Health care providers: Ever wonder WHY the state government is auditing so many past Medicaid payments, seeking so many recoupments, and implementing so many prepayment reviews? Because North Carolina is one of 7 states in the U.S. targeted by the federal government to audit for Medicaid fraud and errors.

This past summer, the Centers for Medicare and Medicaid Services (CMS) announced on its website it would be conducting  prepayment audit beginning August 27, 2012, of 7 states. CMS determined these 7 states were most likely culpable of Medicaid fraud and have high volumes of error-prone providers. (We do not know how CMS came to this conclusion). And….guess what? North Carolina made the top 7! This is why NC is embarking on such a widespread, over-inclusive search for Medicaid fraud and errors.

The states chosen were: California, Florida, Illinois, Louisiana, Michigan, New York,  Texas, Missouri, North Carolina, Ohio, and Pennsylvania.

The result?

Hundreds of providers are receiving Tentative Notices of Overpayment or Notices of Prepayment Review.

The Tentative Notices of Overpayment are notices stating that the health care provider owes North Carolina a certain sum.  Usually the monetary amounts are large; some amounts are in the millions.

The Notices of Prepayment Review are a little sneakier. Basically, the notice  informs the health care provider that the provider is on a prepayment review list, very  similar to Santa Clause‘s “Naughty and Nice List.” Once a health care provider is placed on the Naughty List, every time the provider submits a Medicaid claim, CCME (or the government agency for the Medicaid service submitted) reviews the Medicaid claim and rejects payment if any mistake is found. The health care provider must raise its error rate to 70% non-error  for 3 consecutive  months to get off the Naughty List.

Both Tentative Notices of Overpayment and Notices of Prepayment Review are stressful on the health care provider. Both result in lost profit. But both are manageable with the right help. And, just think, it is happening because we live in North Carolina.  43 states are not going through this.