Almost weekly, I receive a call from a physician practice that has received an audit request or recently responded to an audit request on their own. There is such great uncertainty regarding how to handle audits that this topic cannot be covered enough. How should a practice handle an audit by Medicare, Medicaid or other payers? What are the steps you should follow and what are the mistakes you should avoid making?
Here are some suggestions:
1. Take every inquiry you receive seriously. Sometimes my clients receive "post-payment review" letters asking for a small number of charts. Other times, clients may receive payment denials or an "educational" notice. You may also receive notification that you are under a recovery audit contractors (RAC) or another serious audit. Regardless of who the payer may be (or the stated purpose), all inquiries should be handled carefully.
2. Review the notice you receives. How many charts are needed? When is the due date? What is the stated reason? Many times when I talk with a client, they have not even reviewed the notice carefully and may be gathering the wrong information. They also may be working toward the incorrect due date. If you have questions or concerns you can always try placing a phone call to the payer, but don't be surprised if you cannot get the answers you are looking for! Make sure you meet all requests in a timely manner and if an extension of time is needed, make sure to request one and obtain written confirmation of the extension.
3. The practice should immediately prepare to provide all of the information requested in the audit letter. This may include medical records, invoices for drugs and supplies, and other materials. Copies of the complete record should be included. Do not ever provide originals unless requested. Make sure your records are legible and complete. You can also consider having illegible records transcribed and included along with the handwritten records, as long as the actual date of the transcription is noted.
a. Never modify the medical records that have been requested in an audit. I cannot emphasize this enough! There is an instinct to want to clarify and correct what you find wrong in the requested records, but this is not advisable. Many clients like to add an addendum to the record, which can be done as long as it is clearly noted, so it does not appear you have altered the record. Electronic records that were never electronically signed or "closed" may print out with the date the record is printed. This can make it appear as though the record was recently created. This is why it is important that records be closed out in a timely manner and every practice should have a policy governing closed records.
4. I generally recommend to my clients that an outside auditor be hired to review the records that have been requested. Hiring the auditor through counsel will assure attorney-client privilege of any findings. The audit will also help the client figure out what exactly it is that the auditor may be looking for and can help prepare for an appeal. I can safely say that almost every time when an outside auditor is engaged to review a sampling of the records, we can quickly spot the potential issues. Sometimes this is a lack of familiarity with Medicare or other payer coverage requirements, poor documentation, wrong level of service, etc. Working with counsel, the practice can determine what steps may be appropriate such as a refund, self-disclosure or other action. The audit may also bring to the practice's attention issues with other records with the same or other payers (which can then be properly addressed).
5. At the conclusion of the audit (or sooner), it is essential that a practice thoroughly correct the issues that were the focus of the audit. Follow-up audits are not unusual and failure to correct something can be used as evidence of a disregard for the law and can lead to severe implications. The results of an audit should be used to educate providers and billing staff and to improve a practice's billing policies. Being a small practice will not isolate you from any number of audits and thus every practice, of every size, must continue to improve and educate its staff regarding appropriate billing and documentation practices.
6. Practices should prevent investigations and minimize risk by conducting internal audits and education regularly. This is the best way to prevent and successfully respond to audits.
Finally, although physicians may think they are saving money by not working with legal counsel, sometimes this can be an expensive mistake. Small inquiries from payers can lead to full-blown investigations and practices that respond improperly, or seek legal help too late, may be at an extreme disadvantage, financially and otherwise. Make sure you work with experienced healthcare counsel to get the best results in any audit scenario