Return of the Audits

Published in About on August 28, 2020

By: Wayne van Halem, President, The van Halem Group

wayne van halemVery quietly in a document released in July, ironically entitled “Coronavirus Disease 2019 (COVID-19) Provider Burden Relief Frequently Asked Questions (FAQs),” CMS announced that audits will resume on Aug. 3, 2020, regardless of the state of the public health emergency (PHE). This news took quite a few by surprise, including me. While we all knew audit activity would not be ceased forever, all the other waivers that CMS announced were to be in place for the duration of the PHE, which is still in effect now through the end of September. I guess many of us assumed that would be the case with audits as well.

Another reason many of us were caught off-guard is the fact that at the time of this announcement in July, and even today, many parts of the U.S. are still dealing with large numbers of COVID-19 patients and increased hospitalizations. Providers are still struggling to take care of their patients, deal with equipment inventory issues, and maintain the safety and well-being of their employees. To confound the situation, many organizations are struggling with the reality that the billing or administrative staff that would normally handle audit responses are working remotely, making the accessibility to mail, and patient records even more difficult.

After this announcement, I had an opportunity to meet with representatives of CMS’ central office to discuss their plan for the return of audits. We learned that while the date to begin medical review functions is Aug. 3, there will likely be a delayed time frame before audit requests officially go out. During the July meeting, CMS was still working to develop instructions for contractors. They indicated that they had no intention of opening up the flood gates for a large volume of audits, but rather, they described their strategy as a “toe in the water” type of approach. In a later publication on Aug. 6, they indicated medical review activities would begin on Aug. 17.

We also learned that Targeted Probe and Educate (TPE) Prepayment reviews, the most common type of review pre-pandemic, would not be a part of this initial audit phase. The reason being is that CMS indicated that (1) they do not want to hold up payments to providers, and (2) due to claim processing system limitations, there are less flexibilities to grant extensions for those providers that would need more time to respond. What they mean by this specifically is that with prepayment reviews, if no documentation is received by the due date, the system will automatically deny the claim.

A main area of concern though is the impact that post-payment audits have. While I appreciate CMS not wanting to hold up a provider’s payments, asking for refunds on claims that have been paid is equally, if not more, damaging. In this environment, many providers are already financially impacted by the fact that many patients are no longer going to see their doctors or having surgical procedures, both of which are big sources of referrals. Also, what CMS did not indicate is whether these post-payment reviews will be on a single claim or a sample of claims. If it is a sample of claims, we can be looking at large overpayments that must then be fought through the often lengthy and frustrating appeals process.

CMS has directed audit contractors to only review claims submitted prior to March 1, 2020. CMS also indicated that they do intend to audit claims submitted during the PHE at this particular time. I would imagine that later, claims during the pandemic will be analyzed by CMS. For this reason, it is necessary to remind everyone that the claims you submit are always open to scrutinization and those submitted during the pandemic will be no exception. CMS has not provided any details as to whether there will be a requalification process for patients whose claims may not have otherwise met the requirements had they been submitted outside of the pandemic (e.g., missing signatures), but I imagine there will be, depending on the products. For that reason, you should be tracking these patients and you should maintain notes in your system that easily explain the circumstances under which the equipment was provided. You should also be able to refer back to these patients at a later date and understand exactly why the equipment was provided, despite not meeting certain requirements (that were temporarily waived). Of course, our counsel is always to continue to try to get all the required documentation if you can, but if you can’t, you’ve notated that and flagged it in your system.

What does the future hold?

Time will tell, but for now, I anticipate that CMS will maintain a relatively low volume of audits through the rest of 2020. Depending on the state of the PHE, it could continue further than that. However, one thing that we all need to keep in mind is the impact that the PHE has had on the backlog of appeals at the Administrative Law Judge level. Even prior to the pandemic, the amount of appeals being filed by providers was much less than what normal volumes had been previously. The backlog of appeals can be attributed to the Medicare Recovery Audit Contractor (RAC) program, which had a significant impact on orthotic and prosthetic providers. Since reorganizing the RAC program, CMS has restricted the RAC’s audit activity considerably, especially in comparison to before.

From 2011–2014, RACs were given free range to audit as many claims as they liked. While there were limits to the number of claims they could audit per provider, they were not limited in the number of providers they could audit. Since they are paid a contingency, they understandably went after as much as they could. Often, choosing expensive prosthetic components because of their high-dollar reimbursement. Thus, the backlog ensued nearing one million cases at one point. Following updates to the RAC program, CMS would only provide approval for the RAC to audit between 500-2000 claims per audit issue identified. CMS would then analyze the impact on the appeal process before allowing RACs to audit more. If there was no impact on appeals, CMS would then approve an additional 500-2000 claims.

Since that time, the Office of Medicare Hearings and Appeals (OMHA) has opened up seven new offices and hired 70 new judges. The backlog was expected to be resolved in 2021, but with the extreme slow-down of new cases entering the system during PHE, it will likely be sooner. As appeal representatives, we have seen the number of hearings being scheduled increase rapidly. My concern is that once the backlog is resolved, OMHA has the infrastructure in place to manage up to 300,000 cases annually. That is nowhere near what they are receiving right now. I do not see them closing offices and laying off judges. The alternative, and more likely solution would be to give the RACs a green light to audit at a higher volume. The RAC program made the auditors and the government hundreds of millions of dollars. It is unlikely that, with the staff in place and the budget to handle the volume, CMS would not further pursue that path.

For more information on proactive and reactive audit services provided by The van Halem Group, please visit www.vanhalemgroup.com.


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