Health Care Providers Brace for Medicare Audits

Two Types of Audits

There are two types of audits: automated audits and complex audits. The automated audit is based on data mining and automated analysis and usually involves clear errors, such as if a provider billed for duplicate procedures performed on the same patient on the same day.  Automated review began in Massachusetts in August.  A complex audit requires an auditor to request medical records and typically involves areas susceptible to error based on the auditor’s knowledge of the industry, said Lokensgard. Complex reviews for coding errors began in Massachusetts in October and November.

Reviews of records focused on whether the care that was billed was medically necessary began in 2010. “Once they get to the medical necessity reviews, I believe this is when individual providers will start to encounter the program in significant numbers,” said Phyllis Flora, a health care attorney at Dwyer & Collora in Boston. A medical necessity review may be triggered if Medicare suspects certain tests, billing codes or other services are being abused. This suspicion could be based on a higher use of those services in one area compared to the rest of the country, or on a rise in billing for certain codes. In the past, Medicare has run reviews that focus on the medical necessity of powerchairs and ambulance services, Flora said.

She also said that durable medical equipment providers are specifically mentioned in the national rollout schedule and should be especially vigilant now in reviewing their record-keeping practices. Gustafson predicts that Medicaid will step up audits under a parallel program similar to RAC called “Medicaid Integrity Contractors” (although MICs are not paid on a contingent basis). Andrew Wachler of Wachler & Associates in Royal Oak, Mich., said he has already seen an increase in audits by private third-party payors, such as Blue Cross Blue Shield of Michigan.

Next: Getting Prepared