CMS Audit Considerations After the Pandemic

Early in the COVID-19 outbreak, on April 2, 2020, the Centers for Medicare and Medicaid Services (“CMS”) issued a suspension of most of their audit activities.  This suspension was in place until August 5, 2020, when most audit activities resumed.  However, as most providers who interact with CMS on a regular basis are aware, the overhang of pre-existing investigations, as well as the practicalities of work from home conditions, meant that CMS was not able to immediately hit the ground running and resume audit activities.

Now, over a year after the initial pause, it appears that CMS is back to its pre-pandemic capacity.  Targeted Probe and Educate (“TPE”), Supplemental Medical Review Contractor (“SMRC”) and Recovery Audit Contractor (“RAC”) audits have resumed to their pre-pandemic levels.  Physicians should be aware of what these various types of audits are, and what should be expected if a practice receives a letter from CMS or one of its various contractors.

TPE Audit

A TPE audit is not cause for immediate concern since, as per the CMS, TPE audits are intended to provide education and guidance in an effort to reduce claim denials.  Recent announcements from the CMS note there will be considerably more TPE audits in the near future, so providers need to understand how this audit works.  TPE auditors will request records, audit them and issue findings.  To the extent there are alleged errors, providers will be able to appeal denials through the standard CMS appeal process while simultaneously being provided with one-on-one education by TPE auditors.  Generally, these audits focus on simple common errors that are easily correctable.  CMS will work with providers through the TPE to educate and correct the identified errors.  However, providers who continue to make coding mistakes will be subject to additional rounds of TPE audits, which could lead to the loss of Medicare Billing Privileges.

SMRC Audit

An SMRC audit is similar to a regular commercial audit.  CMS regularly conducts statistical analyses to find physicians who bill specific codes are rates that are outliers to the national average.  Once identified, CMS will request from the practice a sample of medical records to determine whether any coding mistakes were made when the bills are submitted to Medicare for reimbursement. If CMS identifies any errors, it will then issue either an overpayment demand or make manual reductions from the provider’s regular Medicare reimbursements.  These audits do not carry with it any extrapolated overpayment demands nor potential loss of Medicare Billing Privileges.

RAC Audit

Like the SMRC audit, the RAC audit is conducted on a post-payment basis.  As the name suggests, a RAC is outsourced to a Medicare contractor for the purposes of identifying and correcting payments to providers that CMS determines to have been paid improperly.  Sometimes, these audits originate from other investigatory agencies, and are generally more targeted than the SMRC audit, sometimes limited to only a few claims.  After reviewing claims and issuing its findings, the RAC will provide an opportunity to appeal these findings and will also offer the provider an opportunity to discuss the findings in detail with the auditors by way of a Discussion and Education (D&E”) call.  RAC audits can be complicated as the RAC auditors recover a percentage of their recovery, which puts providers at a disadvantage as they being audited and appealing to an interested party.

2021 Concerns and Areas of Focus

Physicians should be aware that CMS audits typically cover dates of services from approximately one (1) year prior to the audit date.  This is particularly problematic since the pandemic impacted documentation for many practices, particularly those who started conducing telemedicine visits for the first time.  As such, most of the current audits will cover at least part of the calendar year 2020, and the height of the pandemic. 

As physicians across the country are aware, the extraordinary circumstances caused by the COVID-19 pandemic forced the practice of medicine to change in unprecedented ways.  Many physicians transitioned their practices fully to telehealth services for at least a part of 2020.  The billing rules for telehealth were drastically altered in an attempt to accommodate physicians and patients.  While many physicians took advantage of this change in order to keep treating patients, CMS has already begun sounding the alarm that providers should be double checking their telehealth billing to ensure accuracy.

It is possible that many providers, due to increased volume and reduced staff, were forced to reduce administrative burdens in a multitude of ways.  This includes a reduction in the type of diligence typically conducted when billing Medicare, or possibly staff more inexperienced employees to deal with the unfortunate stress of the pandemic.  Many practices have begun hiring outside groups to conduct “self-audits,” or a third-party audit of their practice before a CMS audit is received.  This allows the practice to identify problem areas, and to put a corrective action plan in place before an official audit letter is received.

It should be expected that as CMS audits continue, more and more providers will be asked about their billing practices during 2020.  Any good will or relaxed standards that were put into place in 2020 will quickly be forgotten, and physicians may be required to pay back CMS for claims that were billed improperly. 

How Frier Levitt Can Help

Attorneys at Frier Levitt have a wealth of experience handling CMS investigations and audits, as well as regulatory attorneys well versed in the changes to CMS rules during the COVID-19 pandemic.  If you receive an audit letter, or would like to conduct a self-audit to ensure compliance with Medicare billing rules, call Frier Levitt today to speak with an attorney.

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