Prepayment review
Prepayment review is a payer's examination of a claim — and often the medical records behind it — before the claim is paid. Because the review happens first, the claim is held and payment depends on the outcome: the payer issues an initial determination once it has what it needs, and if the requested records do not arrive complete and on time, the claim is denied. It is the counterpart of post-payment review, which revisits a claim after it has already been paid.
Updated
Prepayment review is a payer examining a claim, and frequently the medical records that support it, before making payment. Because the review comes first, the claim is held — pended — and whether it pays depends on the result: the payer issues an initial determination to pay, adjust, or deny the claim once it has the information it needs. It is the mirror image of post-payment review, which revisits a claim after it has already been paid.
Both commercial health plans and Medicare use prepayment review. A plan may place a particular provider, service, or claim type on prepayment review over a coverage question, a coding or medical-necessity concern, or a data pattern; in Medicare, a Medicare Administrative Contractor or a program-integrity contractor conducts prepayment medical review under the rule that no payment is made until the information needed to determine the amount due has been furnished (section 1833(e) of the Social Security Act, 42 U.S.C. § 1395l(e)). The review usually opens with a request for records, and if the records are not received by the deadline the payer sets, the claim is denied.
In practice
For a billing operation, prepayment review appears as a claim that does not pay and a documentation request attached to it. The claim is not lost — it is waiting — but it will be denied if the requested records do not arrive complete and on time. The operative deadline is the one stated on the request or in the provider agreement, not a universal number, and it varies by plan, by contract, and (for prompt-pay purposes) by state.
The practical difference from post-payment review is timing, and with it leverage. On prepayment review the money has not moved, so a complete and timely response is what releases payment. On post-payment review the money has already been paid, so an inadequate response produces an overpayment the plan will recover.
Commonly confused with
- Post-payment review: Post-payment review examines a claim after it has been paid and can leave the payment unchanged or issue a revised determination finding an underpayment or an overpayment. Prepayment review happens before payment, so its result is the initial determination rather than a revision, and no money changes hands until the review is complete.
- Additional Documentation Request (ADR): An ADR is the request a Medicare contractor issues to obtain the records it needs to decide a claim — the instrument, where prepayment (or post-payment) review is the process the request serves. A commercial payer sends the equivalent request under its provider agreement.
- Medical necessity: Medical necessity is one thing a review can test — whether a service met the plan's coverage criteria. Prepayment review is the timing and process of the examination, which may check coding, coverage, or eligibility as well as medical necessity, not only whether the care was necessary.