Fraud and overbilling are serious concerns for CMS and carriers (see “Hospital Improperly Unbundled Orthopedic Surgery Claims”).
If they’ve targeted you for an audit, the payer will calculate the “error rate” based on medical necessity of the sample size you provided and will extrapolate that rate over the months or years of payments. Don’t
believe that past payments are endorsements of proper billing or documentation. Nor should you believe that a change in billing practice will be sufficient going forward. Once a center is audited, the payer is going to want its money back
for work that your center had performed months or years ago. You could even find yourself working just to repay the debt (that you dispute) while you’re waiting for your day in court.
Both insurers and CMS will use computers for any indication that your center is a billing outlier. They know what a facility like yours should bill, which codes are typically used and have reams of data from across the industry to guide their
investigation. If they see something about your billing practices that differs from the statistical norm, it is likely that your center could face an audit.
When they ask for those sample records, contact your attorney immediately. You should also contact your carrier, which might cover legal fees in defending these cases. The earlier you take action, the better.
In my experience, single providers are often hit with an overpayment demand well into the 6 figures. In the case of a surgical center, it ranges into the millions. These cases are typically very difficult to defend and usually will take years
to resolve. They can be a black cloud that hangs over your facility.
Audits by private carriers tend to be easier and quicker to resolve than CMS audits, which feel like a bureaucratic nightmare. It’s extremely difficult to talk to a live person and your appeals can spend years in backlogs. In 2017, the
Secretary of Health and Human Services identified more than 600,000 appeals handled by fewer than 2,000 judges leading to a backlog that could cause a delay of 3 to 6 years from the date of appeal to the date of the hearing in front of
the judge. There’s now a process in place to settle CMS claims before the matter is heard by an administrative law judge. A recent case law precludes CMS from recoupment while the appeal is pending (osmag.net/MZAn9k).
Prevent defense: self-audits
How can you avoid an audit? The plain truth is that you should be preparing for a possible audit well in advance of receiving one of those letters.
Your best defense? Regularly perform your own billing audits, either internally, or by
using a trusted third-party provider, so that you can avoid getting audited in the first place.
It’s easy to get wrapped up in the day-to-day of operating a facility. Bad practices and habits tend to gather momentum and snowball over time. What might have started as a shortcut or an oversight in 1 or 2 cases can become an epidemic
within your center, and the fact that the bills are being paid could easily lead to a false sense of security. A self-audit can be a chore, but it is the most reliable way to avoid an external audit.
Beyond that, keep close track of medical coding changes, particularly in evaluation and management (E/M) coding — not just to avoid an audit, but also for the more practical reason that some of your miscoded claims might be denied or
ignored.
If you use a third-party provider to handle your billing, don’t assume they’re using updated codes. It’s not a defense to an audit that you outsource your billing to a third party. Consultants can help you navigate and implement
coding changes if you don’t have the time or resources to do so internally.
Even technical violations of CMS coding and documentation requirements are difficult to defend. The best defense against audits is to, quite simply, get your house in order. Do it now. Make the time and make it a priority. Perform a self-audit,
communicate the necessary changes in process and practice to your staff, and mandate compliance. Break free of complacency and sleep better at night. OSM