Problem Solvers

Preparing for Potential Audits

Increased funding and more Medicare claims processors could mean more audits for 2013. How should HMEs prepare?

• By Cindy Horbrook
• Jan 01, 2013

Over the past few years, CMS has stepped up its pre- and postpayment audits on Medicare claims for HME providers. And it’s often the providers who take more of a wait-and-see approach or think it’llnever happen to them that have the most difficulty with these audits.

When all of a sudden faced with an audit, unprepared providers realize that they’ve been doing it wrong all along and they’re faced with either a significant amount of claim denials or a large overpayment and they have a harder timegetting through it. Some simply don’t survive it.

“Hundreds of millions of dollars of contracts have gone out to private companies to do audits for Medicare in the last couple of years,” says Wayne van Halem, CFE, AHFI, president of The van Halem Group LLC, a firm that helps providers respond to and appeal audits. “There’s a significant return on the investment in many cases for auditing, so if they throw a couple hundred million dollars in the program integrity world they expect to see more than a couple hundred milliondollars coming back and that means overpayments on providers.”

So will the pace of audits change for the better or worse in 2013? Van Halempredicts the latter.

“It’s hard to believe that they’d get any worse, but I do think they are,” van Halem explains. “And the only reason I say that is because I know that they have received some additional funding and they hired additional staff for a lot of the prior authorization for power mobility, but they seem to have that undercontrol so they have extra staff.”

With that in mind, here are five key steps that providers can take in 2013 tobetter prepare their businesses for potential audits.

Implement a comprehensive compliance program

The basic elements of a comprehensive compliance program are as follows:

• Policies and procedures that specifically address risk areas that the government has identified — many providers already have policies and procedures because they are accredited, however they may need to expand on them to make sure they address what the government has identified as risk areas for the medical equipment industry.
• Conduct internal audits on a regular basis — either by assigning the task to internal staff or bringing in an external agency.
• Conduct ongoing training and education, not only on compliance issues, but also regarding Medicare changes and policies.
• Provide a mechanism for employees to report suspected concerns — it could be a lockbox, phone number, a hotline, etc., but there has to be some mechanism for employees to report compliance concerns and they have to be able to do so anonymously if they wish.
• Select a compliance officer and set up effective lines of communication, meaning they not only feel comfortable going to the compliance officer, but they have mechanism which to report. Employees need to see a consistent message of compliance and providers need a process in place to respond promptly to any detected potential offenses.

The comprehensive compliance program is a mandatory requirement as part of the Affordable Care Act, however there hasn’t been a deadline identified forcomplete implementation, which means providers can set it up at their leisure.

“Since it’s not a mandatory requirement yet, they can certainly at least implement aspects of it and get the process started,” recommends van Halem. “The government has made it pretty clear that they want to only do business with the most compliant of organizations. That’s why they keep coming out with all these programs such as competitive bidding, surety bonds and accreditation and now these intense audits. A compliant company is one thathas a comprehensive compliance program.”

Analyze and understand your data

Sometimes providers fail to realize when there are spikes in billing or when there are certain product categories being billing higher level codes at a higher percentage than the lower level codes when Medicare expects to see it the other way around. Conducting regular internal data analysis can help spot red fl ags like these so if your business becomes the focus of an audit, you’ll be ableto quickly respond to it based on your knowledge of the data.

“Ninety-five percent of government audits are done as a direct result of data analysis, and they’re analyzing the data that the suppliers send them, yet most suppliers aren’t being very efficient in analyzing their own data and understandingwhat it looks like,” van Halem says.

van Halem has noticed that some providers don’t really know when there is an issue with claim denials or when there are issues such as a single physicianaccounting for an overwhelming majority of referrals.

“I think having a good idea of what your data looks like and having someone that’s responsible for monitoring that on a regular basis, so that they see when something looks different, that’s how Medicare chooses the focus of their audits, so you’ll know that,” he says. “It could be a perfect explanation forit, but you still have to be able to prepare.”

Use technology to help streamline your audit response process

Today’s software and imaging systems often allows providers to pull the images they need easily and send them in to Medicare. Still, some systems make it difficult to find what you need, so having an imaging system that’s ableto keep everything in order based on claim is vital.

“If they (Medicare) say we want the documentation to support this claim on this date of service, you know how to get it very easily, and you’re only providing information regarding that,” explains van Halem. Streamlining the process to transmit, such as using ESMD (electronic transmission of medical records) instead of sending medical records hard copy in a box via FedEx,can shave weeks off the response time.

“We transmit them electronically for our clients and what we see in doing that is we get quicker responses,” continues van Halem. “The submissions are more accurate, and normally when you’re sending a response back to Medicare for an audit, it’s taking them 30 to 40 days to render a decision, but when we send it electronically we’reseeing those decisions come back in 10 days.”

Compliance from the top down

Also recommended by van Halem is ensuring that management is involved in all of the key aspects of the audit process, as the ownership is directly impacted whenan audit comes along.

“If you’re going to accept money from the government, you have to play by their rules, whether you like them or not, and making sure that compliance is an absolute commitment from the most senior level management down so that your employees share in that commitment, Ithink will benefit your company greatly,” he says.

Be proactive

For providers, it’s much more cost effective to be proactiveabout audits.

“Most folks, if it’s pre-payment, they see a significant number of denials, which has a significant impact on their cash flow,” explains van Halem. “And if it’s postpayment review the government is really going after these extrapolated overpayments, meaning they extrapolate the percentage of claims that they denied in the sample to your entire universe of claim, and we’ve seen $4 million overpaymentsand, for most companies, that’s a significant problem.”

The next option is go to the appeal process and try to correct the problems that were made, get additional documentation and work with someone who has been throughthe process before to help you through it.

“It’s really important that they’re proactive and not reactive and waiting to see if something happens because the sheer volume of audits right now ispretty intense,” says van Halem..

This article originally appeared in the January 2013 issue of HME Business.