Medicare & Medicaid Overpayment Demands/Audits: How To Avoid Them

There is perhaps no more frustrating moment in a physician’s career than when a health plan or managed care company notifies the healthcare provider that the payor is now suddenly demanding that some exorbitant amount of money be “repaid” to the payor. The basis for such a demand? The payor has reviewed a few charts, isolated what it interprets as a pattern of inappropriate billing, or even worse uses AI for patterns it finds in an algorithm and then takes the amount involved and extrapolates that amount to extend over a randomly selected number of past years. The result? An exorbitant demand for overpayment.  While couched as a “retrospective audit” or a “probe review,” many physicians have simply termed it as legalized extortion.

Understanding how these audits come about is a key first step in avoiding their potential wrath.  The triggering event in most cases is a simple computer analysis that identifies those physicians who are billing and/or coding differently than their supposed peers, labels those physicians as “outliers” and refers them for additional scrutiny.  The traditional model of relying exclusively on staff who bill and/or code in a certain fashion because “we’ve always done it this way” or because “this is how other practices are doing it” is outdated, risky and self-defeating.  Even a simple “snapshot” review of current billing practices, done on an annual basis by a certified coder, can provide valuable insight into what methods are current areas of scrutiny, what trends are developing with one’s peers and/or what can be done to keep the practice in the mainstream.

The need to secure an expert for up-to-date advice has never been more paramount.  Healthcare providers can no longer expect their staff to hold sufficient expertise to properly conduct their billing and coding. From Medicare’s Fraud and Abuse Bulletins to the never-ending stream of Policy and Procedure Manual updates of every health plan and managed care company, the amount of information to be digested is simply overwhelming. To expect general office staff to properly manage that information is both unrealistic and extremely risky.

Physicians who are willing to realize that billing and coding in today’s medical practice management environment are so obscenely complex that they require ongoing advice from expert specialists will have taken an enormous first step in avoiding coming under review or will be in a much better position to defend the audit. And mitigate the impact of a retrospective audit.

The following offers some potential avenues by which physicians can assist themselves in avoiding a Medicare or Medicaid audit:

1. Consider a compliance program.
2. Do not ignore patient complaints regarding billing issues.  Medicare has incentivized patients to report Medicare Fraud and patients are being trained across the country on how to “spot Medicare fraud.”
3. Review all your vendor relationships.  Any healthcare provider who follows a vendor’s instructions on how to bill Medicare has no protection under the law if that advice proves to be inaccurate.
4. Train your office staff.  Training should include courses on what constitutes fraud, how to bill properly under the Medicare system and other vehicles to ensure compliance.
5. Control and limit access to your billing operations and database.  Each employee should have a separate identifiable password not to be shared with any other employee. In addition, only employees that are involved with billing should have access to billing data and no other employees.
6. Monitor the actions of your employees.  “Whistleblower claims are increasing exponentially and with each of your employees facing a potential windfall of up to 25% of any monies recovered, the motivations are obvious and compelling.
7. Review everything you receive from Medicare and Medicaid.  Apart from routine claims management, you should be reading every Medicare and Medicaid bulletin, audit notice or systemic claims rejection. In addition, you should review their websites as they often have very helpful information including what their focus for that year will be.
8. Hire all employees and consultants through legal counsel.  If carried out properly, the information should remain confidential and not discoverable by parties adverse to your interests. In addition, you must check to see if any of your employees are on the Medicare or Medicaid exclusion list.
9. Audit your own practice – today.  You must know as soon as possible if you are at risk, need to make repayments or make other corrective measures. If you need a snapshot review of your medical records, we have a program to handle the initial review for free.
10. Become immediately involved in the billing operations of your practice.  If there is an investigation or action, you – the physician – remain the only target and potentially, the only defendant.

This article contains general advice that is not designed to apply to the reader’s specific situation and does not constitute the formation of an attorney-client relationship.

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