August 27, 2012, Marks the Start Date of the CMS Recovery Audit Prepayment Review (RAPR)

By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On July 31, 2012, the Centers for Medicare and Medicaid Services (CMS) announced on its website that hospitals should brace themselves for prepayment audits beginning August 27, 2012.

The CMS originally announced the Recovery Audit Prepayment Review (RAPR) Demonstration Project in November of 2011 for a January 1, 2012 start date, then delayed it to June 1, 2012, then again to, “summer of 2012.”

To see the official announcement from the CMS, click here.


Recovery Audit Contractors (RACs) will Review Claims with High Rates of Improper Billing.

The Recovery Audit Prepayment Review allows Recovery Audit Contractors (RACs), (commonly known to attorneys representing provers as “bounty hunters”) to review claims before they are paid to ensure that the provider has complied with all Medicare payment rules. RACs will conduct prepayment reviews on certain types of claims that have been found to result in high rates of improper payments. The goal is to cut improper payments before they even happen.

The Initial Launch of Recovery Audit Prepayment Reviews will Center Around Seven States.

The Recovery Audit Prepayment Reviews will focus on seven states with high volumes of fraud and error-prone providers. These states are: California, Florida, Illinois, Louisiana, Michigan, New York, and Texas. The Recovery Audit Prepayment Reviews will also include four states with a high volume of claim with short inpatient hospital stays. These states are Missouri, North Carolina, Ohio, and Pennsylvania.

Here are the RACs for those states from the CMS:

HealthDataInsights serves California and Missouri
7501 Trinity Peak Street, Suite 120
Las Vegas, NV 89128
(866) 590-5598

Connolly Inc. serves Florida, Louisiana, Texas, and North Carolina
One Crescent Drive, Suite 300-A
Philadelphia, PA 19112
(866) 360-2507

CGI Federal Inc. serves Illinois, Michigan, and Ohio
1001 Lakeside Ave., Suite 800
Cleveland, OH 44114
(877) 316-RACB

Diversified Collection Services serves New York and Pennsylvania
2819 Southwest Blvd
San Angelo, TX 76904
(866) 201-0580

To see the name of the RAC for your state, click here.


More States May Look to Be Included in the Recovery Audit Prepayment Review Demonstration Project.

CMS is expecting that the prepayment reviews will help lower error rates by preventing improper payments instead of searching for improper payments after they occur. If these reviews are successful, other states will be included in subsequent roll-outs of the Recovery Audit Prepayment Review Demonstration.


Goals for the Recovery Audit Prepayment Review Demonstration.

In 2012, President Obama set three goals for cutting improper payments this year: curbing overall payment errors by $50 billion, cutting Medicare error rate in half and recovering $2 billion in improper payments, according to CMS. The prepayment review program is intended to help achieve those goals. It will also play a big part in preventing fraud, waste and abuse.

The demonstration project will last for three years.

Click here to learn more on the Recover Audit Prepayment Review Demostration.

My Concerns with Widespread Prepayment Reviews.

Our concerns with the widespread use of prepayment reviews are many. Prepayment reviews, especially when used where there is no indication of any fraud or a high error rate, can slow down a health provider’s cash flow to the point that it is put out of business. This is especially true for those that are predominately reimbursed by Medicare. The small business provider is at a greater risk.

In addition, the increase in professional time, salaries, copy costs, handling costs and postage greatly increase the administrative burden and the cost of doing business. To date, we have not seen or heard of any proposal by CMS to reimburse the provider for this additional unnecessary and unplanned expense.

Contact Health Law Attorneys Experienced in Handling Medicaid and Medicare Audits.

The Health Law Firm’s attorneys routinely represent physicians, medical groups, clinics, pharmacies, durable medical equipment (DME) suppliers, home health agencies, nursing homes and other healthcare providers in Medicaid and Medicare investigations, audits and recovery actions.

To contact The Health Law Firm please call (407) 331-6620 or (850) 439-1001 and visit our website at

Cheung, Karen. “Prepayment Audits Start Aug. 27.” Fierce Healthcare. (July 31, 2012). From: “Recovery Audit Prepayment Review.” (July 31, 2012). From:


About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida, area.  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone:  (407) 331-6620.