Healthcare providers across the country are facing heightened scrutiny from both government payors and commercial insurers. Medicare contractors and private insurers are using advanced data analytics to identify billing patterns that fall outside expected norms and artificial intelligence to handle larger volumes of cases. When aberrant billing patterns are flagged, providers may face audits that delay payments, trigger repayment demands, and can escalate into civil or criminal investigations.
Whether you are a physician, laboratory, pharmacist, or other healthcare provider, understanding the different types of audits and responding appropriately is essential to protecting the stability of your practice or organization.
Most Common Healthcare Audits
Providers encounter several types of audits, each with its own considerations, procedural requirements, and potential risks.
Pre-Payment Audits
In a pre-payment audit, claims are held for review before payment is issued. Instead of processing the claim automatically, the payor requests documentation such as medical records, lab reports, operative reports, or physician notes to confirm that the billed service is medically necessary, properly documented, and otherwise payable.
If the documentation supports the claim, the payor may release payment. If not, the claim may be denied. In some situations, practices may find that a large number of their claims are subject to pre-payment review, which can significantly disrupt cash flow.
When claims subject to prepayment review are denied, providers must carefully evaluate the basis for the denials and applicable appeal deadlines. Timely and effective appeals can help challenge improper denials, correct identified deficiencies, and demonstrate compliance necessary to exit prepayment review.
Post-Payment Audits
Post payment audits occur after claims have already been paid. In these situations, the payor reviews previously processed claims to determine whether the services were billed correctly and supported by adequate documentation.
If an auditor determines that claims were paid improperly, the payor may issue an overpayment demand and seek repayment of funds. These audits often involve large record requests and, in some cases, statistical sampling and extrapolation that can expand the financial impact and lead to significant six- or seven- figure demands.
Targeted Probe and Educate (TPE) Reviews
Medicare contractors use the Targeted Probe and Educate (TPE) program to address providers whose claims show higher error rates in coding or documentation.
Under this program, contractors review a limited number of claims and provide education on documentation or coding deficiencies. Providers may go through multiple rounds of review. If issues continue after three rounds, the provider may be referred to the Centers for Medicare & Medicaid Services (CMS) for additional action, which may include 100% prepayment review, extrapolation, referral to a Recovery Auditor, or other appropriate action.
Unified Program Integrity Contractor (UPIC) Investigations
Unified Program Integrity Contractors (UPICs) focus on detecting, deterring, and preventing potential fraud, waste, and abuse in the Medicare and Medicaid programs. These investigations are more serious than routine claims reviews and may involve broader investigative authority.
UPIC reviews may include extensive medical record requests, analysis of billing patterns, interviews with staff members, and on-site visits. In some cases, matters may be referred to federal or state enforcement agencies.
Common Mistakes Providers Make During Audits
Providers sometimes make avoidable mistakes when responding to audit requests. These errors can increase financial exposure and complicate the review process. Common issues include:
- Missing documentation deadlines
- Submitting incomplete medical records
- Providing records that do not clearly support the billed services
- Attempting to alter records after an audit has begun
- Responding without fully understanding the scope of the review
Because healthcare audits often involve complex billing regulations and strict procedural rules, even small mistakes can have significant consequences.
How Frier Levitt Assists Healthcare Providers
Frier Levitt attorneys represent healthcare providers in Medicare and commercial insurance audits, overpayment and recoupment disputes, Targeted Probe and Educate (TPE) reviews, UPIC investigations, program integrity matters, and Medicare administrative appeals.
Healthcare audits can create significant financial and operational challenges. Providers that receive an audit request, overpayment or recoupment demand, or investigation notice should act promptly to understand the scope of the review, applicable deadlines, and available appeal rights.
Contact Frier Levitt to learn more about navigating healthcare audits and appeals.
