The enactment of the Health Insurance Portability and Accountability Act of 1996 (better know as HIPPA), almost 15 years ago, not only mandated that health care providers ensure the privacy of patients’ confidential health information, it also authorized the Centers for Medicare & Medicare Services (CMS) to contract with outside entities to perform provider audits. These outside entities are known as Program Safeguard Contractors (PSCs). More recently, as part of the Tax Relief and Health Care Act of 2006, the federal government commissioned CMS to hire private companies known as Recovery Audit Contractors (RACs) to conduct provider audits. The federal government has allocated millions of dollars to these audit initiatives in an effort to recover payments which have been improperly paid to health care providers through the Medicare and Medicaid programs.
One of the primary focuses of the PSCs and RACs (collectively called “Medicare Auditors”) are to conduct post-payment audits of health care providers to ensure that provider claims for reimbursement have been properly billed to Medicare and Medicaid and that appropriate documentation is maintained within patient medical files to substantiate that the billings have been made in accordance with CMS regulations. If errors are found, the Medicare Auditors are charged with calculating and assessing the overpayment amounts.
If your practice is targeted for an audit, it will typically be unannounced and a Medicare Auditor will arrive in person at the provider’s office with a list of patient names and dates of service for specified claims which the provider has billed and received reimbursement for through Medicare or Medicaid. The Medicare Auditor will then request that the provider make available for copying, all records, notes and other documentation which substantiates the medical necessity of the services billed on the dates in question. Although the Medicare Auditors do not technically have the power of a subpoena or search warrant, providers have already technically given their consent to such demands and audits as a condition of being eligible to bill through the Medicare and Medicaid Programs.
It is not entirely clear which particular factors may trigger an audit; however, it is believed that Medicare Auditors use markers to flag a practice for an audit. Such things as billing an inordinate amount of procedures above and beyond national averages or billing for procedures which are outside of a provider’s practice area, may result in the practice being targeted for an audit. It is unquestioned that other audits are selected on an entirely random basis.
All providers should be aware of one particular tool which Medicare Auditors have in their arsenal called statistical sampling and extrapolation. By utilizing statistical sampling and extrapolation techniques, Medicare Auditors may actually review only a relatively small number of claims of a certain type of procedure (the sample). Then, if certain requirements are met, including the finding of a high error level in the sample, the Medicare Auditors are permitted to extrapolate the error rate onto a much larger universe of claims of the same type of procedure when determining the overpayment amount. The results can be mind boggling and almost always result in staggering overpayment amounts being assessed, despite the fact that only a small number of claims were actually reviewed by the Medicare Auditors.
In a recent case which Reminger successfully defended1, a general practitioner from Northern Ohio was the subject of an audit. The Medicare Auditor (who happened to be a PSC) only actually reviewed a sample of 30 claims for a certain procedure code which the physician billed to and received reimbursement from Medicare over a specified period of time. As a result of the audit of the sample of 30 claims, the physician was found to have been overpaid by Medicare in the amount of roughly $1,400. Because certain criteria were satisfied, the Medicare Auditor was able to extrapolate the error rate, which was derived from the sample, onto a universe of roughly 2,100 claims billed by the physician for the very same procedure code. These claims were not actually reviewed by the Medicare Auditor. The end result when the Medicare Auditor utilized sampling and extrapolation was that the Medicare Auditor found that the physician was overpaid to the tune of roughly $102,000, a figure nearly 100 times the amount which was derived when considering only the sample of claims which were actually audited by the PSC.
As is illustrated by the case example above, the overpayment amounts assessed by Medicare Auditors are often times staggering and, after a certain level of appeal has been exhausted, CMS may recoupe the overpayment assessment amount from future reimbursements even while the appeal continues through the process.
As Medicare Auditors become more and more aggressive in their audit and recovery activities, it is essential that your practice be prepared. If you need assistance in developing an Audit Action Plan or if your practice is currently the subject of an audit, please contact one of the skilled Health Care Lawyers at Reminger to assist you.
1 Reminger attorneys were able to have the sampling and extrapolation invalidated, limiting the overpayment assessment amount to the $1,400 derived from the sample alone.
