Multiple news sources have been reporting that Congress is considering plans to cut Medicaid spending by as much as $880 billion. Specifically, mentions of targeting Medicaid “waste, fraud, and abuse” is gaining momentum, with some politicians alleging that Medicaid fraud costs taxpayers $50 billion per year. As Congress seeks to reduce costs, New Jersey’s Medicaid providers may be subject to more aggressive review and oversight mechanisms.
For Medicaid providers, treating large Medicaid populations in New Jersey, a crackdown on Medicaid spending will mean more scrutiny over services rendered and bills submitted, and an increase in audits that can directly impact a practice’s financial stability and reputation.
The Growing Risk of Audits and Payment Clawbacks
Recent enforcement trends suggest that Medicaid providers, particularly those billing at higher volumes, are facing increased scrutiny from state agencies and managed care organizations (“MCOs”). While waste, fraud, and abuse prevention has always focused on outliers, there is growing concern that providers that are not historical outliers may be unfairly targeted. These providers are caught between evolving policies and aggressive audit tactics, particularly in light of the lofty goal of reducing spending by $880 billion.
At its core, Medicaid fraud involves intentional deception, such as billing for services not provided. Abuse, on the other hand, refers to improper billing practices that increase costs, even if unintentional. Waste covers unnecessary or inefficient use of resources. The problem is that enforcement agencies and auditors often apply inconsistent standards, creating uncertainty for healthcare providers delivering essential care.
Vulnerability in Medicaid Audits
For providers serving Medicaid patients in New Jersey, the risk of audits and payment clawbacks is higher than ever. Medicaid providers who perform high paying services or who bill procedure codes at a higher rate in comparison to their peers are particularly vulnerable, as these services could be flagged as “overutilized” despite being medically necessary. Audit triggers frequently stem from billing algorithms that fail to account for the realities of patient care, leading to recoupments, extrapolated audits, prepayment review, and claims denials, all of which can significantly disrupt practice revenue streams and create substantial administrative burdens.
Adding insult to injury, providers in New Jersey may face an increased challenge when dealing with the New Jersey Medicaid Fraud Division (“MFD”) and MCOs. When an overpayment is found, the MFD does not negotiate the overpayment demand, nor does it allow MCOs to walk away from any identified overpayment. Historically, the MFD, as well as MCOs, would allow for a discount in exchange for a lump sum payment. However, this flexibility is no longer possible and the only way to reduce an overpayment now is by refuting the audit findings and overturning them on the merits through billing, coding, documentation or other arguments. This shift has made it more difficult for healthcare providers to mitigate the financial impact of audits.
This new reality requires healthcare providers to proactively dedicate more resources to ensuring their billing, coding and documentation practices are fully aligned with Medicaid standards.
Strengthening Documentation and Compliance Practices
To protect themselves, providers should prioritize billing, documentation and compliance practices, with an emphasis on the types of procedure codes used most frequently at their practice. Mistakes in coding can lead to services being misclassified, which may then be flagged as “overutilized” or “improperly billed.”
To mitigate this risk, providers and practices should work with healthcare counsel and certified professional coders who can provide an independent review of the practice’s billing. Outside coders can identify potential issues before Medicaid or MCO auditors flag them, or catch discrepancies that might otherwise be missed, allowing providers to address any concerns proactively. Regular internal self-audits of a practice’s billing, coding, and documentation can help uncover areas where adjustments may be needed to reduce the likelihood of an audit trigger.
Conclusion
The federal government’s growing emphasis on reducing Medicaid waste, fraud, and abuse presents substantial challenges for providers in New Jersey. The increased scrutiny of Medicaid claims and the growing complexity of audits requires providers to be prepared to respond strategically to audits, prepayment reviews, or investigations. This includes implementing robust documentation and compliance practices, conducting internal audits, and engaging with legal and billing experts when needed.
Before submitting any documentation or agreeing to repayment an alleged overpayment, seek legal counsel to assist in the production or help fight against an overpayment demand. Legal professionals who specialize in Medicaid audits and are intimately aware of Medicaid regulations can provide guidance on how best to respond to audit findings, potentially identifying errors or misunderstandings in the audit process that could be used to defend the practice.
Frier Levitt is committed to supporting providers and practices in navigating these challenges. If your practice faces Medicaid audits, denials, or prepayment reviews, contact Frier Levitt to speak with a specialized healthcare attorney.
Frier Levitt provides strategic, industry-focused legal counsel tailored to your needs. Contact our team today to learn how we can help you.
