How to Breathe After Receiving an Audit Letter

As WebPT Co-Founder Heidi Jannenga explained in this blog post, we expect an uptick in rehab therapy claims audits this year. This is no reason to lose sleep, though.

There are many types of audits, and a lot of them originate with the Centers for Medicare and Medicaid Services (CMS). The types of CMS audits frequently seen in the PT and OT industries include:

• Targeted Probe and Educate (TPE) audits
• Recovery Audit Contractor (RAC) audits
• Unified Program Integrity Contractor (UPIC) audits—formerly known as Zone Integrity Program Contractor (ZPIC) audits

TPE audits are the most common. These audits are educational in nature, with the auditor’s goal being to help providers avoid RAC audits. If the findings show that the provider’s documentation and coding do not support claims, then the Medicare Administrative Contractor (“MAC”) will provide education. After 45 days, the MAC will conduct a second review to ensure the provider has improved.

RAC audits come with a little more scrutiny. RAC auditors are generally compensated based on a percentage of the overpayments they discover. As such, RAC auditors may attempt to extrapolate error rates to increase the amount the provider must pay back. 

UPIC audits typically arise due to suspicion of billing fraud (e.g., based on a tip from an inside whistleblower). While providers should always take any type of audit seriously, UPIC audits may warrant retaining the services of an outside consultant.

That being said, all types of audits are defensible. So, just because you’ve been selected for audit doesn’t mean you’ve done anything wrong—and it certainly doesn’t automatically lead to penalty. So when you get that letter, take a breath, keep a level head, and follow these six simple steps:

1. Gather up your documented compliance policies and procedures.

As Heidi explained in the aforementioned blog post, the best way to prepare for an audit is to be familiar with high-risk areas, conduct your own internal audits, and have a well-documented compliance program—including policies, procedures, and training materials. Make sure these documents are easily accessible so you can provide them to the auditor if need be.  

2. Read the audit letter and documentation request very carefully.

It’s important to understand exactly what the auditor is looking for before you begin collecting the requested materials. Most audit letters provide some indication of why your practice was chosen for audit, and the documentation you supply should relate specifically to that reason. 

3. Review your documentation closely before turning it over to the auditor.

Once you’ve pulled the requested documentation, assemble it in a way that makes it easy for the auditor to validate the medical necessity of every service on every claim undergoing review. As you organize this documentation, scrutinize it to ensure that:

You do not underproduce or overproduce.

This is especially important if you’ve relied on administrative staff to pull the documentation for you. Check to make sure the documentation you’re supplying is exactly what you need to deliver in order to satisfy the audit request—no more, no less.

Your documentation always sufficiently supports the claim.

If documentation is lacking, go back to the EMR to see if there are additional scanned documents or screenshots to support the claim.

You’ve exhausted every opportunity to obtain additional relevant documentation from related external parties.

There may be ways for you to supplement (not change or alter) the documentation you have on hand. For example, if there is a missing plan of care certification, you may be able to show a delayed certification by obtaining records from the certifying physician (e.g., physician orders, progress notes, or a statement showing an intent to certify and continue therapy).

You cover your operational bases.

Some audit findings require corrective action beyond repayment. For example, the auditor may require proof that you have changed your policies and procedures and re-educated your staff. So, if you notice gaps upon self-review, you might as well start taking steps to show due diligence in achieving compliance.

4. Mark each individual page with a unique number.

In the legal world, we call this Bates stamping. The idea is to give each page an identifier so you can easily refer to it later. It’s important to organize your documentation in a way that allows you to not only present each claim accurately, but also challenge any audit findings later by referencing specific documentation that supports the claim in question.

5. Aim for an acceptable error rate.

Your goal isn’t perfection. In any audit, there will be audit findings. To err is human. So, breathe again. The goal is to get the audit error rate to an acceptable level. With most Office of Inspector General (OIG) audits, the acceptable error rate is less than 5%. However, TPE audits are more forgiving. 

Review the audit findings very carefully, and pick your battles. Audit findings can be challenged, and—believe it or not—auditors will reverse their findings. I have challenged numerous audit findings with success. The key is pointing to the documentation or supplemental documentation, if necessary and available, to demonstrate that the claim is supported and appropriate. 

6. Know your appeal rights.

You have a right to appeal all audit findings. The question is whether it is worth it. If the findings are significantly adverse, then you’ll definitely want to consider an appeal. Here’s a resource that goes into more detail on the appeals process.

Audits are time-consuming and sometimes stressful. However, they can be managed and defended. So, do not lose sleep. Breathe.