Nearly all healthcare providers will face an audit (if not multiple audits) during their careers. Federal agencies such as the U.S. Department of Health and Human Services (HHS) routinely audit healthcare providers for compliance with the nation’s healthcare laws, and the Centers for Medicare and Medicaid Services (CMS) rely on Unified Program Integrity Contractors (UPICs) and other private auditors to assess and enforce compliance with the Medicare and Medicaid billing regulations.
While different types of private health insurance audits call for different defense strategies, certain defense considerations apply broadly throughout the federal healthcare enforcement spectrum. For providers that are facing audits, understanding these considerations is key. Once you know how to implement an effective defense strategy, you can focus on building a strategy custom-tailored to the circumstances.
“Federal healthcare compliance audits require an informed and strategic defense. These audits can present substantial risks, and mitigating these risks requires both a clear understanding of the issues at hand and a custom-tailored approach to addressing any potential concerns. With the right approach, healthcare providers should be able to avoid unnecessary consequences. However, there are no guarantees, and pursuing an audit appeal will be necessary in some cases.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.
Regardless of the circumstances involved, federal healthcare billing audits present substantial risks. When audits lead to accusations of healthcare fraud, targeted healthcare providers can face recoupments, payment denials, prepayment reviews, and other penalties. To mitigate these risks to the fullest extent possible, healthcare providers must proactively protect themselves during (and ideally before) the audit process.
What Healthcare Providers Can (and Should) Do to Protect Themselves During Federal Billing Audits
With this in mind, what can (and should) a healthcare provider do to protect themselves during federal billing audits? Here are five strategic considerations for effective healthcare audit defense:
1. Develop an Audit Response Playbook
Having a playbook for responding to federal healthcare audits on hand and ready to implement at a moment’s notice can be critical for healthcare providers who are facing scrutiny. All personnel should clearly understand their role during an audit, even if this role is as small as redirecting auditors’ questions to their supervisor. When facing an audit, organization, and structure are key. If anyone does not understand what they should be doing (or what they should not be doing) during the audit process, this can lead to unnecessary adverse consequences.
An audit response playbook should also provide for the prompt assembly of a response team with primary internal responsibility for overseeing the audit process. This team should be composed of executives and senior-level billing personnel who are knowledgeable about the practice’s billing compliance program and efforts. This team should also work with the practice’s outside counsel during its response, seeking advice and relying on counsel to intervene in the audit process as necessary.
2. Focus on Identifying the Scope of the Audit
Upon receiving an audit notice, one of the practice’s first priorities should be to identify the scope of the audit. This is critical for two reasons:
- Understanding the scope of the audit will allow for the devotion of appropriate resources and,
- Knowing where auditors will focus their efforts will allow for a focused and efficient internal billing compliance assessment.
In many cases, the initial notifications that healthcare providers receive informing them of impending audits will be vague. Auditors often try to hide their intentions because they think that being open with these details will allow targets to hide evidence of wrongdoing. For this reason, many auditors only provide generic descriptions of the types of information that audit targets will be expected to provide and the areas of their operations that will be subject to inspection.
But, often, reading between these vague instructions will provide adequate insight to begin effective preparations. For example, if an auditor’s requests all focus on billing codes, then you can be confident that the audit is focused on uncovering improper reimbursements. However, if the initial notification does not provide enough clues, it may make sense to reach out to the auditor and request more information. Even if the auditor still isn’t entirely forthcoming, any additional insights you can obtain will be helpful.
Once you have gathered as much information as possible about the scope of the audit, your next priority should be to conduct an internal billing compliance assessment. If the audit is likely to uncover billing violations, this is a fact that you need to know—and that you need to address proactively. Conversely, if your practice has consistently implemented an effective billing compliance program, having your compliance documentation ready will help facilitate an efficient and favorable resolution.
3. Monitor the Auditor’s Actions Throughout the Audit Process
Once the audit begins, it is crucial to monitor the auditor’s actions throughout the process. You should ensure that the auditor only inspects the areas and documents subject to review. Confining the auditor to the scope of the audit will help ensure that unnecessary and inadvertent disclosures do not lead to consequences that could (and should) have been avoided.
Of course, this needs to be done tactfully. If efforts to oversee the audit process are interpreted as evasiveness or interference, this can lead to additional scrutiny.
One way to effectively manage the scope of a healthcare billing audit is to control which personnel the auditor has access to during the process. The audit scope will dictate the personnel who need to be involved. Preventing the auditor from interacting with other individuals can avoid situations where multiple people provide different answers to the same question (which will lead to additional questions) and situations where individuals who do not clearly understand the risks involved provide access to documents unnecessarily. Insulating others from the audit process will also free them from becoming involved and keep your business running as smoothly as possible while the audit is ongoing.
4. Proactively Address Issues As They Arise During the Audit Process
Along with monitoring auditors’ actions, healthcare providers targeted in billing audits should proactively address issues arising during the audit process, including issues related to their billing records and the audit process.
Regarding the latter, auditors can—and frequently do—make mistakes. These mistakes can have significant financial consequences for targeted healthcare providers. If a mistake during your practice’s audit presents a risk for unwarranted recoupment liability or other consequences, you will want to address this proactively and avoid the need to pursue an appeal if possible.
What should you do if an auditor uncovers evidence of improper billings? The answer to this question depends on the nature and scope of the issue that led to the improper billings and the other circumstances involved. Generally speaking, a proactive approach is best in this type of situation, though what exactly this approach entails can vary greatly from one situation to the next. In some situations, providers may need to acknowledge inadvertent mistakes and adjust their billings and patient records accordingly. For other healthcare providers, modifications or updates to their compliance policies, procedures, or protocols may be necessary.
5. The Best Audit Defense Strategy is an Effective Healthcare Billing Compliance Program
While these are all key steps to take when facing a Medicare or Medicaid fraud audit, the best defense strategy is to take a comprehensive and proactive approach to healthcare billing compliance. Adopting and implementing an effective billing compliance program can mitigate the risks of facing an audit and help ensure that audits proceed (and get resolved) as quickly as possible.
Just like responding to a healthcare billing audit, implementing an effective compliance program requires a comprehensive and custom-tailored approach. Even though Medicare, Medicaid, and other billing rules and regulations apply across the board, healthcare providers must address these rules and regulations in a way that allows them to effectively manage compliance based on the unique aspects of their operations.
With custom-tailored compliance policies, procedures, and protocols in place, healthcare providers should be able to manage billing compliance effectively and document it continuously. This documentation is essential when facing scrutiny from auditors. If auditors cannot confirm that billing is compliant, they will assume that it is not. Lack of documentation is a common issue for providers facing healthcare billing audits, and it frequently leads to recoupments and other penalties that could (and should) have been avoided.
Is your practice prepared to survive a healthcare billing audit? If your answer is “No” or “I’m not sure,” you’ve got work to do. To ensure your practice is ready when the time inevitably comes, retain healthcare audit defense services from an experienced healthcare audit defense lawyer as soon as possible.
