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Medical Review and Education

Consistent with Sections 1833(e), 1842(a)(2)(B), and 1862(a)(1) of the Social Security Act, the Centers for Medicare & Medicaid Services (CMS) is required to protect the Medicare Trust Fund against inappropriate payments that pose the greatest risk to the Trust Fund and take corrective actions.

To meet this requirement CMS 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 atypical billing patterns and perform claims review. These entities are referred to as Medicare Contractors.

Medical review is the collection of information and clinical review of medical records by Medicare Contractors to ensure that payment is made only for services that meet all Medicare coverage, coding, and medical necessity requirements. Medical review activities are directed toward areas where data analysis, Comprehensive Error Rate Testing (CERT) and Office of Inspector General (OIG)/Government Accounting Office (GAO) findings as well as Recovery Audit Contractor (RAC) vulnerabilities indicate questionable billing patterns.

Goal of the Medical Review Program

The goal of the medical review program is to reduce payment error by identifying and addressing billing errors concerning coverage and coding made by providers. To achieve the goal of the medical review program, Medicare Contractors:

  • Proactively identify patterns of potential billing errors concerning Medicare coverage and coding made by providers through data analysis and evaluation of other information (e.g. complaints);
  • Review CERT data, RAC vulnerabilities and OIG/GAO reports;
  • Take action to prevent and/or address the identified error;
  •  Publish local medical review policy (called Local Coverage Determination-(LCD)) to provide guidance to the public and medical community about when items and services will be eligible for payment under the Medicare statute; and
  • Publish MLN (Medicare Learning Network) educational articles as they relate to the medical review process.

Progressive Corrective Action (PCA)

PCA is an operational principle upon which all medical review activities are based.  PCA involves data analysis, error detection, validation of errors, provider education, determination of review type, sampling claims and payment recovery. It serves as an approach to performing medical review and assists contractors in deciding how to deploy medical review resources and tools appropriately.


The Medicare Contractor may use any relevant information they deem necessary to make a prepayment or postpayment claim review determination. This includes reviewing any documentation submitted with the claim as well as soliciting documentation from the provider or other entity when the contractor deems it necessary and in accordance with our manuals, through a process known as additional documentation request (ADR).

Contractor Oversight

One distinct role of the CMS Medical Review personnel is to provide contractor oversight such as:

 Providing broad direction on medical review policy

  • Review and approve Medicare Contractors' annual medical review strategies
  • Facilitate Medicare Contractors' implementation of recently enacted Medicare legislation
  • Facilitate compliance with current regulations
  • Ensure Medicare Contractors' performance of CMS operating instructions
  • Conduct continuous monitoring and evaluation of Medicare Contractors' performance in accord with CMS program instructions as well as contractors' strategies and goals
  • Provide ongoing feedback and consultation to contractors regarding Medicare program and medical review issues.

National and Local Coverage Determinations (NCD and LCD)

Medicare Contractors are required to follow CMS policy instructions.  In addition to the instructions found in our manuals, CMS and their contractors issue the following types of instructions:

  • 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. Medicare Contractors are required to follow NCDs. If an NCD does not specifically exclude/limit an indication or circumstance, or if the item or service is not mentioned at all in an NCD or in a Medicare manual, it is up to the Medicare contractor to make the coverage decision.
  • 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 determination (LCD).

Section 522 of the Benefits Improvement and Protection Act (BIPA) defines an LCD as a decision by a FI or carrier whether to cover a particular service on an intermediary-wide or carrier-wide basis in accordance with Section 1862(a)(1)(A) of the Social Security Act (e.g., a determination as to whether the service or item is reasonable and necessary).

FIs, carriers, and MACs are Medicare Contractors that develop and/or adopt LCDs. Medicare Contractors develop LCDs when there is no NCD or when there is a need to further define an NCD. The guidelines for LCD development are provided in Chapter 13 of the Medicare Program Integrity Manual.

All NCDs, LCDs, local policy articles, and proposed NCD decisions are found in the Medicare Coverage Database.