New Medicare Fraud Audits to Ease Burden on Compliant Providers

August 21, 2017 - CMS recently updated its Medicare fraud and improper payment audit process to target providers and suppliers who continually demonstrate high medical billing error rates, according to the federal agency’s website.

The new Targeted Probe and Educate method replaces the medical review strategy that included broad medical billing investigations and provider education.

Starting in 2014, CMS launched the Probe and Educate initiative that selected a limited number of claims from each Medicare provider for review. Medicare Administrative Contractors (MACs) assessed the claims for noncompliance and educated providers on proper medical billing and Medicare fraud prevention strategies.

Providers who demonstrated higher medical billing error rates than their peers received additional training from MACs.

The Probe and Educate initiative particularly affected providers in home health agencies as well as those billing under the Two-Midnight Rule.

However, the wide-spread audits troubled providers, especially those who consistently complied with Medicare billing requirements.

“CMS is cognizant that this type of review can be burdensome to providers and we are always working to improve the process,” the federal agency wrote on its website.

As part of its improvement process, the federal agency decided to swap the original Probe and Educate method for a more targeted approach.

Under the Targeted Probe and Education method, MACs will review 20 to 40 claims from Medicare providers and conduct one-on-one, personalized education sessions to address medical billing errors found in the reviewed claims.

Although, if the MAC review shows overall compliance with Medicare billing regulations or a modest medical billing error rate, the provider will not be subject to audits for at least 12 months.

If the review reveals a moderate or high error rate in the first audit round, the provider will receive personalized training and face another audit in about 45 days.

Similar to the first round, compliant providers in the second round will be exempt from medical reviews for at least 12 months and providers who maintain high or moderate error rates face a third round of audits.

If providers cannot demonstrate Medicare billing compliance after three rounds of medical reviews and education, MACs will refer the provider to CMS for “further action,” which may include total prepay review, extrapolation, and referrals to Unified Program Integrity Contractors (UPICs) or Zone Program Integrity Contractors (ZPICs).

Source: CMS

CMS noted that the successes of a Targeted Probe and Educate pilot in four MAC jurisdictions from June 2016 to July 2017 prompted agency leaders to expand the initiative to all Medicare providers.

“As a result of the successes demonstrated during the pilot, including an increase in the acceptance of provider education as well as a decrease in appealed claims decisions, CMS has decided to expand to all MAC jurisdictions later in 2017,” the website stated.

The updated Medicare fraud and improper payment prevention method also came about a year after the Government Accountability Office claimed that CMS was not doing enough to reduce improper payments.

The federal watchdog questioned CMS efforts, such as the Probe and Educate program, because the federal agency continued to exceed improper payment thresholds. In 2015, HHS did not comply with the Improper Payments Elimination and Recovery Act of 2010 because the Medicare fee-for-service error rate was greater than 10 percent and the Medicaid fee-for-service rate was 12.1 percent.

Medicare and Medicaid error rates also exceeded regulatory caps in 2016, with the Medicare rate reaching 11 percent and the Medicaid rate hitting 10.48 percent.

While time will tell if a targeted approach to Medicare fraud and improper payment prevention will reduce error rates, the new method could decrease the growing Medicare appeals backlog.

HHS Secretary Tom Price recently told an appeals court in DC that the backlog of pending appeal cases could reach 950,520 cases by the end of the 2021 fiscal year.

The process already takes an average of three years to complete, 11 times longer than the statutory deadline of 90 days.

HHS explained that broad claim reimbursement audits under initiatives like Probe and Educate and the Recovery Audit Contractor program drove Medicare denials up, causing providers to appeal reimbursement decisions.

Using a more targeted approach may help alleviate the increasing Medicare appeals backlog by preventing compliant providers from undergoing audits that may result in appealed claims.