Medicare, Medicaid And Insurance Carrier Audits

One of the most confounding terms of the agreement of a Medicare and Medicaid provider is the physician’s acceptance of the often-careless deployment of recovery audit contractor claim denials and demands for repayment of hundreds of thousands if not millions of dollars. Our firm has extensive experience with practices that have been the objects of these audits. Typically, a Recovery Audit Contractor (RAC) is under agreement with CMS to recover as much money as possible, by conducting what are frequently poorly conceived and partially informed claim and medical record reviews in a very limited number of instances. Since the RAC is compensated on a contingency fee basis, it is no surprise that they rarely audit a medical practice from which they do not seek recovery of payment for one reason or another.

Based upon a practice’s specialty, CPT coding, ICD-9 coding and the evaluation and management (“E/M”) codes, and when declaring particular patient record flaws, the RAC auditor selects and applies specific algorithms to the entire universe of claims that utilized the audited code sets. The effect is to extrapolate for a period of years, the declared audited defects; and, the result is then applied to the entire universe of claims that had been submitted by the practice for a look-back period that can extend as far back as six years. While the construct of the algorithm is sometimes sound, we have successfully used experts to impeach certain extrapolations that were intrinsically flawed. As an example, the criteria contained within the local coverage determinations frequently change over a period of time. As such, we frequently find the audit or the extrapolation to be unreliable. Certain of the predicate assumptions are invalid and can thus be shown to fatally impair the RAC Auditor’s extrapolation. Hence the audit result can be discarded.

When arguing issues of medical necessity and the adequacy of pathology documentation, our 20 plus years in defending physicians in medical malpractice and insurance fraud cases repeatedly proves invaluable in preparing for the impeachment of government’s experts. Program Integrity Audits, Medicare Affiliate Contractor Audits, and Zone Program Integrity Contractor Audits are all variants of the same paradigm; and they exist to find any substantive or technical flaw that will permit an extrapolate demand for repayment of all monies paid by or through CMS for the same service code or code set. In each instance, though the motivation is the same, auditors are motivated to perform their service as quickly as possible to generate the largest possible repayment invoice. The first level of review is internal within the auditor’s own entity, so it is critical for the client to substantially prepare for the ultimate appeal. This is done from the very beginning and is made clear as the case moves through the appellate review process. Our clients are prepared to win as the case moves through reconsideration, appeal, hearing and beyond, in the extraordinary circumstance when such an adjudication is necessary.

By way of prevention, as is always the case, there is no substitute for homework, preparation and diligence. The providers and group practices that successfully avoid adverse findings are those that have an ongoing program of routine chart and claim reviews. Most practices have enough cumulative knowledge among their employees to prophylactically audit, but rarely do so because of time and productivity pressures. We represent practices that range from 5 to well over 150 employees. We see that even the larger practices, with enormous back-office and administrative infrastructure rarely have the ability to deal with the volume of services that are delivered, documented and billed within the enterprise. As such, under agreement with our office, our clients frequently arrange review and audit services as part of an anecdotal compliance project, or as part of an ongoing compliance program. In this way, the client develops and implements its program with confidence that the subject matter is confidential and the analysis remains independent from internal influences, concerns or biases.

While RAC auditors typically apply the most adverse standard to each audited claim, the provider is not bound to the test, medical necessity determination or documentation requirement that is applied by the Medicare affiliated contractor. Indeed there are national and local coverage determinations and credentialing body guidelines that can each be applied in a manner most favorable to the circumstance of the individual physician. We are very aware of the need to consider all authoritative resources, even if they will not be accepted upon redetermination by the Medicare affiliated contractor or upon reconsideration by the qualified independent contractor.

We often expect that the early stage of the game is rigged against the provider and we proceed as though the most important level of termination is with the administrative law judge, if not the Medicare Appeals Council. During the course of redetermination or reconsideration, our adversary often times understands that they are going to lose at a later level, and perhaps it will be cost effective for the parties to engage in a negotiated resolution. We will pursue a negotiated settlement that is an acceptable loss to the client if it is in the client's best financial interest. Alternatively, we believe it is the wisest use of our time to prepare for the proceeding and provide a client with a proper audit resolution.

Medicaid Recovery Audit Contractor Audits.

In New York, particularly the Department of Health, either through its general investigation service or through the Office of Medicaid Inspector General (OMIG)—can be ruthless in its auditing techniques. Frequently, an investigator will present at an office without prior arrangement and demand unfettered access to patient records, financial records, personnel records and/or inventory records. Medicaid providers are engaged in what is known as a "relationship at will," which allows the Department of Health to terminate the providers' participation in the program as long as it was not acting pursuant to a legal standard, known as the "arbitrary and capricious," the lowest of legal standards. While the state wishes to have Medicare program beneficiaries properly and adequately cared for by health care professionals, the state is extremely intolerant of abuses or regulation departures that have the effect of increasing the Medicaid Program’s payables. As such, the necessity of proving that a Medicaid audited practice complied with program guidelines is imperative. Here, a thorough knowledge of the EmedNY guidelines, rules, stipulations and agreements is imperative when defending an audit.

In the instance of durable medical equipment (DME), prosthetics and orthotics we see particularly aggressive OMIG audit activity, which must be met with a well-documented and well-considered explanation as to how a provider runs its business and achieves compliance. We often find that the DOH or OMIG investigator does not fully understand the nature or scope of the client’s practice or business and does not procure all information necessary to conduct a thorough audit. We frequently find the necessary documents are not requested or are overlooked in the audit. Upon submission of additional materials we find that an auditor is often willing to reconsider his or her evaluation of compliance.