Medicare to Narrow Scope of Health-Care Provider Audits

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By James Swann

Medicare is cutting back on some of its claims review audits, a move that may reduce paperwork and other administrative burdens for physicians.

The Centers for Medicare & Medicaid Services’ Targeted Probe and Educate program, which involves reviewing fewer claims per provider, will roll out nationally to all 12 Medicare administrative contractor jurisdictions by the end of 2017, the CMS announced Aug. 14.

There are likely two reasons behind the move to take TPE audits nationwide, Ellyn Sternfield, a health-care attorney with with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC in Washington, told Bloomberg BNA Aug. 22. One is that it supports the Trump administration’s goal of reducing provider burdens, Sternfield said.

The other reason has to do with the educational component of the review, Sternfield said. The audits are designed to educate providers on proper claims billing, not to punish them for improper payments. As a result, they may end up reducing the number of Medicare claims appeals, Sternfield said, noting that the CMS backlog of Medicare claims appeals has been the subject of recent litigation.

TPE audits will review claims for services that have the highest risk of improper payments and will focus on providers with high claims error rates. Taking a targeted approach to claims review should ease provider burdens, the CMS said.

No RAC Relief

Sternfield said it was interesting that the switch only affected Medicare administrative contractors (MACs), who are paid on a flat rate basis, and not recovery audit contractors (RACs), who are reimbursed based on a percentage of recovered improper payments.

“Providers are anxious to see what CMS intends to do, if anything, to rein in RACs,” Sternfield said.

TPE audits were rolled out in a June 2016 pilot program in one MAC jurisdiction and focus on specific providers billing for a service rather than all providers billing for that service. They review 20 to 40 claims per provider.

The claims review portion, known as the probe, is smaller than traditional MAC audits, and is followed by an educational component where the MAC meets with the individual providers to discuss ways to avoid improper payments.

Data Analysis

Improved data analysis capabilities also may have factored into the CMS’s decision to take the TPE audits nationwide, Judith Waltz, a health-care attorney with Foley & Lardner LLP in San Francisco, told Bloomberg BNA Aug. 22.

“CMS is on record as indicating that every fee-for-service claim is now screened against a database of several years of claims data, so outliers should become apparent pretty quickly,” Waltz said.

Waltz said the improved data analysis lets the CMS figure out where to take a closer look.

“Also, they must have decided that the smaller probes are enough to give a good enough overview,” Waltz said, noting that it’s time-consuming to review medical records and that reducing the claims reviewed should free up time to look at more providers or issues.

The educational component of the audits puts providers on notice that they’re making errors and that the MACs know about them, Waltz said, which is likely to act as an incentive to stop improper behavior.

The TPE audits should be more persuasive in encouraging better billing habits than an audit of all providers in an industry sector billing for a particular code, Waltz said.

“In many respects, it should be viewed as similar to getting an audit request from a ZPIC [zone program integrity contractor],” Waltz said. A ZPIC audit request lets a provider know it has been singled out as a potential problem and forces it to take the inquiry seriously, Waltz said.

ZPICs are responsible for identifying and investigating fraud in the Medicare fee-for-service program and can suspend Medicare payments, revoke Medicare privileges, and refer potential fraud to law enforcement

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To contact the editor responsible for this story: Kendra Casey Plank at

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