The  Social Security Act, the Centers for Medicare & Medicaid Services (CMS) is mandated  to protect the Medicare Trust Fund against inaccurate or excessive payments that pose risk to the Trust Fund and  to take corrective measures to correct such.

To protect the fund Medicare contracts with Part A and Part B Medicare Administrative Contractors (A/B MACs), Durable Medical Equipment Medicare Administrative Contractors (DME MACs), fiscal intermediaries (FIs), carriers and others to perform analysis of fee-for-service (FFS) claim data to identify not typical  billing patterns and perform claims review. These entities are referred to as Medicare Contractors.

Medical review is the collection of information and then reviewing of the medical records by Medicare Contractors to ensure that payment is made only for services that meet all Medicare coverage requirements and rules, coding, and medical necessity requirements. Medical review activities consist of audits and questioning atypical practices.

Medical Billers Medical Review for Medicare

Goals of the  medical review program is to reduce payment errors by finding and addressing billing errors concerning coverage and coding errors made by providers. To achieve the goals of the review contractors do the following:

  • Look for ¬†patterns of potential billing errors/problems ¬†concerning Medicare coverage and coding made by providers through data collection and evaluation.
  • Review of OIG reports that come out yearly.
  • Confront and address errors found.
  • ¬†Publish local coverage determinations to give guidance to the public and medical ¬†personnel regarding items and services that will be eligible for payment under the Medicare statutes.

The Medicare Contractor may use any relevant information they feel is  necessary to make a prepayment or postpayment claim review determination. This includes reviewing any documentation submitted with the claim as well as requesting documentation from the provider when the contractor feels it is  necessary in accordance with their manuals, through a process known as additional documentation request.

Medicare Contractors are required to follow CMS policy instructions.  In addition to the instructions found in CMS manuals, their are LCD and NCD determinations that are followed.

  • National Coverage Determination (NCD): Medicare coverage is limited to items and services that are reasonable and necessary for the diagnosis or treatment of an illness or injury (and within the scope of a Medicare benefit category). The NCDs are developed by CMS to describe the circumstances for which Medicare will cover specific services, procedures, or technologies on a national basis. ¬†Obviously, medical necessity is key and core to NCDs.
  • Local Coverage Determinations (LCD): In the absence of a national coverage policy, an item or service may be covered at the discretion of the Medicare Contractors based on a local coverage determinations (LCD), which is also based on medical necessity.

It is important as an medical biller to be very familiar with Medical, NCDs, and LCDs, and to review the OIG report that comes out every October to make sure your office is in compliance and the issues that Medicare is looking at this following year.  This helps save Medicare dollars and makes providers responsible for understanding Medical rules, regulations and compliance issues.


By: Dawn Moreno, PhD, CPC, CBCS, CMAA, MTC. Lives in the beautiful Southwest United States and has been an instructor for medical coding/billing for the past 7 years.  Interested in quality medical billing training? 

Read More Information about Medical Billers Medical Review

Medicare’s New Ruling for Modifier 59 – Medical Billing Modifiers

AAPC РCertified Professional Biller  (CPB)