable and necessary.
Medical records include any medical documentation, other than what
is included on the face of the claim that supports the item or service
that is billed. For Medicare to consider coverage and payment for any
item or service, the information submitted by the supplier or provider
(that is, claims) must be supported by the documentation in the
patient's medical records. The patient's medical records include--(1)
physician's office records; (2) hospital records; (3) nursing home
records; (4) home health agency records; (5) records from other
healthcare professionals; and (6) diagnostic reports and other
supporting documentation. The contractor specifies which pieces of
documentation they want. Providers and suppliers may supply additional
documentation not explicitly listed by the contractor. This supporting
information may be requested by CMS and its agents on a routine basis
in instances where diagnoses on the claims do not clearly indicate
medical necessity. For example, documentation supporting the medical
necessity of a power wheelchair would not be requested in the vast
majority of cases where patients have definite medical conditions such
as neurological spinal cord injury, cerebral palsy, multiple sclerosis
or stroke with residual myoplegia (not all inclusive). On the other
hand, it is more likely that documentation would be requested for
patients whose diagnoses are limited to non-neurological conditions
such as chronic obstructive pulmonary disease, congestive heart
failure, coronary artery disease, arthritis or obesity (not all
inclusive).
Any determination must be documented and include the rationale for
the decision. While medical review staff must follow National Coverage
Determinations and Local Coverage Determinations, they are expected to
use their expertise to make clinical judgments when making medical
review determinations. They must take into consideration the clinical
condition of the beneficiary as indicated by the beneficiary's
diagnosis and medical history when making these determinations. At any
time during the medical review process the contractor detects possible
fraud, the contractor would refer the issue to the Benefit Integrity
Program Safeguard Contractor.
Before the enactment of the MMA, we continued to perform non-random
prepayment complex medical review until the provider or supplier
demonstrated compliance with Medicare billing requirements as evidenced
by an acceptable error rate. The contractor made the determination of
``acceptable error rate.'' As a result, some providers and suppliers
have remained on medical review for a considerable period of time.
B. Termination of Non-Random Prepayment Complex Medical Review
In accordance with section 934 of the MMA, we are proposing to
terminate in most cases a provider or supplier from non-random
prepayment complex medical review no later than 1 year from the
initiation of the review or when the provider's or supplier's error
rate decreases by 70 percent from the initial error rate. The
initiation of review begins on the date the contractor sends a letter
to the provider or supplier. The letter would notify the provider or
supplier of the results of the probe review and would inform them that
they would be subjected to non-random prepayment complex review. In
addition, we are proposing terminating a provider or supplier from non-
random prepayment complex medical review when medical review error rate
findings indicate that the provider or supplier has corrected its
billing errors resulting in at least a 70 percent decrease from its
initial error rate. The initial error rate would be calculated based on
the probe review prior to the initiation of non-random complex
prepayment medical review. We initially considered whether a 90 to 95
percent decrease in a provider's or supplier's error rate was
appropriate but determined that a 90 to 95 percent reduction in a
provider's or supplier's error rate would be impracticable. Therefore,
we believe an error rate reduction of 70 percent from the error rate
calculated during probe review, the ``initial error rate,'' would
protect the financial integrity of the Medicare program and allow the
provider or supplier a realistic opportunity to be terminated from non-
random prepayment complex medical review.
When a provider or supplier is terminated from non-random
prepayment complex medical review after 1 year of review and the
contractor determines that the provider or supplier continues to have a
high error rate despite educational interventions, the contractor must
consider referring the provider or supplier to the Benefit Integrity
Program Safeguard Contractor. Contractors must also consider continuing
educational interventions without performing medical review or consider
performing postpayment medical review.
We are also proposing that a contractor could extend a non-random
prepayment complex medical review beyond the 1-year limit in certain
situations. The contractor could extend non-random prepayment complex
medical review if a provider or supplier stops billing the code under
review or shifts billing to another inappropriate code to avoid the
contractor's proper calculation of the error rate. If the reduction in
the error rate is attributed to a 25 percent or greater reduction in
the number of claims submitted for the specific billing code under
review, non-random prepayment complex medical review for that provider
or supplier could be extended. However, if the number of claims
submitted for a specific code was reduced because the provider or
supplier began billing claims using a new appropriate code, or there is
another legitimate explanation for the reduced number of claims billed,
at the contractor's discretion, the provider or supplier may not be
required to undergo extended non-random prepayment complex medical
review. If extended medical review is necessary, contractors would
notify providers and suppliers in writing the reason for the need to
perform additional prepayment complex medical review.
The contractor would evaluate the results of non-random complex
prepayment medical review, and the length of time a provider or
supplier remains on review, at least every quarter following the
initiation of non-random prepayment complex medical review. Quarterly
error-rate evaluations would
[[Page 58652]]
be for the discrete quarter; a rolling error rate average over more
than one quarter would not be appropriate. After the contractor
determines that the provider or supplier should be terminated from non-
random prepayment complex medical review, the contractor would update
the claims processing system within 2 business days to ensure that the
provider's and supplier's claims are no longer suspended for that
specific billing error.
Once a provider or supplier is terminated from non-random
prepayment complex medical review contractors would periodically re-
evaluate the provider or supplier's data. If necessary the contractor
could place a provider or supplier that appears to have resumed a high
level of payment error on complex medical review. This review would
only be initiated if a probe review confirms that there continues to be
a high level of payment error.
III. Provisions of the Proposed Regulations
To comply with section 934 of the MMA, we are proposing to amend 42
CFR part 421 by adding and reserving subpart D and adding a new subpart
E entitled, ``Medicare Payment Review.'' This subpart would establish
the general criteria for terminating a provider or supplier from non-
random prepayment complex medical review.
In Sec. 421.401, we are proposing to define the following terms
for purposes of this new subpart:
Error rate.
Initial error rate.
Medical review.
Non-random complex prepayment medical review.
Non-random prepayment medical review.
Provider specific probe review.
Quarterly error rate.
Service specific probe review
Termination of non-random prepayment complex medical
review.
In addition, we are proposing in Sec. 421.405 to specify the
termination criteria for non-random prepayment complex medical review.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each issue for Sec. 421.405 as
summarized and discussed below that contain information collection
requirements.
Section 421.405 Termination and Extension of Non-Random Prepayment
Complex Medical Review
In summary, Sec. 421.405 outlines the proposed requirements and
process for the termination and extension of non-random prepayment
complex medical review, a form of complex medical review. Contractors
conduct complex medical review to determine whether items or services
billed are covered, correctly coded, and are reasonable and necessary
for the condition of the patient. Under complex medical review the
provider or supplier must submit a copy of the medical records that
support the items or services billed.
The burden associated with this section is the time and effort
necessary for the provider or supplier of services to locate and obtain
the supporting documentation for the claim to Medicare and to forward
the materials for submission to Medicare contractors for review. We
expect that this information would generally be maintained by suppliers
and/or providers as a normal course of business and that this
information will be readily available.
The burden associated with this requirement is estimated to be 10
minutes per provider or supplier, to locate, photocopy and transmit
this information to the contractor upon request.
Over the past 3 years, Medicare contractors have performed complex
medical review on an average of 2.9 million claims.
The total annual burden associated with this requirement is
estimated to be 483,333 hours (2.9 million requests for medical records
x 10 minutes).
If you comment on these information collection and recordkeeping
requirements, please mail copies directly to the following: Centers for
Medicare & Medicaid Services, Office of Strategic Operations and
Regulatory Affairs, Regulations Development Group, Attn: William N.
Parham, III, CMS-6022-P, Room C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management
and Budget, Room 10235, New Executive Office Building, Washington, DC
20503, Attn: Christopher Martin, CMS Desk Officer, CMS-6022-P,
Christopher_Martin@omb.eop.gov. Fax (202) 395-6974.
V. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We would consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we would respond to
the comments in the preamble to that document.
VI. Regulatory Impact
We have examined the impact of this rule as required by Executive
Order 12866 (September 1993, Regulatory Planning and Review), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Act, the Unfunded Mandates Reform Act of 1995
(Pub. L. 104-4), and Executive Order 13132.
Executive Order 12866 (as amended by Executive Order 13258, which
merely reassigns responsibility of duties) directs agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
This rule does not reach the economic threshold and thus is not
considered a major rule.
The RFA requires agencies to analyze options for regulatory relief
of small businesses. For purposes of the RFA, small entities include
small businesses, nonprofit organizations, and government agencies.
Most hospitals and most other providers and suppliers are small
entities, either by nonprofit status or by having revenues of $6
million to $29 million in any 1 year. Individuals and States are not
included in the definition of a small entity. We are not preparing an
analysis for the RFA because we have determined that this rule would
not have a significant
[[Page 58653]]
economic impact on a substantial number of small entities. We believe
that this rule would decrease the costs for providers and suppliers
because it establishes guidelines for terminating a provider or
supplier from non-random prepayment complex medical review. We believe
this rule would eliminate inappropriate reviews and would ensure that
Medicare payments would not be withheld for extended time periods.
Because a contractor would no longer be maintaining providers or
suppliers on non-random prepayment complex medical review for extended
periods, administrative expenses (for example, copying, mailing, and
the retention of medical documentation) would be reduced.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because we have determined that
this rule would not have a significant impact on the operations of a
substantial number of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any 1 year by State,
local, or tribal governments, in the aggregate, or by the private
sector, of $100 million. This rule would have no consequential effect
on the governments mentioned or on the private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. Since this regulation would not impose any costs on State
or local governments, the requirements of E.O. 13132 are not
applicable.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 421
Administrative practice and procedure, Health facilities, Health
professions, Medicare, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as follows:
PART 421--INTERMEDIARIES, CARRIERS, AND PROGRAM SAFEGUARD
CONTRACTORS
1. The authority citation for part 421 continues to read as
follows:
Authority: Sec. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
2. The heading for Part 421 is revised to read as set forth above.
3. Add and reserve a new subpart D.
4. Add new subpart E, consisting of Sec. 421.400 through Sec.
421.405, to read as follows:
Subpart E--Medical Review
Sec.
421.400 Medicare review functions.
421.401 Definitions.
421.405 Termination and extension of non-random prepayment complex
medical review.
Subpart E--Medical Review
Sec. 421.400 Medicare review functions.
CMS enters into contractual agreements with intermediaries,
carriers, and program safeguard contractors (PSCs) (hereinafter,
intermediaries, carriers, and PSCs that perform medical review
functions are referred to as contractors) to perform medical review
functions to ensure that items or services are covered and are
reasonable and necessary in accordance with Medicare coverage policies
and program instructions.
Sec. 421.401. Definitions.
As used in this subpart--
Allowable charges means the dollar amount (including co-pay and
deductibles) that the Medicare program will pay for a particular item
or service.
Complex Medical Review means all medical review of claim
information and medical documentation by a licensed medical
professional, for a billed item or service identified by data analysis
techniques or probe review to have a likelihood of sustained or high
level of payment error.
Error rate means the dollar amount of allowable charges for a
particular item or service billed in error as determined by complex
medical review, divided by the dollar amount of allowable charges for
that medically reviewed item or service.
Initial error rate means the calculation of an error rate based on
the results of a probe review prior to the initiation of non-random
prepayment complex medical review.
Medical review means the process performed by a contractor to
ensure that billed items or services are covered and are reasonable and
necessary as specified under section 1862(a)(1)(A) of the Act.
Non-clinician medical review staff means specially trained medical
review staff that do not possess the knowledge, skills, training, or
medical expertise of a licensed health care professional.
Non-random prepayment complex medical review means the prepayment
medical review of claim information and medical documentation by a
licensed medical professional, for a billed item or service identified
by data analysis techniques or probe review to have a likelihood of
sustained or high level of payment error.
Non-random prepayment medical review means the prepayment medical
review of claims for a billed item or service identified by data
analysis techniques or probe review to have a likelihood of a sustained
or high level of payment error.
Provider-specific probe review means the complex medical review of
a small sample of claims, generally 20 to 40 claims, from a specific
provider or supplier for a specific billing code to confirm that the
provider or supplier is billing the program in error.
Quarterly error rate means the calculation of an error rate based
on the results of non-random prepayment complex medical review for a
specific billing code for a specific quarter.
Service-specific probe review means the complex medical review of a
sample of claims, generally 100 claims, across the providers or
suppliers that bill a particular item or service to confirm that the
item or service is billed in error.
Termination of non-random prepayment complex medical review means
the cessation of non-random prepayment complex medical review.
Sec. 421.405 Termination and extension of non-random prepayment
complex medical review.
(a) Except for cases described in paragraph (b) of this section, a
contractor may terminate a provider or supplier from non-random
prepayment complex medical review--
(1) No later than 1 year following the initiation of non-random
prepayment complex medical review; or
(2) If calculation of the error rate indicates that the provider or
supplier has reduced its initial error rate by 70 percent or more. A
contractor must review claims for a specific billing code aberrancy for
the quarter and calculate
[[Page 58654]]
the quarterly error rate for those claims medically reviewed in that
quarter. In order for this determination to be made, the provider or
supplier must submit a copy of the medical records that indicate that
the items or services billed are covered, correctly coded, and are
reasonable and necessary for the condition of the patient. When a
provider or supplier is terminated from non-random prepayment complex
medical review after 1 year of review and the contractor determines
that the provider or supplier continues to have a high error rate
despite educational interventions the contractor must consider
referring the provider or supplier to the Benefit Integrity PSC.
Contractors must also consider continuing educational interventions
without performing medical review or must consider performing
postpayment medical review.
(b) Extension of non-random prepayment complex medical review. (1)
A contractors must extend non-random prepayment complex medical review
beyond the 1 year timeframe if a provider or supplier stops billing the
code under review or shifts billing to another inappropriate code to
avoid proper calculation of the error rate. If the reduction in the
error rate is attributed to a 25 percent or greater reduction in the
number of claims submitted for the specific billing code under review,
non-random prepayment complex medical review for that provider or
supplier must be extended. However, if the number of claims submitted
for a specific code were reduced because the provider or supplier began
billing claims using a new appropriate code, or there is another
legitimate explanation for the reduced number of claims billed, at
contractor discretion, the provider or supplier may not be required to
undergo extended non-random prepayment complex medical review.
(2) If extended medical review is necessary, contractors must
notify providers and suppliers in writing the reasons for the need to
perform additional prepayment complex review.
(c) Quarterly termination evaluation--(1) Contractors, at a
minimum, must evaluate the length of time a provider or supplier has
been on non-random prepayment complex medical review on a quarterly
basis. A determination as to whether the provider's or supplier's
initial probe review error rate for a specific billing code has been
reduced by 70 percent must also be evaluated quarterly.
(2) Quarterly error rate evaluations must be for the discrete
quarter; a rolling error rate average over more than one quarter is not
permitted. After the contractor determines that the provider or
supplier should be terminated from non-random prepayment complex
medical review, the claims processing system must be updated within 2
business days to ensure that a provider's or supplier's claims for a
specific billing error is no longer suspended for non-random prepayment
complex medical review.
(d) Periodic re-evaluation. Once a provider or supplier is
terminated from non-random prepayment complex medical review,
contractors must periodically re-evaluate the provider or supplier's
data and if necessary must place a provider or supplier that appears to
have resumed a high level of payment error on complex medical review.
This review would only be initiated if a probe review confirms that
there continues to be a high level of payment error.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: October 26, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
Approved: March 10, 2005.
Michael O. Leavitt,
Secretary.
Editorial Note: This document was received at the Office of the
Federal Register on September 30, 2005.
[FR Doc. 05-19925 Filed 9-30-05; 2:47 pm]
BILLING CODE 4120-01-P