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Post-Service, Prepayment Audit (PPM Audit) FAQs

Formerly known as Special Claims Review (SCR).

  1. What is a post-service, prepayment audit (PPM Audit)?
    A. A PPM Audit (formerly known as Special Claims Review [SCR]) is a utilization control process that the Department of Health Care Services (DHCS) uses to ensure that providers are filing accurate Medi-Cal claims. Providers that are audited on a prepayment basis receive a letter explaining specific billing instructions necessary to pass professional medical review before claims payment. Claims subject to a PPM Audit must be submitted with documents required to substantiate the nature, extent and medical necessity of the services claimed. A PPM Audit is a post-service, prepayment audit of claims, established by Welfare and Institutions Code section (W&I Code §) 14133, subdivision (b). It does not constitute a sanction or punishment for misconduct, but instead is used by the DHCS to satisfy its oversight responsibilities.
  2. Why are Medi-Cal claims subject to a post-service, prepayment audit (PPM Audit)?
    A. The California Code of Regulations (CCR), Title 22, Section (22 CCR §) 51460 states: "Special Claims Review may be imposed on a provider upon a determination that the provider has submitted improper claims, including claims which incorrectly identify or code services provided." Providers receive a Utilization Control Action Notice provider letter with a detailed explanation concerning problems found with a claim based on the audit.
  3. Why are claims denied?
    A. Provider claims are held until a professional medical examination can verify the validity of each claim. Claims are only denied if they fail to meet professional service or medical documentation standards, or the requirements for Medi-Cal payment. For helpful guidance, see your Utilization Control Action Notice provider letter or the Medi-Cal provider manual (see the Provider Manuals page and CCR, Title 22, Division 3 on the California Code of Regulations Web site).
  4. Can a provider continue to submit claims electronically?
    A. Providers may not submit claims electronically if the procedure codes or all services are subject to a post-service, prepayment audit (PPM Audit). Claims for services subject to the audit must be submitted on an original paper billing form. Medi-Cal denies electronic claims for services subject to a PPM Audit. Providers may continue to submit claims electronically if the specific procedure codes or dates of service are not subject to the PPM Audit.
  5. What else does a provider need to submit for a post-service, prepayment audit (PPM Audit)?
    A. Claims submitted for a PPM Audit must contain documents required to substantiate the nature, extent and medical necessity of the services claimed. There are special signed statements that must be attached and other specific documentation requirements as described in your Utilization Control Action Notice provider letter. For example, if a provider has 10 claims, they should send 10 original paper billing form claims with separate supporting documents for each claim.
  6. Does the post-service, prepayment audit (PPM Audit) status affect all of a provider’s current claims in the system?
    A. As explained in the Utilization Control Action Notice provider letter providers receive, the PPM Audit applies to one or more procedure codes, or to all of the provider’s claims. Medi-Cal only reviews claims for dates of services within the PPM period, regardless of when the claim was submitted. The Utilization Control Action Notice letter informs providers of the specific procedure codes affected and the date when the PPM Audit began.
  7. Does the post-service, prepayment audit (PPM Audit) apply to claims billed for services provided before, or after, the PPM Audit's effective date period?
    A. The Utilization Control Action Notice letter informs providers of the date when the PPM Audit period begins and ends. The audit applies to any claims for codes specified on Utilization Control Action Notice provider letter for the dates of service listed within the PPM Audit period, no matter when the provider submits the claim. Providers may bill electronically for services provided before and after the PPM Audit period.
  8. How long will a provider be reviewed on a post-service, prepayment audit (PPM Audit)?
    A. DHCS evaluates the need for continuation or modification of a PPM Audit during the standard nine-month audit period. DHCS sends written notice and instructions to providers before the PPM begins and after it ends. Improper claiming discovered by the PPM Audit may result in other actions being taken against a provider.
  9. Does DHCS offer post-service, prepayment audit (PPM Audit) training?
    A. A PPM Audit reinforces normal billing procedures, and requires professionally competent medical recordkeeping. Medi-Cal encourages all providers and billers to attend a billing workshop. Providers may wish to obtain continuing professional education in recordkeeping. Please refer to the latest Medi-Cal Update for upcoming billing workshops. Providers can also review the appropriate Medi-Cal provider manual for policies and billing procedures. To find the latest provider manual updates, click the appropriate provider type on the Provider Bulletins page.
  10. What is the post-service, prepayment audit (PPM Audit) status?
    A. Accompanying each individual claim warrant, the “Explanation of Benefits” section contains information regarding the reasons for payment, reduction or denial of a specific claim. All claims that are denied on the basis of a PPM Audit will have a denial code message that begins with the words “Denied by post-service, prepayment audit.” The audit will not end until a sufficient percentage of claims are passing the PPM Audit review for a substantial period of time.
  11. Why would a provider’s claims not be listed on their "Explanation of Benefits?”
    A. Claims subjected to a post-service, prepayment audit (PPM Audit) take longer to process than electronic claims. While they are waiting for professional medical review, they will not be listed on a provider’s "Explanation of Benefits."
  12. Will the provider receive a letter explaining how the post-service, prepayment audit (PPM Audit) will affect their claims and payments? If so, when?
    A. Providers should receive a written notice and instructions before the PPM Audit begins. All providers within the organization and all persons involved in billing should review the Utilization Control Action Notice provider letter and understand its requirements.
  13. How can a provider get another copy of their Utilization Control Action Notice provider letter?
    A. Please note that if someone on the provider’s staff received the Utilization Control Action Notice provider letter on the provider’s behalf, DHCS will direct the provider to the person who received the letter. The provider may request a copy of the letter from DHCS by writing to the following address:

    Department of Health Care Services
    Audits and Investigations
    Medical Review Branch
    Case Administration Section
    MS 2303
    PO Box 997413
    Sacramento, CA 95899-7413

  14. Can a provider appeal being placed on post-service, prepayment audit (PPM Audit)?
    A. DHCS may audit Medi-Cal claims at any time; providers do not have the right to appeal the DHCS decision to conduct the audit. The PPM Audit is one of the utilization controls established by W&I Code § 14133(b). DHCS procedures for the PPM Audit are prescribed by 22 CCR § 51460. Neither section provides an appeal right for providers.
  15. How can a provider appeal a specific claim denied by the post-service, prepayment audit (PPM Audit)?
    A. Providers can follow the regular appeals process as listed in the appropriate provider manual. For information about appeals, please see the Appeal Process Overview section of the Part 1 provider manual.
  16. Who can a provider talk to for questions concerning post-service, prepayment audit (PPM Audit) documentation requirements for specific claims?
    A. Providers can call the Telephone Service Center (TSC) at 1-800-541-5555 with questions about the manual billing process, the adjudication of a particular claim, insufficient documentation submitted with specific claim, or the reasons why particular denial codes were assigned to a claim.
  17. Who can a provider talk to for other questions concerning the post-service, prepayment audit (PPM Audit) process?
    A. If providers have any questions about the audit process that have not been answered after carefully reading all the accompanying information, cited regulations and provider manuals, they can call Phyllis Eversole, Chief, Utilization Review Unit, at (916) 440-7460.
  18. How does a provider know when to start billing electronically again?
    A. Providers will receive a written notice and instructions from DHCS that specify when they may begin billing electronically for claims after a post-service, prepayment audit review. Until notice is received, providers should continue to bill using paper claims.


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