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An old adage says there are two sure things in life: death and taxes. Well, most physicians can also add a Medicare audit at some point in their careers to that list. It is important for physicians and practice managers to know how to prepare for these audits and to respond to records requests by Medicare contractors.

Two primary types of Medicare contractors currently are conducting audits of physician practices in Tennessee — RACs (Medicare Recovery Audits) and ZPICs (Zone Program Integrity Contractors).

Following the creation of the Medicare Integrity Program in 1996, the Centers for Medicare & Medicaid Services (CMS) began contracting with outside organizations to assist with cost containment measures related to Medicare services. As a result, an alphabet soup of private contractors such as ZPICs and RACs have been commissioned to “find and prevent waste, fraud and abuse in Medicare.”

In March 2010, President Barack Obama announced that new efforts will be undertaken to “crack down on waste and fraud in Medicare, Medicaid and other government programs through the expanded use of payment recapture audits.” Furthermore, the Administration noted that, “auditors can be compensated based on the amount of improper payments they identify and are reclaimed – providing a powerful incentive to find every error.”



Audit focus includes physicians

While the Medicare Recovery Audits program continues to focus the majority of efforts toward hospital adoption of CMS evidence-based coverage policies and site-of-service issues, CMS has launched another major initiative to directly challenge providers. The Medicare Zone Program Integrity Contractors of ZPIC was not officially rolled out with the emphasis on physicians, but providers, including physicians, durable medical equipment and physical therapy, are noticing that is where ZPIC is focusing its efforts.

“ZPICs have a contracted Statement of Work that encompasses all of the fundamental activities required for the CMS program safeguarding activities,” said Donna Klutts, administrator of West Tennessee Bone & Joint Clinic in Jackson, Tenn. “Basically, a PSC or now referred to as a ZPIC is generally responsible for one or more of the following Center for Medicare and Medicaid audit focus areas: (1) pre or post medical review of claims, (2) data analysis, (3) benefit integrity and/or fraud detection, (4) cost report audits and (5) provider education. ZPIC audits are similar in many ways to other CMS audits currently being performed nationwide, but they do differ in one very important aspect — potential Medicare fraud implications.”

The Medicare recovery audit contractor for Tennessee is Connolly Healthcare. Although the RAC program expansion has been a gradual process over the last couple of years, it is now in full swing in Tennessee. Connolly has begun auditing Part B providers in West Tennessee. The Medicare Zone Program Integrity Contractor in Tennessee is AdvanceMed Corporation. ZPICs are focusing their efforts on practices and services that pose the greatest risk to the Medicare program.



Take audit requests seriously

“When you receive a request for medical records from Connolly or AdvanceMed, it is important to take the request seriously and to have a protocol in place for responding to such requests,” said Angela Youngberg, attorney with Rainey, Kizer, Reviere and Bell, PLC of Memphis and Jackson.

“I recommend the following 12 steps to help you through the process:”


Step 1: Act quickly and make responding to the request a high priority, even if only a small number of records are requested. Medical records requests are a serious matter. This IS a big deal!

Step 2: Pull the requested medical records and associated billing records.

Step 3: Review the records to identify potential problems. Remember, the record request was not generated at random. The contractor is looking for or thinks it will find a specific error.

Step 4: Do your research. Review applicable billing and documentation requirements, including CPT code requirements, NCDs, LCDs, program transmittals and contractor policies and provider manuals. Consult with your coders, nurses and/or doctors if the problem is not easily identifiable, or contact a professional to assist you.

Step 5: Make sure the notes are clear and legible. If you think someone else might have trouble reading your documentation, create and submit a transcribed copy along with the original documents. If the documentation includes non-standard abbreviations, provide a legend for abbreviations with your records.

Step 6: Ensure the documentation is complete before mailing. Although it is important to act quickly and meet all deadlines, you don’t want to rush the process and carelessly forget to include relevant documents. Contractors will question any documentation that is provided at a later date to supplement the record.

Step 7: Supply the requested records, but be sure to clarify in writing that there may be additional records relating to the patient not in your possession, such as hospital records.

Step 8: Do not sign statements certifying the completeness of the records! It is very important that you do not certify the completeness of the records unless and until you are absolutely certain that all documents have been provided, including any documentation not in your possession.

Step 9: Retain a copy of all documents provided to the audit contractor.

Step 10: If you discovered a potential problem when reviewing the requested records, contact a consultant or healthcare attorney to conduct an internal review of other claims similarly submitted over the past three years, which is the length of time CMS can go back and review claims without alleging fraud. This will help you estimate your potential repayment obligation and plan financially to prepare to make repayment. We recommend that internal reviews and compliance audits be conducted at the direction of legal counsel so that the audit, its findings and any associated legal advice are protected by the attorney-client privilege. If internal audits are conducted by the practice or by a hired consultant without the direction of legal counsel, then the audit and its findings may be obtained by the government in an investigation or “discovered” by a third party in litigation.

Step 11: Be prepared to receive a subsequent demand letter saying that you owe a large sum of money back to Medicare. No matter how good you think your documentation is, it is likely that the contractor will initially determine that there has been some amount of overpayment. Remember, you will have an opportunity to appeal.

Step 12: When you receive the demand letter, contact a healthcare attorney who has experience in appealing Medicare denials to assist you in the appeals process. Also, immediately contact your medical malpractice insurer to find out whether your policy covers any of the costs associated with an appeal. Most medical malpractice insurers pay the physicians’ attorneys’ fees up to a policy-specified dollar amount to appeal.


Prepare for government audits

“When possible, it is best to prepare for government audits before the first medical record request is received,” said Youngberg. “Ideally, providers should establish an audit committee, develop policies and procedures for record requests and audits, and conduct periodic internal audits to ensure proper coding and documentation guidelines are being met.”

For a smaller practice this may not always be practical or financially feasible. For smaller practices, Youngberg suggests these simple steps to be prepared for an audit:


· Identify a point person to handle records’ requests and audits.

· Update your contact information with Connolly. Connolly allows providers to identify a contact person for both medical record requests and potential overpayment claims. This can be done online through Connolly’s website, www.connollyhealthcare.com, or by faxing a contact information form to Connolly.

· Notify personnel to be on the lookout for letters from AdvanceMed or Connolly Healthcare.

· Instruct personnel to deliver all record requests to the audit point person immediately.

· Be aware of hot audit issues. Periodically check the RAC “Approved Issues” list posted on Connolly’s website. Keep updated on improper payments that have been identified in OIG audit reports. Review OIG’s annual Work Plan for topics and issues related to your practice. If any of these “hot audit” issues relate to your practice, you may want to consider conducting an internal review of related claims to ensure compliance with coding and documentation guidelines.

· Pay attention to claim denial patterns. Keep track of denied claims and look for patterns of denial. If a pattern is identified, develop and implement a corrective action plan to resolve future issues.

· Use qualified billers and coders. Make sure your billing staff (or the billing company with which you contract) is properly trained and qualified and regularly participates in continuing education to keep up to date on coding and billing practices, applicable Medicare guidelines and the audit process.


Insurance available for audit liability

“Medicare recovery audit contractors have mainly focused on hospitals,” said Klutts. “An article published by MGMA in October 2010, The Word on the Street about RAC Audits, gives providers statistics on what has been the hospitals’ experiences.

“Believe it or not insurance is available to help cover your liability in an audit,” said Youngberg. “It is a specialty product called ‘billing errors and omissions’ insurance. Contact your clinic’s agent to find out more about it and rates.”

Youngberg also recommends that if a clinic is audited and is not pleased with its results, it should appeal the decision. “The majority of the time the appeals process results in either a reduction in the amount owed or it is eliminated all together,” said Youngberg. “So in my experience it is worth it to roll the dice and appeal.”

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