Category Archives: Legal Remedies for Medicaid Providers

A Medicare Mistake: Your Missing Contract

-written by Todd Yoho, my paralegal, who has worked closely with me for over a decade. He knows more about Medicare and Medicaid than he probably cares to, but no one could contest that he doesn’t know his stuff!

There is a film almost everyone in the legal field has seen at least once. A comedic drama from 1973 titled, The Paper Chase. It follows the journey of a first year law student at Harvard Law School, and his particular frustrations with his Contracts course and professor. Contracts are one of the first things a law student studies, and some attorneys spend their career reviewing, drafting, revising, and negotiating contracts. They are that important.

In the health care, provider world, contracts are the lifeblood of your company. Contracts are how you secure work, ensure rates for revenue, and contain vital information should someone act contrary to the contract. If you have a dispute with an entity, your first act should be to consult an attorney and provide them with a copy of your contract. There should be a section about dispute resolution, which you should carefully scrutinize before signing any contract. It may be mandatory arbitration, it may stipulate a particular venue, or it may cite specific rules and statutes that, if you are not an attorney, may read like obtuse, dense, “word salad” put together by people who do not have to live and operate under the very laws they enact.

But, what if you don’t have a copy of your contract? You signed it years ago, your business has moved several times, or it just disappeared in the hectic daily life of daily operations. Your recourse is that you have to ask the very entity you have a dispute with to provide you with a copy. We’ve seen providers in situations like this, and sometimes the other entity complies immediately. Other times they say it will take 30 days, or 60 days, and you are already on your heels. Without a copy of that contract, you and your attorney may not know what your first step towards resolution will be. Worse if you are on a time limit you don’t know exists.

So, what do you do to avoid this kind of situation? You need to have a document retention policy. Know how long you are required to keep documents, Create an important document archive in a secure location that you update every time you execute a business related document. And make a copy to be kept in a separate, secure location. Then make another copy. It used to be this could be a notebook, a folder, or a file box in your CEO’s office, manager’s office, or with another person trusted with corporate responsibility. A copy could be kept at the CEO’s home in a locked file cabinet. And it still could be. There’s nothing wrong with keeping a hard copy archive, but this is the digital era.

Because we are in the digital era, you should absolutely keep your archive backed up to the cloud. Cloud data services can be cheap, and will pay enormous dividends if you suffer a catastrophic document loss. But, you have to preserve them first. Don’t let them get misplaced. Much like your important family documents, your important business documents are vital pieces of information. You may not need them every day, but the day you do need them, you want to have them quickly and easily available. They are that important. You don’t want to find yourself at an inopportune moment chasing paper.  

Some helpful links include the following:

https://www.uschamber.com/co/start/strategy/how-long-to-keep-business-document

https://www.uschamber.com/co/run/technology/cloud-storage-security

Knicole here. Sorry for the duplicative links. I don’t know how to delete them.

Questions Answered about RAC Provider Audits

Today I’m going to answer a few inquiries about recovery audit contractor (“RAC”) audits from providers. A question that I get often is: “Do I have to submit the same medical records to my Medicare Administrative Contractor (“MAC”) that I submit to a RAC for an audit?” The answer is “No.” Providers are not required to submit medical records to the MAC if submitted to a RAC, but doing so is encouraged by most MACs. There is no requirement that you submit to the MAC what you submit to RACs. This makes sense because the MACs and the RACs have disparate job duties. One of the MACs, Palmetto, instructs providers to send records sent to a RAC directly to the Palmetto GBA Appeals Department. Why send the records for a RAC audit to a MAC appeals department? Are they forecasting your intentions? The instruction is nonsensical unless ulterior motives exist.

RAC audits are separate from mundane MAC issues. They are distinct. Quite frankly, your MAC shouldn’t even be aware of your audit. (Why is it their business?) Yet, many times I see the MACs cc-ed on correspondence. Often, I feel like it’s a conspiracy –  and you’re not invited. You get audited, and everyone is notified. It’s as if you are guilty before any trial.

I also get this question for appeals – “Do I need to send the medical records again? I already sent them for the initial review. Why do I need to send the same documents for appeal?” I get it – making copies of medical records is time-consuming. It also costs money. Paper and ink don’t grow on trees. The answer is “Yes.” This may come as a shock, but sometimes documents are misplaced or lost. Auditors are humans, and mistakes occur. Just like, providers are humans, and 100% Medicare regulatory compliance is not required…people make mistakes; those mistakes shouldn’t cause financial ruin.

“Do the results of a RAC audit get sent to your MAC?” The answer is “Yes.” Penalties penalize you in the future. You have to disclose penalties, and the auditors can and will use the information against you. The more penalties you have paid in the past clear demonstrate that you suffer from abhorrent billing practices.

In fact, Medicare post-payment audits are estimated to have risen over 900 percent over the last five years. Medicare provider audits take money from providers and give to the auditors. If you are an auditor, you uncover bad results or you aren’t good at your job.

Politicians see audits as a financial win and a plus for their platform. Reducing fraud, waste, and abuse is a fantastic platform. Everyone gets on board, and votes increase.

Appealing your RAC audits is essential, but you have to understand that you won’t get a fair deal. The Medicare provider appeals process is an uphill battle for providers. And your MACs will be informed.

The first two levels, redeterminations and reconsiderations are, basically, rubber-stamps on the first determination.

The third level is the before an administrative law judge (ALJ), and is the first appeal level that is before an independent tribunal.

Moving to the False Claims Act, which is the ugly step-sister to regulatory non-compliance and overpayments. The government and qui tam relators filed 801 new cases in 2022.  That number is down from the unprecedented heights reached in 2020 (when there were a record 922 new FCA cases), but is consistent with the pace otherwise set over the past decade, reflecting the upward trend in FCA activity by qui tam relators and the government since the 2009 amendments to the statute.

See the chart below for reference:

A New Associate Joins Practus’ Health Care Team: Ryan Hargrave!!

Attorney Ryan Hargrave joined the Practus Health Care Litigation team on June 1, 2022.  Ryan comes from a career of litigation in the State of North Carolina.  He began his career in 2016 as a Prosecutor for the State of North Carolina, Guilford County.  There he gained valuable experience from which he used as he moved to defending clients.  He served as the Lead Trial Attorney at Triad Legal Group before joining Graystar Legal as the Senior Associate Attorney.  

Ryan obtained his undergraduate degree at Presbyterian College in Clinton, SC., where he received a B.A. in Political Science and a minor in Biology.  Ryan has always had a keen interest in health care which has followed him throughout his career.  He is locally known as the “Drug Lawyer” for his focus in the defense of drug-related crimes.  He has a reputable proficiency in Cannabis Law, Criminal Law, and Civil Law across State and Federal Courts.  Ryan has extensive trial experience that he brings to the Health Care Litigation team at Practus.  

Ryan lives in North Carolina with his family, spending his time working out, making financial investments, and beginning his non-profit business, “Colored Money”.  His non-profit will focus on teaching young boys and girls the value of money as a vehicle to achieve wealth, making smart investments, and how to achieve financial freedom.  He is a big Georgia football fan and even has an English Bulldog that could serve as the team’s mascot.

Note from me:

I expect Ryan to dovetail and expand my Medicare and Medicaid regulatory compliance practice because his litigation experience will directly help me in litigation natters, but, also, his criminal litigation experience will also allow us to represent more White Collar Crime clients, including Medicare and Medicaid fraud accusations, False Claims Act, Stark, and Anti-Kickback alleged violations.

We are happy that he is here!

Medicare Investigations for False Claims Act Violations

Whenever you receive correspondence with letterhead from the Department of Justice, Attorney General’s office, you know it’s important and you better take note.

DOJ, AG

A Civil or Criminal Investigative Demand is serious. Getting any communication from the U.S. Department of Justice can be a bit unnerving. That’s particularly true for Medicare and Medicaid providers receiving a Civil Investigative Demand (“CID”) for documents and testimony.  

A CID is a tool used by the Justice Department (“DOJ”) to investigate potential violations of the False Claims Act (“FCA”). See blog. The DOJ can issue a CID whenever the DOJ has “reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation.” The bottom line is that the DOJ uses CIDs to obtain documents and identify potential witnesses so they can bring FCA suits against the recipient or others.

What is the False Claims Act anyway?

It’s a broad statute that punishes many things, one of which is making false statements to the government in connection with a claim for payment from the government. The DOJ often uses CIDs to investigate medical providers who seek payment from Medicare and Medicaid. 

Just because the Investigative Demand is labeled “civil” does not mean that the investigation is only civil; it could take a turn towards criminal. In other words, something sparked the DOJ’s attention, but, perhaps there were no allegations of criminal action, the investigation could start and the investigator could uncover something they consider criminal. An investigation earmarked as civil can turn criminal with the uncovering of one document.

On the other hand, the investigator could review all the documents and conclude that there is not even a civil violation. Very rarely, do the investigators contact you to tell you that the investigation is over and no violation was found. Most of the time, you are put on notice that you are being investigated, then hear nothing from the investigator in perpetuity.

Recently, I had an investigator inform me that the review of. my client was complete, and the file was being closed. But that’s the only time in 22 years that I was informed that nothing noncompliant was found. Usually, time just passes.

If you are found to have violated the FCA, the government can triple the amount of penalties, so the numbers get very high very quickly.

The Justice Department obtained more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2021. This is the second largest annual total in False Claims Act history, and the largest since 2014. Settlement and judgments since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $70 billion.

A much lesser known provision of the FCA is the reverse one. Not to blow everyones’ minds, but there is also a “reverse false claims” provision of the False Claims Act.  The reverse false claims provision permits the government or relators to pursue defendants who are alleged to have hidden or reduced an obligation to pay the government through false statements, or who have violated the 60-day payment rule’s obligation to return “identified overpayments.”   These claims typically have been raised in the context of cost reporting, Medicare Part C, or related to alleged failures to fulfill obligations under the 60-day payment rule.  The government and relators have increasingly relied on the reverse false claims provision to support stand-alone claims or have used it in conjunction with affirmative false claims.  However, because the reverse false claims provision is very lightly used compared to affirmative false claims provisions, there is a dearth of case law defining it or exploring its parameters.   The case law that does exist is primarily from district courts and, as the survey of case law contained herein illustrates, there is little guidance from the Circuit Courts or the U.S. Supreme Court.

Intent or deliberate disregard is required to prove the false claims act – reverse and regular.

Failure to respond to a CID completely could warrant criminal contempt. This is especially important to note, as civil investigate demand sounds much less important than a subpoena. But a CID is, in essence, a subpoena. Immediately, implement a “legal hold” upon receipt of the CID, and don’t forget to avoid producing privileged documents.

After the investigation is complete, if there are violations of the FCA uncovered, you will receive correspondence that states in “all-caps” and bold font:

Rule 408 FOR SETTLEMENT PURPOSES ONLY 

FRE 408 prohibits the use of settlement negotiations as evidence. After reviewing the offer, get with your legal counsel to discuss next steps.

Absent Auditors in Medicare Provider Appeals

(On a personal note, I apologize for how long since it has been my last blog. I was in an accident and spent 3 days in the ICU.)

I’d like to write today about the sheer absurdity about how these RAC, ZPIC, MAC, and other types of audits are being held against health care providers. When an auditor requests documents from a provider and opines that the provider owes a million dollars in alleged overpayments, I would expect that the auditor will show up before an independent tribunal to defend its findings. However, for so many of these Medicare provider appeals, the auditor doesn’t appear to defend its findings.

In my opinion, if the entity claiming that you owe money back to the government does not appear at the hearing, the provider should automatically prevail. A basic legal concept is that the accused should be able to confront its accuser.

I had depositions the last two weeks for a case that involved an opiate treatment program. The two main accusers were Optum and ID Medicaid. When Optum was deposed, they testified that Optum did not conduct the audit of the facility. When ID Medicaid was deposed, it contended that Optum did conduct the audit at issue.

When not one person can vouch for the veracity of an audit, it is ludicrous to force the provider to pay back anything. Auditors cannot hide behind smoke and mirrors. Auditors need to testify to the veracity of their audits.

To poke holes in Medicare audits, you need to know the rules. You wouldn’t play chess without knowing the rules. Various auditor have disparate look-back period, which is the time frame the auditor is allowed to look back and review a claim. For example, RACs may only look back 3 years. Whereas ZPICs have no specific look back period, although I would argue that the older the claim, the less likely it is to be recouped. There is also the federal 48-month limit to look backs absent accusations of fraud.

When appealing the outcome of a MAC or RAC audit, it is necessary for providers to have a specific reason for challenging the auditors’ determinations. Simply being dissatisfied or having generalized complaints about the process is not enough. Some examples of potential grounds for challenging a MAC or RAC determination on appeal include: 

  • Application if inapplicable Medicare billing rules 
  • Misinterpretation of applicable Medicare billing rules 
  • Reliance on unsound auditing methodologies
  • Failure to seek an expert opinion 
  • Ignoring relevant information disclosed by the provider 
  • Exceeding the MAC’s or RAC’s scope of authority 

It is imperative that you arm yourself in defending a Medicare audit, but if the auditor fails to appear at any stage in litigation, then you should call foul and win on a “absent” technicality.

Despite State Statute – Perhaps You Can Appeal Medicaid Prepayment Review!

It’s hard enough to be one of the providers to accept Medicare and Medicaid. The regulatory oversight is burdensome. You are always getting metaphorically yelled at for upcoding or bundling. See blog, thanking providers.

One of the absolute, most-Draconian penalty against a Medicare or Medicaid provider is prepayment review.

Prepayment review is exactly as it sounds. Before you receive payment – for services rendered – an auditor reviews your claims to determine whether you should be reimbursed. Prepayment review is the epitome of being guilty until proven innocent. It flies in the face of American due process. However, no one has legally fought its Constitutionality. Yet many provider-companies have been put out of business by it.

Generally, to get off prepayment review, you have to achieve a 75% or 80% success rate for three consecutive months. It doesn’t sound hard until your auditors – or graders – fail to do their job correctly and fail you erroneously.

Usually, when a provider is placed on prepayment review, I say, “Well, you cannot appeal being placed on prepayment review, but we can get a preliminary injunction to Stay the withhold of reimbursements during the process.” It tends to work.

Most State statutes have language like this:

“(f) The decision to place or maintain a provider on prepayment claims review does not constitute a contested case under Chapter 150B of the General Statutes. A provider may not appeal or otherwise contest a decision of the Department to place a provider on prepayment review.”

However, in a recent case, Halikierra Community Services, LLC v. NCDHHS, the provider disputed being placed on prepayment review and accused NCDHHS of a malicious campaign against it.

Halikierra was the largest, in-home, Medicaid health care provider and it alleged that 2 specific, individuals at DHHS “personally detested” Halikierra because of its size. As an aside, I hear this all the time. I hear that the auditors or government have personal vendettas against certain providers. Good for Halikierra for calling them out!

According to the opinion, these 2 DHHS employees schemed to get Halikierra on prepayment review by accusing it of employing felons, which is not illegal. (Just ask Dave’s Killer Bread). Halikierra sued based on substantive due process and equal protection rights, but not before being forced to terminate its 600 employees and closing its doors because of being placed on prepayment review. It also asserted a claim of conspiracy in restraint of trade under NCG.S. §75-1 against the individual DHHS employees.

The Court held that “[t]he mere fact that an agency action is nonreviewable under the Administrative Procedure Act does not shield it from judicial review.” The upshot? Even if a statute states that you cannot appeal being placed on prepayment review, you can sue for that very determination.

FYI – This case was filed in the Industrial Commission, which has jurisdiction for negligence conducted by the state agencies. Exhaustion of administrative remedies was not necessary because, per the state statute, being placed on prepayment review does not constitute a contested case in administrative court.

Defenses Against Medicare/caid Audits: Arm Yourself!

Auditors are overzealous. I am not telling you anything you don’t know. Auditors cast wide nets to catch a few minnows. Occasionally, they catch a bass. But, for the most part, innocent, health care providers get caught in the overzealous, metaphoric net. What auditors and judges and basically the human population doesn’t understand is that accusing providers of “credible allegations of fraud” and alleged overpayments, when unfounded, has a profound and negative impact. First, the providers are forced to hire legal counsel at an extremely high cost. Their reputations and names get dragged through the mud because providers are guilty until they are proved innocent. Then, once they prove that there is no fraud or noncompliant documents, the wrongly accused providers are left with no recourse.

            The audits generally result in similar reasoning for denials. For instance,

  1. Lacks medical necessity. Defense: The treating physician rule. Deference must be given to the treating physician, not the desk reviewer who has never seen the patient.
  2. Canned notes: Defense: While canned notes are not desirable, it is not against the law. There is no statute, regulation, or rule against canned notes. Canned notes are just not best practices. But, in reality, when you serve a certain population, the notes are going to be similar.
  3. X-rays tend to be denied for the sole reason that there are no identifying notes on the X-ray. Or the printed copy of the X-ray you submit to the auditors is unreadable. Defense/Proactive measure: When you submit an X-ray, include a brief note as to the DOS and consumer.
  4. Signature illegible; therefore, no proof of provider being properly trained and qualified. Defense: This one is easy; you just show proof of trainings, but to head off the issue, print your name under your signature or have it embedded into your EHR.
  5. Documentation nitpicking. The time, date, or other small omissions result in many a denial. Defense: There is no requirement for documents to be perfect. The SSA provides defenses for providers, such as “waiver of liability” and “providers without fault.” The “waiver of liability” defense provides that even if payment for claims is deemed not reasonable and necessary, payment may be rendered if the provider did not know and could not have been reasonably expected to know that payment would not be made.

Whenever a client tells me – let’s concede these claims because he/she believes the auditors to be right, I say, let me review it. With so many defenses, I rarely concede any claims. See blog for more details.

Medicare Appeals: When It Comes To Appealing, Beneficiaries May Be Key!

Today I want to discuss the Medicare appeal process and its faults. Upon undergoing a Medicare audit by Safeguard or whichever auditor contracted by CMS, a provider usually receives a notice of overpayment. The 5-level appeal process is flawed as the first two levels rubber-stamp the findings. After the second level of appeal – the QIC level to the ALJ – recoupment occurs unless the provider set up an extended repayment schedule (ERS) or files for an injunction in federal court based on a taking of a property right; i.e., the right to reimbursement for services rendered.

Everyone deserves to be paid for medically necessary services rendered. The conundrum here is that the circuit courts are split as to the protections a provider deserves.

Whenever a federal injunction is filed, the Defendant auditor files a Motion to Dismiss based on (1) failure to exhaust administrative remedies and that the Medicare Act requires the administrative process; therefore, the federal court has no jurisdiction. The provider will argue that the federal action is ancillary to the substantive issue of whether the overpayment was in error and that its protected property right is being taken without due process.

A new case rendered October 1, 2021, Integrity Social Work Services, LCSW, LLC. V. Azar, 2021 WL 4502620 (E.D.N.Y 2021) straddles the fence on the issues. The EDNY falls within the 2nd circuit, which is undecidedly split. The 5th Circuit is, as well, split. District courts across the country are split on whether Medicare providers have a protected property interest in Medicare payments subject to recoupment. Several courts have found that the Medicare Act does create such a property right, including NC, 4th Circuit, Texas, Florida, Ohio, and Illinois, to name a few.

This provider was accused of an alleged overpayment of about 1 million. It argued that because it will not receive a prompt ALJ hearing that it will be driven out of business. This is a harsh and unacceptable outcome that readily occurs in about half the states. Providers should be aware of which State in which it resides and whether that State upholds a providers’ property interest in reimbursements for services rendered.

The Integrity Social Work Court found that, yes, jurisdiction in federal court was proper because the claims were ancillary to the substantive claims that would be heard by the ALJ. The provider was asking for a temporary stay of the recoupments until an ALJ hearing was concluded. As you read the case, you get false hope on the ruling. In the end, Judge Peggy Kuo found “Nor is the process to contest an overpayment or a recoupment decision arbitrary, outrageous, or even inadequate.”

Respectfully, I disagree. As does half the other courts. See, e.g.Accident, Injury & Rehab., PC v. Azar, No. 4:18-CV-2173 (DCC), 2018 WL 4625791, at *7 (D.S.C. Sept. 27, 2018); Adams EMS, Inc. v. Azar, No. H-18-1443, 2018 WL 3377787, at *4 (S.D. Tex. July 11, 2018); Family Rehab., Inc. v. Azar, No. 3:17-CV-3008-K, 2018 WL 3155911, at *4-5 (N.D. Tex. June 28, 2018). Juxtapose other courts have found that no such property interest exists. See, e.g.Alpha Home Health Solutions, LLC v. Sec’y of United States Dep’t of Health & Human Servs., 340 F. Supp. 3d 1291, 1303 (M.D. Fla. 2018); Sahara Health Care, Inc. v. Azar, 349 F. Supp. 3d 555, 572 (S.D. Tex. 2018); PHHC, LLC v. Azar, No. 1:18-CV-1824, 2018 WL 5754393, at *10 (N.D. Ohio Nov. 2, 2018); In Touch Home Health Agency, Inc. v. Azar, 414 F. Supp. 3d 1177, 1189-90 (N.D. Ill. 2019).

Providers – If you bring a claim to cease the recoupment, also sue on behalf of your Medicare beneficiaries’ property rights to freedom of choice of provider and access to care. Their rights are even stronger than the providers’ rights. I did this in Bader in Indiana and won based on the recipients’ rights.

Managed Care Ruins Medicaid and Terminates Providers at Whim!

If you receive a letter from CMS or your State Department terminating your Medicare or Medicaid contract, would that affect you financially? I ask this rhetorical question because providers’ rights to a Medicare or Medicaid contract or to reimbursements for services rendered is a split in the Circuit Courts. Thankfully, I reside in the 4th Circuit, which has unambiguously held that providers and recipients have a property right in reimbursements for services rendered, a Medicare/caid contract and the right to the freedom of choice of provider. If you live in the 8th Circuit Court of Appeals, I am sorry. You have no rights.

Usually when there is split decision among the Circuit Courts, the Supreme Court weighs in. But, it has not. In fact, it declined to opine. Timing is everything. A 4th Circuit court of Decision giving providers property rights requested the Supreme Court to weigh in and finally end this rift amongst the Circuits. But, sadly, Justice Ginsburg died on September 18, 2020. The Supreme Court declined to review the Fourth Circuit decision on October 13, 2020.  Justice Barrett was confirmed by the Senate on October 26, 2020 and was sworn in on October 27, 2020. So, the certiorari was denied – I assume – due to the vacant seat at the time.

In 40 States, managed care manages Medicaid. The contracts they write are Draconian, saying that either party may terminate at will for no cause but for convenience. Termination at will is all fine and good in the private sector. However, Medicare and Medicaid are highly regulated, and when tax dollars and access to care are at issue, property rights are created.

In NC State Court, against the judgment of the 4th Circuit, a November 5, 2021, unpublished case determined that providers have no property rights to a Medicaid contract and an MCO can terminate at whim. Family Innovations v. Cardinal Innovations Healthcare Solutions, No. COA20-681 (June 1, 2021). Unpublished decisions are supposed to carry no weight. Unpublished decisions are not supposed to be controlling. Citation is disfavored.

Yet, in a strange turn of events, our State administrative courts have rendered, in the last week and in violation of 4th Circuit and administrative case law, that the termination-at-will clause in the MCO contract that a provider is forced to sign stands and is enforceable. These were new Judges and obviously were not well-versed in Medicaid law. Both came from employment law backgrounds, which is completely different than the health care world. But their rash and uneducated decisions bankrupt companies and shut down access to care for medically necessary behavioral health care services.

The upshot? If you have managed care companies in charge of your Medicaid or Medicare contracts, review your contracts now. Is there a termination-at-will clause? Because if there is, you too could lose your contract at any time. Depending on where you reside, you may or may not have property rights in the Medicare Medicaid contract. This is an issue that the Supreme Court must decide. Too many providers are getting erroneously and discriminatorily terminated for no reason and given no due process.

We must bring litigation to thwart the Courts that uphold termination-at-will clauses. Especially, in the era of COVID, we need our health care providers. We certainly do not need the MCOs, which kill access to care.

New Report Points to More Audits of Hospitals

Hospitals across the nation are seeing lower profits, and it’s all because of a sudden, tsunami of Medicare and Medicaid provider audits. Whether it be RAC, MAC, UPIC, or Program Integrity, hospital audits are rampant. Billing errors, especially ‘supposed bundling,’ are causing a high rate of insurance claims denials, hurting the finances of hospitals and providers.

A recent report from American Hospital Association (AHA) found “Under an optimistic scenario, hospitals would lose $53 billion in revenue this year. Under a more pessimistic scenario, hospitals would lose $122 billion thanks to a $64 billion decline in outpatient revenue”*[1]

The “Health Care Auditing and Revenue Integrity—2021 Benchmarking and Trends Report” is an insider’s look at billing and claims issues but reveals insights into health care costs trends and why administrative issues continue to play an outsize role in the nation’s high costs in this area. The data used covers 900+ facilities, 50,000 providers, 1500 coders, and 700 auditors – what could go wrong?

According to the report,

  • 40% of COVID-19-related charges were denied and 40% of professional outpatient audits for COVID-19 and 20% of hospital inpatient audits failed.
  • Undercoding poses a significant revenue risk, with audits indicating the average value of underpayment is $3,200 for a hospital claim and $64 for a professional claim.
  • Overcoding remains problematic, with Medicare Advantage plans and payers under scrutiny for expensive inpatient medical necessity claims, drug charges, and clinical documentation to justify the final reimbursement.
  • Missing modifiers resulted in an average denied amount of $900 for hospital outpatient claims, $690 for inpatient claims, and $170 for professional claims.
  • 33% of charges submitted with hierarchical condition category (HCC) codes were initially denied by payers, highlighting increased scrutiny of complex inpatient stays and higher financial risk exposure to hospitals.

The top fields being audited were diagnoses, present on admission indicator, diagnosis position, CPT/HCPCS coding, units billed, and date of service. The average outcome from the audits was 70.5% satisfactory. So, as a whole, they got a ‘C’.

While this report did not in it of itself lead to any alleged overpayments and recoupments, guess who else is reading this audit and salivating like Pavlov’s dogs? The RACs, MACs, UPICs, and all other alphabet soup auditors. The 900 facilities and 50,000 health care providers need to be prepared for audits with consequences. Get those legal defenses ready!!!!


[1] * https://www.fiercehealthcare.com/hospitals/kaufman-hall-hospitals-close-between-53-and-122b-year-due-to-pandemic