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Are
you ready for a Medicare Audit?
The
words, “Medicare Audit” typically produce a wide
range of emotional reactions from providers and
suppliers of EMS and ambulance services across
the country.
During my consulting career, I have witnessed
the reactions of ambulance service chiefs and
billing managers when they receive their initial
notification that a Medicare audit or probe is
about to be conducted on their agency. The
reactions can vary greatly from “mildly
concerned” to “a complete meltdown”. Other
typical reactions include “anger, “surprise”,
“disbelief” and “denial.” After the initial
emotions subside, EMS management staff will
typically react swiftly and take the necessary
steps to respond to the requests of a Medicare
auditor.
The reactions described above are “normal” and
should be expected from anyone whose agency is
under scrutiny of a federal health care,
regulatory or law enforcement agency. Most EMS
administrators, in conjunction with their
internal or external billing staff, will
immediately take the time to compile all of the
requested information and send the information
to the requesting agency and hope for the best!
For those of you who always say – “Well, that
will never happen to us!” Beware!
Medicare is dramatically “stepping up” their
audit activity for ambulance services and other
Part B suppliers. Why? Well, maybe the answer
can be found by examining some recent court
cases involving ambulance fraud and abuse. The
following is just one excerpt from the United
States - First Circuit - Court of Appeals
located in the northeastern part of the United
States:
“… The owner and operator of [name redacted],
and his company pled guilty to Medicare and
Medicaid fraud… as well as obstruction of a
federal audit… and money laundering. He admitted
to more than $800,000 of fraud… “…his sentence
was enhanced for obstruction of justice, arising
out of his earlier submission of false
information to federal auditors before that
audit led to the criminal investigation and
prosecution.”
While we hope that this type of blatant
fraudulent activity is isolated to a “few bad
apples” within our industry, there are more than
a few government officials who have expressed
concern over the issues of fraudulent ambulance
claims. For these and other compelling reasons,
all EMS and other health care providers, should
expect increased audit activity, over the next
several years.
One of the main reasons why the EMS industry
should expect enhanced audits and overall
scrutiny is found by examining the conclusions
of a recent report which was released by The
Department of Health and Human Services, Office
of Inspector General (OIG) entitled “Medicare
Payments for Ambulance Transports – January
2006”.
The purpose of this report was “to evaluate
whether ambulance transports met Medicare’s
coverage and level of service criteria and to
evaluate safeguards in place to identify
improper payments.” The following is a summary
of the startling findings of the OIG report:
• “Twenty-five percent of ambulance transports
did not meet Medicare’s program requirements,
resulting in an estimated $402 million of
improper payments.
• In CY 2002, 13 percent of transports did not
meet coverage criteria because the patient’s
condition did not warrant transport by
ambulance, resulting in an estimated $220
million in improper payments.
• Nine percent of covered transports did not
meet level of service criteria because a lower
level of ambulance transport was indicated,
resulting in an estimated $31 million paid
improperly.
• Five percent of transports were found to be in
error because the ambulance supplier, though
contacted, did not respond to our request for
documentation, resulting in an estimated $150
million in improper payments.”
The OIG report also determined that “Contractor
safeguards are insufficient to identify and
prevent improper payments for ambulance
transports…”and; “…We found that contractors use
few prepayment edits consistently. Less than
half of the contractors we surveyed conducted
post payment review of ambulance claims” and;
“There are no uniform requirements regarding the
kind of documentation contractors require…”
This is just the latest of a series of OIG and
CMS reports which have indicated current and
past problems with ambulance claim submissions.
In response to these reports and other
compelling reasons, CMS has implemented various
programs to identify and prevent areas of fraud
and risk to the Medicare program. CMS has
created a division called the Division of
Medical Review and Education. The goal of this
agency is to reduce payment errors by
identifying and addressing billing errors and
coding made by health care providers and
suppliers.
CMS has also mandated that Part B Carriers
participate in programs to determine the
accuracy of claim submissions such as the
Comprehensive Error Rare Testing (“CERT”)
Program. CMS has also hired a number of “Program
Safeguard Contractors” and Recovery Audit
Contractors (“RAC”) to assist CMS and its FI’s
and Carriers in detecting fraudulent or abusive
practices and in collecting any erroneous
payment amounts.
All of these programs and initiatives generally
have one common goal: identify potential billing
and coding errors through analysis of data
(e.g., profiling of providers, services, or
beneficiary utilization) and evaluation of other
information such as complaints or erroneous
submission of cost report data, etc.
The following is a summary of my experiences
with Medicare audits and information contained
in a CMS informational document entitled: “The
Medicare Medical Review Process
• Audits and probes are typically conducted when
atypical billing patterns are identified, or
when a particular kind of problem (e.g., errors
in billing a specific type of service) is
identified.
• Providers and suppliers may be selected for an
audit through data analysis and evaluation of
other information (e.g., complaints) and when
suspected billing problems are identified by any
agencies.
• If selected for an audit, I highly recommend
immediate consultation with appropriately
qualified legal counsel and other professionals
who can help guide you through the audit
process.
• The audit process normally begins with a
“probe review”. This review may include
examination of 20-40 claims. More widespread
probe reviews may be initiated when a larger
problem, such as a spike in billing for a
specific procedure, is identified. Providers and
suppliers are typically notified that a probe
review is being conducted and are asked to
provide medical documentation for the claim(s)
in question. Providers must also be notified of
the results of the probe review.
When a probe verifies that an error exists, the
Contractor classifies the severity of the
problem as minor, moderate, or significant. The
benchmarks used for this categorization process
normally involves calculation of the “error
rate” (number of claims paid in error), dollar
amounts improperly paid, and past billing
history.
Depending on the severity of the issues, a
corrective action plan may be mandated. The
following are examples of corrective action
steps:
• Collection of any money paid in error –
Suppliers are typically given options to
immediately repay any overpayments directly or
CMS may elect to collect monies due through an
“offset” of revenue related to current or future
claims.
• Education – including provider / supplier
education on proper billing procedures and
• Prepayment review — Prepayment review consists
of a manual review of a certain percentage of
claims (normally based on certain HCPCS codes)
and supporting documentation - prior to payment.
Once providers have re-established the practice
of billing correctly, they are removed from
prepayment review.
• Post payment review — Post payment review
involves a review of claims - after payment has
been made. Post payment review is generally
performed by using Statistically Valid Sampling.
In my consulting experience, convincing the
contractor to remove an ambulance service from
either pre or past payment review can be a very
daunting and frustrating task. To my knowledge,
there are no publicly available standards which
specifically identify the actual error rate
which will permit a Part B supplier to be
removed from the “review status” and returned to
normal claims processing. Contractors have a
wide degree of latitude in applying the review
standards.
How can you minimize your chances of being
audited? Well, simply put, EMS and ambulance
services best defense is the implementation of a
comprehensive, effective corporate compliance
program!
An effective compliance program should include,
at a minimum; the following components:
• Written Plan – which includes review, advice
and approval by legal counsel
• Assessment - of billing an coding practices
and other risk areas
• Audit – Regular scheduled internal and
external claim audits to assure compliance
• Training – for all levels of the company or
organization
• Monitoring – of all policies, procedures and
practices
• Updating – regular updating of the written
plan and training
• Self-Disclosure –with proper advice from legal
counsel
• Hotline / Reporting Mechanism – internal or
external
More detailed information on Medicare audits and
corporate compliance programs will be presented
by the author at the upcoming Ortivus User Group
Training scheduled for April 21, 2006 in Dallas,
Texas.
http://oig.hhs.gov/oei/reports/oei-05-02-00590.pdf
http://new.cms.hhs.gov/MedicalReviewProcess/Downloads/mrfactsheet.pdf
Disclaimer:
The author is not an attorney and does not
provide legal advice. The information contained
in this article is not intended and should not
be construed as legal advice or direction. All
readers are advised to obtain professional legal
advice from an attorney before implementing any
material change in their billing, administrative
operational or documentation polices or any
other matter which is governed by law or
regulation.
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