MAC Medical Review Explained: Prepayment vs. Postpayment Audits and How to Respond to Each

Medicare Administrative Contractors, known as MACs, are the private contractors that process Medicare fee-for-service claims in each geographic jurisdiction. Along with processing claims, MACs conduct medical review to make sure that Medicare pays only for items and services that meet coverage, coding, and payment requirements. For most providers, MAC medical review is the most common type of Medicare audit they will encounter.

Medical review matters because Medicare improper payments remain significant. CMS reported that the fiscal year 2025 Medicare fee-for-service improper payment rate was 6.55 percent, or $28.83 billion, and that most improper payments fell into two categories: insufficient documentation and documentation that did not sufficiently demonstrate medical necessity. MAC medical review is one of CMS's main tools for preventing and correcting these errors.

MAC medical review can happen before a claim is paid, called prepayment review, or after a claim is paid, called postpayment review. The two types differ in timing, financial impact, and how providers should respond. This article explains how MAC medical review works, the differences between prepayment and postpayment review, response deadlines and appeal rights, and practical steps for responding to each.

What Is MAC Medical Review?

CMS describes Medicare fee-for-service compliance programs as preventing, reducing, and measuring improper payments through medical review. Medical review involves both automated and manual processes:

• Automated review uses claim edits to deny claims that clearly do not meet Medicare requirements, without reviewing medical records.

• Complex medical review involves a licensed clinician or other qualified reviewer examining medical records to determine whether the claim meets coverage, coding, and payment rules.

How MACs Select Claims

The Medicare Program Integrity Manual, Chapter 2, describes data analysis as an essential first step in identifying potential problems. MACs compare billing patterns, identify statistical outliers within peer groups, analyze trends over time, and identify high-volume or high-cost services that may be overutilized. MACs also consider Comprehensive Error Rate Testing (CERT) results, OIG findings, complaints, and other information.

Targeted Probe and Educate

Most MAC complex medical review is conducted through the Targeted Probe and Educate (TPE) strategy. According to CMS, TPE reviews can be either prepayment or postpayment and involve MACs focusing on specific providers that bill a particular item or service. A TPE round typically involves review of 20 to 40 claims, followed by one-on-one education, for up to three rounds.

Prepayment Review

What It Is

In prepayment review, the MAC suspends a claim before payment and sends an Additional Documentation Request (ADR) asking the provider to submit medical records supporting the claim. The claim is paid, partially paid, or denied based on the review.

When MACs Use Prepayment Review

Prepayment review may be used when:

• A provider is selected for TPE on a prepayment basis.

• A provider has high error rates or unusual billing patterns.

• CMS directs 100 percent prepayment review after failed TPE rounds.

• A service has a high national error rate and is targeted through a service-specific review.

Financial Impact

Prepayment review delays payment while the claim is under review. If many claims are subject to prepayment review, cash flow can be affected significantly. Claims that are denied are not paid unless overturned on appeal.

Response Deadline

Under CMS instructions, providers generally have 45 calendar days to respond to a MAC ADR. If documentation is not received within the timeframe, the claim is typically denied. MACs may accept late documentation for good cause, but providers should not rely on this.

How to Respond to a Prepayment ADR

1. Log the ADR. Record the claim, date of service, ADR date, and response deadline.

2. Identify what is required. Review the ADR and applicable coverage requirements, including national and local coverage determinations and documentation requirements for the service.

3. Gather complete records. Include orders, physician or practitioner notes, certifications, plans of care, test results, signature attestations, and proof of delivery, as applicable.

4. Review for quality. Confirm that records are legible, signed, dated, and support medical necessity and the level of service billed.

5. Organize the submission. Consider a cover sheet that lists enclosed documents and highlights where key requirements are met.

6. Submit on time. Use the MAC's preferred submission method, such as the Electronic Submission of Medical Documentation (esMD) system or the MAC's portal, and keep proof of submission.

7. Track the result. Monitor the claim outcome and review denial reasons.

Appealing Prepayment Denials

A prepayment denial is an initial determination that can be appealed through the Medicare fee-for-service appeals process:

• Redetermination by the MAC, generally requested within 120 days of receiving the initial determination.

• Reconsideration by a Qualified Independent Contractor, generally requested within 180 days of the redetermination decision.

• Administrative Law Judge hearing, generally requested within 60 days of the reconsideration decision.

• Medicare Appeals Council review.

• Judicial review in federal district court.

Postpayment Review

What It Is

In postpayment review, the MAC reviews claims that have already been paid. The MAC sends an ADR requesting records for selected claims. If the review finds that claims were paid improperly, the MAC determines an overpayment and seeks recovery.

When MACs Use Postpayment Review

Postpayment review may be used when:

• A provider is selected for TPE on a postpayment basis.

• Data analysis identifies potential errors in previously paid claims.

• CMS directs review of specific services or time periods.

Statistical Sampling and Extrapolation

In some postpayment reviews, contractors may review a statistically valid random sample of claims and project the error rate to a larger universe of claims to estimate an overpayment. Section 1893(f)(3) of the Social Security Act limits the use of extrapolation to situations where there is a sustained or high level of payment error, or where documented educational intervention has failed to correct the payment error. CMS has listed extrapolation as a possible next step for providers that fail to improve after three rounds of TPE.

Financial Impact

Postpayment review can result in overpayment demands, sometimes for large amounts if extrapolation is used. Recoupment may begin if the overpayment is not paid or appealed in time.

Response Deadline

As with prepayment review, providers generally have 45 calendar days to respond to a MAC postpayment ADR. Failure to respond typically results in the claims being denied and an overpayment being assessed.

How to Respond to a Postpayment ADR

The steps are similar to prepayment review, with some additional considerations:

1. Log and calendar the ADR.

2. Retrieve historical records. Because the claims may be months or years old, records may be stored in archived systems, held by former vendors, or maintained at closed locations.

3. Confirm the documentation supports each claim as billed.

4. Review signatures and late entries. Make sure signature attestations and addenda follow Medicare documentation rules. Never create or alter records after the fact.

5. Submit complete records on time and keep proof.

6. Prepare for potential extrapolation. If the review involves a statistical sample, consider whether to engage a qualified statistician to evaluate the methodology.

Overpayment Demands and Recoupment

When a postpayment review results in an overpayment, the MAC issues a demand letter. Key points include:

• Under Section 1893(f)(2) of the Social Security Act and 42 CFR 405.379, recoupment is limited during the first two levels of appeal if the provider files a timely appeal. Generally, filing a redetermination request within 30 days of the demand letter, and a reconsideration request within 60 days of the redetermination decision, prevents recoupment while those appeals are pending.

• If the provider does not pay or file a timely appeal, recoupment through offset of future Medicare payments may begin.

• Interest may accrue on unpaid overpayments.

• Providers experiencing financial hardship may request an extended repayment schedule under 42 CFR 401.607.

Appealing Postpayment Overpayments

Overpayment determinations follow the same five-level appeal process described above. Because of the recoupment rules, the 30-day and 60-day timeframes for redetermination and reconsideration requests are especially important.

Prepayment vs. Postpayment: Key Differences

• Timing. Prepayment review occurs before payment, while postpayment review occurs after payment.

• Cash flow. Prepayment review delays payment on reviewed claims. Postpayment review results in overpayment demands and potential recoupment.

• Records. Prepayment review involves recent records. Postpayment review may require retrieving older records.

• Extrapolation. Extrapolation is generally associated with postpayment review of a statistical sample.

• Recoupment protections. Postpayment overpayments are subject to recoupment limitations during timely filed first and second level appeals.

• Strategy. Prepayment review rewards strong, real-time documentation practices. Postpayment review rewards good records management and historical documentation quality.

Related Review Programs

MAC medical review is closely connected to other CMS programs. Some items and services are subject to prior authorization, which allows providers to obtain a decision before services are furnished or claims are submitted. In certain states, Review Choice Demonstrations allow eligible providers to choose among review options, such as pre-claim review or postpayment review, for specific services. CMS has expanded the Inpatient Rehabilitation Facility Review Choice Demonstration to additional states, including California and Texas. Providers subject to these programs should understand how they interact with routine MAC medical review and TPE.

Common Reasons for Denials

Based on CMS's description of improper payment drivers, common reasons for denials in medical review include:

• Missing or insufficient documentation.

• Documentation that does not support medical necessity.

• Missing or invalid physician or practitioner signatures.

• Missing orders or certifications.

• Incorrect coding, including billing a higher level of service than documented.

• Failure to meet specific coverage requirements, such as homebound status for home health or face-to-face encounter requirements.

• No response to the ADR.

Understanding Medical Necessity Documentation

Because CMS identifies insufficient documentation and lack of medical necessity as the leading causes of improper payments, providers should understand what reviewers look for. In general, documentation should:

• Clearly describe the patient's condition, symptoms, and relevant history.

• Explain why the item or service was reasonable and necessary for that patient.

• Show that the service was ordered by an appropriate practitioner, when an order is required.

• Demonstrate that coverage criteria in applicable national or local coverage determinations were met.

• Show that the service was actually provided as billed, including dates, times, and the identity of the person who furnished it.

• Support the specific code and level of service billed.

Documentation should be individualized to the patient. Generic or cloned text that appears identical across many patients may raise questions about whether the documentation reflects actual care.

Signature Requirements

Medicare generally requires that services provided or ordered be authenticated by the author. Missing or illegible signatures are a common reason for denials. CMS guidance in the Medicare Program Integrity Manual describes acceptable signature methods and the use of signature attestation statements in certain circumstances. Providers should review signature practices regularly, especially when using electronic health records, scribes, or dictation services.

Writing an Effective Cover Letter

A clear cover letter can help reviewers find key information quickly. An effective cover letter typically:

• Identifies the provider, the ADR, the beneficiary, the claim, and the date of service.

• Lists the enclosed documents in a logical order.

• Briefly summarizes how the documentation meets the applicable coverage requirements, with page references.

• Notes any signature attestations included.

• Provides a contact person for questions.

The cover letter should be factual and should not include information that is not supported by the enclosed records.

A Sample ADR Workflow

Many organizations use a simple workflow to manage ADRs consistently:

1. Intake: The ADR is received, logged, and assigned within one business day.

2. Retrieval: Records are gathered from all relevant sources within the first week.

3. Clinical review: A clinician or trained reviewer checks that documentation supports the claim.

4. Quality check: A second person confirms completeness, legibility, and signatures.

5. Submission: Records are submitted well before the deadline, and proof of submission is saved.

6. Follow-up: The outcome is tracked, and denials are routed for appeal review and root cause analysis.

Preparing a Redetermination Request

If a claim is denied, a well-prepared redetermination request can be effective. Consider these steps:

• Review the denial reason carefully and identify exactly what the reviewer found lacking.

• Determine whether the documentation actually supports the claim and was overlooked, or whether additional existing records can be provided.

• Submit the request within the applicable deadline, using the MAC's form or required format.

• Include a clear explanation of why the claim meets Medicare requirements, with references to specific pages in the records.

• Include any relevant records that were not previously submitted, as long as they existed at the time of service and were not created or altered afterward.

• For overpayments, remember that filing within 30 days of the demand letter is important for limiting recoupment during the appeal.

Practical Tips for Responding to Any MAC ADR

• Treat every ADR as a priority, regardless of the dollar amount.

• Assign a responsible person to track ADRs and deadlines.

• Respond before the deadline, not on the last day.

• Send all relevant records, not just the note for the date of service. CMS manual instructions allow reviewers to collect documentation related to the beneficiary's condition before and after a service.

• Make sure records are legible and complete.

• Use signature attestations when appropriate and allowed.

• Highlight where key requirements are met, without altering records.

• Keep a copy of everything submitted and proof of delivery.

• Analyze denials to identify patterns and educational needs.

• Appeal denials you believe are incorrect, within the deadlines.

Prepayment Review and Cash Flow Planning

Extended prepayment review can create serious cash flow pressure, especially when a large share of claims is affected. Providers can reduce the impact by:

• Estimating how many claims and dollars are likely to be held under review each month.

• Building a short-term cash forecast that reflects delayed payments.

• Responding to ADRs early, since faster responses can lead to faster determinations.

• Prioritizing documentation quality so that claims are paid on first review rather than after appeal.

• Communicating with leadership and lenders, if appropriate, about the expected impact.

• Tracking prepayment review outcomes to identify when error rates improve and review may end.

Building a Medical Review Readiness Program

Documentation Practices

• Train clinicians on documentation requirements for your services.

• Use electronic health record templates that prompt for required elements without encouraging cloned documentation.

• Conduct pre-billing reviews for high-risk services.

ADR Management

• Create a central ADR log with deadlines, responsible staff, submission dates, and outcomes.

• Monitor the MAC portal regularly for new ADRs.

• Establish a quality review step before submission.

Data Monitoring

• Review comparative data such as CMS's Program for Evaluating Payment Patterns Electronic Report (PEPPER), where available.

• Track denial rates by service, clinician, and location.

• Investigate unusual changes in billing patterns.

Internal Audits

• Conduct periodic internal audits that mirror MAC review criteria.

• Report results to leadership and the compliance committee.

• Address overpayments identified internally under the 60-day overpayment rule at 42 CFR 401.305.

When to Seek Outside Help

Many providers handle routine ADRs internally, but outside support can be valuable when a provider is placed on extended prepayment review, receives a large postpayment request, faces potential extrapolation, or sees recurring denials it cannot resolve. Independent reviewers can assess documentation quality, identify root causes, and help prepare appeals, while qualified statisticians can evaluate sampling and extrapolation methods. When a review suggests potential fraud concerns or involves a Unified Program Integrity Contractor, experienced legal counsel should be involved.

Frequently Asked Questions

What is the difference between prepayment and postpayment review?

Prepayment review occurs before a claim is paid and delays payment until the review is complete. Postpayment review occurs after payment and can result in overpayment demands and recoupment.

How long do I have to respond to a MAC ADR?

Generally 45 calendar days. Always follow the deadline in the ADR letter.

What happens if I do not respond to an ADR?

The claim is typically denied for lack of documentation. In TPE, non-responses count as errors.

Can a MAC use extrapolation?

Yes, in certain circumstances. Under Section 1893(f)(3) of the Social Security Act, extrapolation may be used when there is a sustained or high level of payment error or when documented educational intervention has failed.

How do I stop recoupment during an appeal?

Generally, by filing a redetermination request within 30 days of the overpayment demand and a reconsideration request within 60 days of the redetermination decision, consistent with 42 CFR 405.379.

Does prepayment review mean I am suspected of fraud?

Not necessarily. Prepayment review is commonly used to address documentation and billing errors, often through TPE. However, if review uncovers patterns that suggest potential fraud, the MAC may refer the matter to a Unified Program Integrity Contractor.

Can I submit additional records with my appeal?

Generally, yes, at the redetermination and reconsideration levels, as long as the records existed at the time of service and were not created or altered afterward. Submitting complete records early in the appeal process is important, because later levels may limit new evidence.

Conclusion

MAC medical review is a routine part of Medicare participation, but it can have major financial consequences. Prepayment review affects cash flow by delaying payment, while postpayment review can lead to overpayment demands, extrapolation, and recoupment. Both require timely, complete, and well-organized responses supported by strong documentation.

Providers that understand the differences between prepayment and postpayment review, track ADRs carefully, respond on time, appeal incorrect denials within key deadlines, and invest in documentation quality and internal audits are best positioned to protect their revenue and maintain compliance.

How HealthBridge Can Help

HealthBridge is a healthcare management consulting firm that specializes in Medicare medical review, audit response, and documentation improvement. We help providers manage ADRs, review records before submission, analyze denial patterns, prepare appeals, evaluate extrapolation methodologies, and conduct internal audits that mirror MAC review criteria. If you would like help responding to prepayment or postpayment review, please get in touch with us. We will be happy to help you with this topic.

References

• Centers for Medicare & Medicaid Services. Medicare Program Integrity Manual, Chapter 3. https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/pim83c03.pdf

• Centers for Medicare & Medicaid Services. Medicare Program Integrity Manual, Chapter 2. https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/pim83c02.pdf

• Centers for Medicare & Medicaid Services. Medicare Fee-for-Service Compliance Programs. https://www.cms.gov/data-research/monitoring-programs/medicare-fee-service-compliance-programs

• Centers for Medicare & Medicaid Services. Targeted Probe and Educate. https://www.cms.gov/data-research/monitoring-programs/medicare-fee-service-compliance-programs/medical-review-and-education/targeted-probe-and-educate-tpe

• Centers for Medicare & Medicaid Services. Targeted Probe and Educate (TPE) Questions and Answers. https://www.cms.gov/files/document/updated-tpe-qas.pdf

• Centers for Medicare & Medicaid Services. Hospital Patient Status Review Frequently Asked Questions. https://www.cms.gov/data-research/monitoring-programs/medicare-fee-service-compliance-programs/medical-review-education/inpatient-hospital-reviews-faqs

• Centers for Medicare & Medicaid Services. Fiscal Year 2025 Improper Payments Fact Sheet. https://www.cms.gov/newsroom/fact-sheets/fiscal-year-2025-improper-payments-fact-sheet

• Centers for Medicare & Medicaid Services. MLN Connects Newsletter for January 29, 2026. https://www.cms.gov/training-education/medicare-learning-network/newsletter/mln-connects-newsletter-january-29-2026

• Centers for Medicare & Medicaid Services. Comprehensive Error Rate Testing (CERT). https://www.cms.gov/data-research/monitoring-programs/improper-payment-measurement-programs/comprehensive-error-rate-testing-cert

• Centers for Medicare & Medicaid Services. Original Medicare (Fee-for-Service) Appeals. https://www.cms.gov/medicare/appeals-grievances/fee-for-service

• U.S. Social Security Administration. Social Security Act, Section 1893, Medicare Integrity Program. https://www.ssa.gov/OP_Home/ssact/title18/1893.htm

• Electronic Code of Federal Regulations. 42 CFR 405.379, Limitation on Recoupment of Provider and Supplier Overpayments. https://www.ecfr.gov/current/title-42/section-405.379

• Electronic Code of Federal Regulations. 42 CFR 401.607, Claims Collection. https://www.ecfr.gov/current/title-42/section-401.607

• Electronic Code of Federal Regulations. 42 CFR 401.305, Requirements for Reporting and Returning of Overpayments. https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-A/part-401/subpart-D/section-401.305

• Centers for Medicare & Medicaid Services. MLN Connects Newsletter for May 28, 2026 (PEPPER Relaunch). https://www.cms.gov/training-education/medicare-learning-network/newsletter/mln-connects-newsletter-may-28-2026