Wound care providers are facing unprecedented scrutiny from Medicare and other payors due to the nearly $10 billion the government spent last year on these services. As highlighted in recent payer audits and government publications, the enforcement environment is unforgiving and has already led to multiple prosecutions nationwide.
In this climate, attempting to defend a wound care audit alone can result in a multimillion-dollar overpayment demand, potential billing privilege revocation, and downstream False Claims Act exposure. Working with subject matter experts and experienced healthcare counsel, with specific knowledge of how to defend a wound care audit, is not optional; it is essential to protect your practice.
Enforcement Trends in Wound Care
Nationwide, CMS contractors, including Unified Program Integrity Contractors (UPICs), Recovery Audit Contractors (RACs), and Medicare Administrative Contractors (MACs), have been particularly focused on wound care services.
One unique denial used by auditors is “consolidated billing” when a patient is in a Part A skilled nursing facility (SNF) stay. Under CMS regulations, the SNF is typically responsible for billing most services, including some wound care services and supplies, through a bundled payment. However, a critical site-of-service exception permits providers to bill Medicare Part B when services are furnished outside the SNF and not arranged by the SNF. Auditors frequently overlook or misunderstand this exception, resulting in sweeping denials for services that were properly billed.
A second enforcement focus involves skin substitutes and amniotic/placental products. Government contractors often assert that certain products are “experimental or investigational,” or that their use constitutes non-homologous application, to deny coverage despite supportive clinical circumstances. LCDs and related coverage articles frequently require rigorous documentation of conservative care (generally at least four weeks), wound trajectory with serial measurements, co-morbidity status, nutritional and smoking assessments, and a clear rationale for repeat applications beyond ordinary utilization parameters.
Frier Levitt handles dozens of wound care audits, and a frustrating and dangerous trend is emerging. Now, most auditors repeatedly find gaps in documentation, many times raising allegations of key information being “missing” when it is staring at them in the face. Making matters worse, during the audit process, the MACs and Qualified Independent Contractors (QIC), raise new issues to support an overpayment while ignoring arguments refuting a UPIC or RAC auditor’s findings. This can lead to serious confusion when you reach the Administrative Law Judge (ALJ) phase of the CMS appeal process, which requires experienced healthcare counsel to present in a coherent and cogent manner.
High Risk Audits
The stakes of an adverse audit are far reaching in wound care audits. While historically contractors employed statistical extrapolation to inflate an error sample into a multi-million-dollar demand, in the case of wound care services, auditors only typically need a handful of beneficiaries to yield a seven-figure overpayment demand.
With literally millions on the line, a missed appeal deadline can foreclose relief at later stages in addition to making the alleged overpayment final and binding, inclusive of the near 12% interest that the CMS charges monthly.
Healthcare counsel should be retained immediately when notice of an audit is received so that counsel can assist with the production as well. Deficient responses, such as incomplete productions, disorganized records, or unvetted narrative explanations, can set a tone that is difficult to undo. Moreover, overpayments can trigger obligations under the 60-day rule for identified overpayments and escalate into civil monetary penalties or False Claims Act cases if the government contends that billing errors were reckless or knowing. In extreme cases, contractors may refer matters for law enforcement review, and regulators can revoke billing privileges, leading to practice-threatening disruption.
Working with Frier Levitt
Frier Levitt’s audit defense team is made up of experienced healthcare counsel that have dealt with these issues on dozens of cases across the nation with a myriad of UPIC auditors and MACs.
First, we ensure that productions are complete, coherent, and strategically produced to lower the likelihood that a provider’s records will be overlooked. Second, we challenge contractor methodologies, including extrapolation validity, sample stratification, and application of coverage criteria, preserving technical and procedural defenses from the start. Third, we coordinate with vetted coding and clinical experts to validate medical necessity, correct coding, and compliance with any governing LCDs, national policy, and the Medicare Program Integrity Manual. Fourth, we work closely with our experts and clients throughout the multiple stages of the appeal process, creating appeals that address clinical, coding, and legal issues at the redetermination, reconsideration, and ALJ phases. Finally, we assess and address collateral risks, including potential licensure issues, professional liability, and, where applicable, indemnity from third parties.
By contrast, handling an audit alone is fraught with pitfalls. Providers may inadvertently concede coverage standards by adopting contractor language, fail to develop the factual record needed to prevail at later appeal stages, or miss opportunities to correct misapplied rules like the SNF consolidated billing exception. Unrepresented responses often lack the narrative cohesion and evidentiary rigor that persuade reviewers and ALJs. They may omit critical elements or documents that are determinative in wound care audits, or fail to produce all evidence at the QIC level, which precludes an ALJ from considering key evidence. In the worst cases, key deadlines are missed, leading to the recovery of the entire overpayment demand, plus interest, with no ability to vacate the overpayment.
Proactive preparation is equally important. At Frier Levitt, we assist our clients by working with them to ensure that, at the production stage, the documentation produced to auditors align with any LCD requirements, CMS standards, CPT Coding Manual standards, NCCI Edits, and implement verification of conservative care history from referring providers and facilities. This foundation not only equips providers to withstand audit scrutiny but also reduces the risk of future denials.
Conclusion
In today’s enforcement environment, wound care providers should view audits not as routine administrative inconveniences but as legal and financial events that demand a coordinated, expert response. The rules are intricate, the contractors are aggressive, and the consequences of missteps are severe. Dedicated healthcare counsel like Frier Levitt brings the procedural fluency, regulatory command, and advocacy needed to defuse overreaching findings, protect revenue, and safeguard the practice. The cost of representation is often dwarfed by the avoided exposure, especially when millions can hinge on how the first response is framed, the evidence is organized, and the record is built for appeal.
If you are facing an audit, contact us to speak with an attorney and discuss your options.
