Audit Forecast: Recent Publications and Activities Hint at Audit Increases Across Multiple Payers

Published in Orthotics & Prosthetics on March 24, 2023

By Wayne van Halem, President, The van Halem Group

There are a number of signs that are pointing to an increase in audit activity across multiple payers as the public health emergency (PHE) winds down. These increases can be expected not just on Medicare claims, but also in the Medicaid and managed care spaces as well. Audit volumes have been on the increase for many product categories since early 2021, excluding those categories affected by the PHE waivers and flexibilities, which are still seeing low audit volumes overall. However, even with the PHE waivers in effect for some product categories, there are a few significant exceptions we will note in this article below.

Medicare

In November 2022, CMS published “Medicare Fee-for-Service Claims Review When the Public Health Emergency Ends.” The article was simply one question and answer that states:

Q. At the end of the Public Health Emergency (PHE) how will CMS review contractors conduct medical reviews for claims billed during the PHE based on approved waivers or flexibilities?

A. CMS contractors (MACs, RACs, and SMRC) review a very small percentage of Medicare Fee-for-Service claims each year. During the PHE, flexibilities were applied across claim types. For certain DME items, this included the non-enforcement of clinical indications for coverage. Since clinical indications for coverage were not enforced for certain DME items provided during the PHE, once the PHE ends, CMS plans to primarily focus reviews on claims with dates of service outside of the PHE, for which clinical indications of coverage are applicable. We note that we may still review these DME items, as well as other items or services rendered during the PHE, if needed to address aberrant billing behaviors or potential fraud. The HHS-Office of the Inspector General may perform reviews as well. All claims will be reviewed using the applicable rules in place at the time for the claim dates of service.¹

CMS indicates that they are going to focus on claims submitted after the PHE and apply the policies in effect on those dates. That essentially seems to hint that once the waivers are done, there may be a requalification process that requires your Medicare patients have documentation to show they qualify for continued coverage of the equipment that is being billed. While that is not too surprising for ongoing or capped rentals with supplies, I believe that there are certain products that would prove difficult to requalify patients for coverage. One example of a difficult product to requalify is continuous glucose monitors (CGMs). I believe it would be unreasonable for CMS to think each of the Medicare beneficiaries that received a CGM under the relaxed requirements should be required to go back to finger-sticks for monitoring their blood sugar.

We have already seen CMS use their Unified Program Integrity Contractors (UPICs) to audit pandemic-related claims for respiratory equipment with CR modifier. These audits have been relatively low in claims volume, and it appears that they are not extrapolating the results at this time, but instead only identifying actual overpayments. While this is good news, we have seen in a majority of audit results that the UPICs are denying a high percentage of the claims despite having the CR modifier on them. In most instances, we have successfully worked to get the claims overturned on appeal, which raises the question of why. But hopefully, CMS is analyzing those results and it will not become a rampant issue.

Lastly, there is another situation being resolved that will likely lead to an increase in RAC audit activity. That is the fact that the backlog at the Administrative Law Judge (ALJ) is nearly gone. All signs point to the fact that they will meet the court-imposed deadline of having the backlog resolved by Jan. 1, 2023, and we will be getting ALJ decisions within 90 days of submission. 

Medicaid

We are also likely to see an increase in Medicaid audits performed by the UPICs, which is concerning because these audits generally include post-payment samples and extrapolated overpayments. UPICs are contractors that are responsible for identifying and preventing fraud, waste, and abuse, so they tend to be a bit more complex than a normal audit. I believe we will see this increase based upon an Office of Inspector General (OIG) report published on Oct. 3, 2022. The report, “UPICs Hold Promise to Enhance Program Integrity Across Medicare and Medicaid, But Challenges Remain,” found the following:

UPICs conducted substantially more Medicare FFS program integrity work in 2019 compared to that for Medicaid. The UPICs also conducted only minimal activities related to Medicaid Managed Care, even though most Medicaid enrollees receive services through Managed Care. UPICs reported no data analysis projects completed or vulnerabilities identified related to Medicaid Managed Care in 2019. Further, they reported only a single Medicaid Managed Care fraud referral. Overall, UPICs conducted disproportionately fewer Medicaid activities compared to the levels of funding they received from CMS for Medicaid program integrity activities.²

As is the case with all OIG reports, it includes recommendations to the agency. In this instance, OIG recommended the following:

1. Implement a plan to increase UPICs’ Medicaid program integrity activities, particularly related to managed care
2. Make improvements to the Unified Case Management (UCM) system
3. Implement a plan to help ensure the success of the MCC (Major Case Coordination) for Medicaid referrals
4. Identify the reasons for the unexplained variation in program integrity activities across UPICs

CMS concurred with all of the findings of the report, and for this reason, I expect to see an increase in UPIC audit activity on Medicaid claims. We have seen this in the past, but the volume was never significant. The UPICs would audit Medicare claims and would occasionally audit some Medicaid claims at the same time. 

Managed Care

An article published on Nov. 21, 2022, by NPR, discusses newly released audits that reveal widespread overcharges and payment errors to Medicare Advantage plans. It indicates that some plans were overbilling Medicare an average of $1,000 per patient a year. CMS indicated it was their intent to extrapolate the results and recoup an estimated $650 million from the insurers.³ Historically, CMS has had very little oversight over managed care plans. This is a significant problem when you think of the millions of people transitioning to managed care each year. In multiple publications released over the last year, CMS has announced increased oversight of certain activities of managed care organizations (MCOs) and increased funding to states to improve oversight and ensure access to care. 

To me, the bigger concern is that when CMS increases oversight of the MCOs and they are required to refund monies paid inappropriately, it will not stop there. What will likely ensue is a domino effect in which MCOs will start coming after providers and suppliers. The challenge here is that the plans interpret rules differently and they have proven to be very difficult to deal with. At least with Medicare, there is a process that all sides are familiar with, and it is generally adhered to.

What to Expect

I don’t think anyone reading this would be surprised that we anticipate audit volumes to increase once the PHE ends. I think these three main areas are where we will see the biggest increase. The key is staying ahead of them and not letting them get out-of-control, which is more apt to occur with audits from both managed care plans and UPICs. Being proactive and prepared is the best way to minimize the impact. Of course, if you are being audited and having issues, regardless of the plan or type, The van Halem Group is here to assist and help you navigate through the process.

References

1. “Medicare Fee-for-Service Claims Review When the Public Health Emergency Ends.” Spotlight | CMS. www.cms.gov. Accessed Dec. 21, 2022. https://www.cms.gov/ About-CMS/Components/CPI/CPI-Spotlight.
2. “UPICs Hold Promise to Enhance Program Integrity Across Medicare and Medicaid, But Challenges Remain.” oig.hhs.gov. Accessed Dec. 21, 2022. https://oig.hhs.gov/oei/reports/OEI-03-20-00330.asp.
3. Schulte F, Hacker HK. “Hidden audits reveal millions in overcharges by Medicare Advantage plans.” NPR. https://www.npr.org/sections/healthshots/2022/11/21/1137500875/audit medicareadvantage-overcharged-medicare. Published Nov. 21, 2022. 

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