The Centers for Medicare and Medicaid Services (CMS) and its audit contractors have recently increased their use of Targeted Probe and Educate (TPE) audits to target providers suspected of improperly billing Medicare. While TPE audits focus on educating Medicare-participating providers about unusual billing practices, the threat of legal action looms if progress is not made. Healthcare providers who fail the TPE process can face civil liability and exclusion from the Medicare program, and failed TPE audits can even lead to referrals to federal law enforcement authorities for Medicare fraud investigations in some cases.
With these risks in mind, an informed and strategic response is essential for healthcare providers who are facing TPE audits. Despite the purportedly “educational” nature of these audits, they can have serious consequences for providers not fully compliant with the Medicare billing rules and regulations.
“Medicare-participating healthcare providers facing TPE audits must be very careful to protect themselves. These audits present the same risks as all other Medicare-related billing compliance inquiries—including risks for financial penalties, program exclusion, and even criminal enforcement.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.
7 Common Questions About TPE Audits
What must you know if your Medicare-participating healthcare practice or business faces a Targeted Probe and Educate (TPE) audit? Here are the answers to seven common questions:
1. What is a TPE Audit?
Like other types of Medicare audits, a TPE audit involves a detailed and comprehensive examination of a healthcare provider’s Medicare claims. The provider’s Medicare Administrative Contractor (MAC) conducts the audit and does so to identify and correct any and all billing mistakes. If any questionable billing practices or discrepancies between the provider’s billings and patient records come to light, the MAC will help the provider fix the problems and avoid similar financial risk.
Or, at least, that is how it is supposed to work.
As a practical matter, TPE audits often proceed very differently. While MACs are supposed to help healthcare providers identify underpayments and overpayments during TPE audits, these audits (like other Medicare audits) frequently focus exclusively on overpayments. The more overpayments a MAC uncovers, the more likely a TPE audit will lead to further scrutiny—and potentially civil or criminal enforcement. As a result, healthcare providers cannot take TPE audits lightly, and they cannot assume that their MACs will help them come into compliance with their best interests in mind.
Even though MACs conduct TPE audits, CMS administers and oversees the program. CMS created the TPE program as a pilot program in 2017 in an attempt to find inefficiencies in the Medicare payment system. While CMS paused the program in the early days of the coronavirus pandemic, MACs resumed conducting TPE audits on September 1, 2021.
As mentioned above, while the TPE audit program is intended to remedy (and ultimately prevent) Medicare billing problems by educating healthcare providers on proper billing techniques, the reality is that failing a TPE audit can lead to significant penalties—up to and including federal criminal penalties for healthcare fraud. Given that this is the case, healthcare providers who are facing TPE audits cannot afford to take these inquiries lightly, and they should not assume that “education” on Medicare billing compliance is the worst possible outcome.
2. What is the TPE Audit Process?
Medicare Administrative Contractors use data analysis to identify potential instances of Medicare billing fraud. They often choose providers with high claim denial rates or use certain billing codes more often than their peers for TPE audits. However, other factors can trigger TPE audits as well, and when conducting TPE audits, MACs will look for evidence of any and all forms of Medicare billing fraud.
When receiving a Notice of Review letter from their MAC, healthcare providers will typically learn they are being audited under CMS’s TPE program. This letter will state why the provider was chosen for an audit, and it will request the supporting medical records for sampling between 20 and 40 of the provider’s Medicare claims.
Once the MAC receives the provider’s medical records, it will examine them to determine if they support the provider’s associated Medicare claims. At this stage, the MAC will be looking for evidence that suggest questionable billing practices on Medicare, such as:
- Incorrect coding for the healthcare services provided;
- Unbundling related healthcare services that providers are supposed to bill at a lower combined rate;
- A lack of documentation supporting the medical necessity of the procedures involved;
- Missing proof of certification or recertification; and,
- Missing signatures of certifying physicians.
If a provider’s medical records support its Medicare billings, then the provider should receive a “passing” grade from its MAC, and the TPE audit should close. After passing a TPE audit, a provider cannot be selected for another TPE audit for at least a year unless its MAC detects significant changes in its Medicare billing practices.
If a provider’s medical records do not support its Medicare billings, the MAC will schedule a one-on-one educational session with the provider. During this session, the MAC will show the provider what errors were made and how to fix them. The provider will then have 45 days to make the appropriate changes to its Medicare billing compliance program. The MAC can then conduct a second TPE audit and demand medical records for another 20 to 40 Medicare claims submitted at least 45 days before the education session.
The review process is repeated in this second round. If the MAC finds that the provider’s medical records support its Medicare claims, it will close the audit. If it finds more errors, the MAC will schedule another educational session with the provider, the provider will have 45 more days to implement the changes—and then the MAC will conduct a third audit involving similar processes and procedures. If the MAC finds errors in the third round, it can fail the provider and refer it to the CMS for additional action.
3. What are the Penalties for Failing a TPE Audit?
If a healthcare provider fails its third TPE audit, the MAC will send the results to CMS for further action. At this stage, CMS can take steps including (but not limited to):
- Extrapolating Medicare overpayments from the sampling and demanding repayment;
- Referring the provider to a Recovery Audit Contractor (RAC) or a Unified Program Integrity Contractor (UPIC) for further examination;
- Future Medicare claim denials without an onerous prepayment review process;
- Suspending Medicare payments to the provider and,
- Excluding the provider from the Medicare program entirely.
But facing scrutiny from CMS (or a recovery auditor or UPIC) following a TPE audit poses more than just a financial threat. It can also lead to civil or criminal charges being filed against the provider for healthcare fraud. Healthcare fraud is a serious federal offense, and in criminal enforcement cases, practitioners, executives, and other individuals can face substantial fines and federal imprisonment.
4. Can the Outcome of a TPE Audit Be Appealed?
Healthcare providers can appeal the outcome of a TPE audit. These appeals go through the normal Medicare appeals process, which is lengthy and complex. While appeals will lead to reversals in many cases, achieving a favorable result requires highly experienced legal representation.
5. How Often Do Providers Fail TPE Audits?
According to the latest data available from CMS, Medicare Administrative Contractors performed around 13,500 audits between October 2018 and September 2019, examining approximately 435,000 Medicare claims. Of those 13,500 audits, the CMS estimates that less than two percent of the healthcare providers targeted failed three successive TPE audits.
6. How Can Providers Avoid Failing a TPE Audit?
Healthcare providers can avoid failing TPE audits by prioritizing Medicare billing compliance. Along with adopting comprehensive and custom-tailored Medicare billing policies and procedures, conducting regular training sessions with employees will help facilitate ongoing compliance and prevent billing mistakes that can lead to TPE audit failures.
For healthcare providers that have received a Notice of Review letter from their MAC, hiring an experienced lawyer is essential. This is true regardless of their billing compliance records. To avoid unnecessary consequences, targeted healthcare providers must be able to demonstrate compliance affirmatively, and this requires both a comprehensive understanding of the relevant Medicare billing rules and the ability to communicate with MAC auditors effectively.
7. What Should I Do if I Am Facing a TPE Audit?
With all of this in mind, when facing TPE audits, healthcare providers should engage experienced legal counsel promptly. They should then work with their lawyers to independently assess the efficacy of their Medicare billing compliance programs. If there are issues that need to be addressed, addressing these issues proactively will help to prevent unnecessary adverse consequences. Conversely, if a provider’s Medicare billings are fully compliant, effectively demonstrating compliance will be essential for passing a TPE audit the first time around.
