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How to Handle an Audit from Medicare or Other Payers

Document with title Audit on an office table.

As a healthcare provider, learning that you are under audit by your payers can be alarming. You may wonder how the process will unfold, why it is happening, what you must do, how long it will take, how much it will cost, and what the consequences of any uncovered error may be. Both government and private payers conduct audits of providers to avoid overbilling, fraud, and other improper billing or coding procedures. If you are facing an audit, do not panic. Below, we provide tips from the Medicare audit attorney at the Law Offices of Art Kalantar for your healthcare entity to follow on how to proceed when you are facing an audit from Medicare and other payers.

Types of audits

Healthcare providers may be subject to different types of audits, each requiring different approaches. Private commercial payers may conduct informal reviews of a few claims or seek formal review of many claims. The audit may occur after the claim is billed but before payment is processed, or after the claim is paid to evaluate the billing and determine if repayment is appropriate.

Medicaid audits are typically formal. The Centers for Medicare & Medicaid Services (CMS) works with contractors to determine whether Medicaid is overpaying or if the providers are not complying with Medicaid regulations.In California, the state Department of Health Care Services (DHCS) oversees the Medi-Cal program.The audits typically occur after payment, seeking to unearth fraud or other inappropriate practices. If fraud is discovered, the matter will be referred to the state attorney general for further prosecution or other proceedings.

Medicare audits generally take one of three forms. A Recovery Audit Contractor’s (RAC) Program audit involves using a contractor to identify errors in fee-for-service plans. Comprehensive Error Rate Testing (CERT) audits focus on providers who have unusual coding or billing practices, such as those who have unusually high rates for expensive procedures or unnecessary tests. Zone Program Integrity Contractor (ZPIC) audits are performed by CMS contractors looking for fraudulent billing practices.

Audits can be undertaken in response to identified billing practices, or at random in an attempt to keep providers honest.

Responding to audits

Here are a few tips to keep in mind when responding to an audit:

● Whatever the type of audit, it is vital that you discuss the matter with your healthcare attorney, compliance officer, malpractice carrier, or risk manager as soon as you get notice of the audit. You should fully understand your obligations in complying with the audit request, and you should engage qualified counsel to help you proceed.
● Take every inquiry seriously. Regardless of how formal or informal the audit appears, it is important to handle it carefully and fully.
● If you can afford it, hire an outside auditor. Retain the auditor through your legal counsel to preserve attorney-client privilege. The auditor will review the requested records or a sample of them and will help you identify what the payer is looking for. You will have a better sense of any problems or errors and how to respond to them in a timely fashion, avoiding more severe consequences.
● Collect and prepare copies of all documents requested by the audit. Do not hide anything, do not provide originals (unless requested), and do not modify any erroneous or incomplete records you find. You may have the instinct to correct or clarify errors, but this can cause problems with the audit and imply that you are hiding things or trying to defraud the payer. Listen to your attorney’s advice–if you want to add an addendum to explain or clarify mistakes, you can do so, with the help of counsel.
● After the audit, take the time to thoroughly fix every issue identified. Use the audit as a learning exercise for your billing staff and other individuals who committed errors. Small problems can become large problems down the line if they are not corrected.

California Healthcare Audit Lawyers

For help with payer audits and other healthcare business matters in Los Angeles and California statewide, call the Law Offices of Art Kalantar in Beverly Hills at 310-773-0001 for a free initial consultation.

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