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Medicare Provider Appeals: Premature Recoupment Is Not OK!

A ZPIC audited a client of mine a few years ago and found an alleged overpayment of over $7 million. Prior to them hiring my team, they obtained a preliminary injunction in federal court – like I always preach to do – remember, that between the levels 2 and 3 of a Medicare provider appeal, CMS can recoup the alleged overpayment. This is sheer balderdash; the government should not be able to recoup funds that the provider, most likely, doesn’t owe. But this is the law. I guess we need to petition Congress to change this tomfoolery.

Going back to the case, an injunction stops the premature recoupments, but it does nothing regarding the actual alleged overpayments. In fact, the very reason that you can go to federal court based on an administrative action is because the injunction is ancillary to the merits of the contested case. Otherwise, you would have to exhaust your administrative remedies.

Here, we asserted, the premature recoupments (1) violated its rights to procedural due process, (2) infringed its substantive due-process rights, (3) established an “ultra vires” cause of action, and (4) entitled it to a “preservation of rights” injunction under the Administrative Procedure Act, 5 U.S.C. §§ 704–05. We won the battle, but not the war. To date, we have no date for an administrative law judge (“ALJ”) – or level 3 – hearing on the merits.

For those of you who have participated in a third-level, Medicare provider appeal will know that, many times, no one shows for the other side. The other side being the entity claiming that you owe $7million. For such an outlandish claim of $7 million, would you not think that the side protesting that you owe $7 million would appear and try to prove it? At my most recent ALJ hearing, no one appeared for the government. Literally, my client – a facility in NJ that serves the MS population – me and the ALJ were the only participants. Are the auditors so falsely confident that they believe their audits speaks for itself?

In this particular case, the questionable issue was whether the MS provider’s consumers met the qualifications for the skilled rehabilitation due to no exacerbated physical issues. However, we all know from the Jimmo settlement, that having exacerbated issues or improvement is not a requirement to requiring skilled rehab versus exercising with your spouse. The ALJ actually said – “I cannot believe this issue has gotten this far.” I agree.

Defenses Against Medicare Audits: Arm Yourself!

To defend against RAC, MAC, or TPE audits, we always fight clinically claim by claim. We show that the clinical records do support the service billed despite what an auditor says. But there are other more broad defenses that apply to providers found in the Social Security Act (SSA), even if the clinical arguments are weak.

When faced with an alleged overpayment, look to the SSA. Within the SSA, we have three, strong, provider defenses:

  1. Waiver of liability
  2. Providers without fault
  3. Treating physician rule

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 payment would not be made. SSA, § 1879(a); 42 U.S.C. §1395pp; see also Medicare Claims Processing Manual (CMS-Pub. 100-04), Chapter 30, §20. If a provider could not have been reasonably expected to know payment would not be made as the services were medically necessary and covered by Medicare.

Section 1870 of the SSA states that payment will be made to a provider, if the provider was without “fault” with regard for the billing for and accepting payment for disputed services. As a general rule, a provider would be considered without fault if he/she exercised reasonable care in billing for and accepting payment; i.e., the provider complied with all pertinent regulations, made full disclosure of all material facts, and on the basis of the information available, had a reasonable basis for assuming the payment was correct. Here, there is no allegation of fraud; medically necessary services were rendered. The doctors performed a medically necessary service and should be paid for the service despite nominal documentation nit-picking. The SSA does not require Medicare documents to be perfect; there is no requirement of error-free.

            It is well-settled law that the treating physician’s medical judgment as to the medical necessity of the services provided should prevail absent substantial contradictory evidence. Meaning, the doctor who actually physically or virtually treat the consumer has a better vantage point than any desk review audit. Therefore, substantial deference should be given to the treating physician. This is especially important in proving medical necessity.

Lastly, even though this is not in the SSA, question the expertise of your auditors. If you are an MD and provide bariatric services, the auditor should be similarly qualified. Likewise, a dental hygienist should not audit medical necessity for a dental practice. Even if, clinically, your records are not stellar, you still have the broad legal defenses found in the SSA.

Meaningful Use Increases Audits

Today I want to discuss EHR – electronic health records and RAC audits. We all remember the government pushing providers into purchasing EHR. It’s known as the meaningful use (MU) program, which is now known as the Promoting Interoperability Programs. CMS initially provided 10 incentives to accelerate the adoption of EHRs to meet program requirements. Now, physicians who fail to participate in MU will receive a penalty in the form of reduced Medicare reimbursements, at a minimum. Multiple audits at a maximum. Physicians must use certified electronic health records technology (CEHRT) and demonstrate meaningful use through an attestation process at the end of each MU reporting period to avoid the penalty.

Audits for MU can equal tens of thousands of dollars. The monetary amount is not as high as other RAC audits for medical records. One of my clients is a pediatric facility in Georgia. His facility received an alleged overpayment of $34,000 for two of his physicians not meeting the meaningful use criteria 8 and 9. We were going to fight it, but the two physicians who were dinged had quit and would not testify positively on behalf of my client. Plus, attorneys’ fees would surpass the penalty. Criteria 8 and 9 constitute proving your consumer have email and actually open their emails to check their health care internet folders, which are ridiculous criteria.

On September 2, 2020, CMS published the Fiscal Year (FY) 2021 Medicare Hospital Inpatient Prospective Payment System (IPPS) for Acute Care Hospitals and Long-Term Care Hospital (LTCH) Prospective Payment System (PPS) Final Rule which included program requirements for calendar year (CY) 2021. In this final rule, CMS continued its advancement of EHR utilization, focusing on burden reduction, and improving interoperability, and patient access to health information.

Meaningful use’s not anticipated consequence is ramping up RAC audits. Many RAC auditors are using EHR to claim “copy and paste.” Obviously, the point of EHR is to morph all service notes into a certain standard-looking note. But standard-looking notes scream copy and paste to RAC auditors. Maybe RAC auditors haven’t digested meaningful use yet.

On August 2, 2021 CMS released the Fiscal Year (FY) 2022 Medicare Hospital Inpatient Prospective Payment System for Acute Care Hospitals and Long-term Care Hospital Prospective Payment System Final Rule. For more information on the proposed changes, visit the Federal Register.

COVID affected EHR audits too.

The deadline for eligible hospitals and critical access to submit a hardship exception application is September 1, 2021.

A Decline in Home Health and Long Term Care Providers

Hello and Happy birthday Medicare and Medicaid. You are now 56 years old. Medicaid was never supposed to be long-lasting or a primary insurance that it has become. Over 81 million citizens rely on Medicaid. President Lyndon Johnson signed both landmark social programs into law on July 30, 1965.

I have two newsflashes to discuss today. (1) Nursing homes will be targeted by audits because few surveys occurred during COVID, according to a newly published OIG Report; and (2) long-term care facilities, in general, are decreasing in number while the need escalates.

First, the OIG, Addendum to OEI-01-20-00430, published July 2021, “States’ Backlogs of Standard Surveys of Nursing Homes Grew Substantially During the COVID-19 Pandemic,” which is an audit of a mass number of nursing homes across the country.

Nationally, 71 percent of nursing homes (10,913 of 15,295) had gone at least 16 months without a standard survey as of May 31, 2021. By State, the backlogs for standard surveys ranged from 22 percent to 96 percent of nursing homes. Expect a surge of standard audits.

Insert chart.

Second, enrollment in fee-for-service (FFS) Medicare and Medicaid has skyrocketed in recent years, especially due to COVID and longer life-expectancies. This equates to more consumers. It means a need for more providers willing to accept the low reimbursement rates offered by Medicare and Medicaid. More providers plus more consumers equals more RAC and MAC audits. Medicare remains the nation’s largest single purchaser of health care, with home health care services accounting for a decent chunk of spending. Of the $3.2 trillion spent on personal health care in 2019, Medicare accounted for 23% — or $743 billion — of that total.

There were 11,456 home health agencies operating in 2020. That total is down slightly compared to the 11,571 agencies operating in 2019. The number of home health agencies has actually been declining since 2013. Before that, the industry had experienced several years of substantial growth in terms of new agencies opening. The decline in agencies has been most concentrated in Texas and Florida. The number of skilled nursing facilities (SNFs) is also decreasing, though not quite as fast.

My humble opinion? The government needs to be more aware of how aggressive Medicare and Medicaid auditors are. How overzealous. Congress needs to pass legislation to protect the providers who accept Medicare and Medicaid. Like the military, we should be saying, “thank you for your service.”

OIG Opens Fire on Telehealth Claims during COVID

They’re here….

Steven Spielberg actually directed Poltergeist, crew member confirms | The  Independent | The Independent

The audits of telehealth during COVID. OIG is conducting, at least, seven (7) nationwide audits of providers specific to telemedicine. These audits will review remote patient monitoring, virtual check-ins, and e-visits. In 2018, OIG issued a report regarding a 31% error rate of claims for telehealth – and that report was prior to the explosion of telemedicine in 2020 due to COVID. All providers who have billed telehealth during the public health emergency (“PHE”) should be prepared to undergo audits of those claims.

The following audit projects are as follows:

  • Audits of behavioral health care telehealth in Medicaid managed care;
  • Audits of Medicare Part B telehealth services during PHE;
  • Audits of home health services provided as telehealth during the PHE;
  • Audits of home health agencies’ challenges and strategies in responding to the PHE;
  • Medicare telehealth services during PHE: Program Integrity Risks;
  • Audits of telehealth services in Medicare Parts B (non-institutional services) and C (managed care) during the COVID-19 pandemic;
  • Medicaid: Telehealth expansion during PHE.

Recently added to the “chopping block” of audits via OIG include Medicare payments for clinical diagnostic laboratory tests in 2020. OIG will also audit for accuracy of place-of-service codes on claims for Medicare Part B physician services when beneficiaries are inpatients under Part A. As it always seems is the case, home health and behavioral health care are big, red targets for all audits. Over the pandemic, telehealth became the “new norm.” Audits on telehealth will be forthcoming. Specifically in behavioral health, OIG announced that it will audit Medicaid applied behavior analysis for children diagnosed with autism.

On another note, I recently had a client undergo a meaningful use audit. Everyone knows the government provides incentives for using electronic records. In order to qualify for a meaningful use incentive you must meet 9 criteria. If you fail one criterion, you owe the money back. One of the biggest issue physicians have faced in an audit is demonstrating the “yes/no” requirements that call for attestation proving the security risk analysis was successfully met. In this particular case, opposing counsel was a GA state AG. The attorney told me that he had zero authority to negotiate the penalty amount. It was the first time another lawyer told me that the penalty was basically a “strict liability” issue, and since the funds were federal, the State of GA had no authority to reduce or remove the penalty. But there is an appeal process. It made no sense. In this case, the doctor didn’t want to pursue litigation. So, reluctantly, we paid. I am wondering if any of my readers have encountered this issue of no negotiations for meaningful use penalties.

“Reverse RAC Audits”: Increase Revenue by Protecting Your Consumers

Today I want to talk about two ways to increase revenue merely by ensuring that your patients’ rights are met. We talk about providers being audited for their claims being regulatory compliant, but how about self-audits to increase your revenue? I like these kind of audits! I am calling these audits “Reverse RAC audits”. Let’s bring money in instead of reimbursements recouped.

You can protect yourself as a provider and increase revenue by remembering and litigating on behalf of your consumers’ rights. Plus, your patients will be eternally grateful for your advocacy. It is a win/win. The following are two, distinct ways to increase revenue and protect your consumers’ rights:

  1. Ensuring freedom of choice of provider; and
  2. Appealing denials on behalf of your consumers.

Freedom of choice of provider.

In a federal case in Indiana, we won an injunction based on the patients’ rights to access to care.

42 CFR § 431.51 – Free choice of providers states that “(b) State plan requirements. A State plan must provide as follows…:

(1)  A beneficiary may obtain Medicaid services from any institution, agency, pharmacy, person, or organization that is –

(i) Qualified to furnish the services; and

(ii) Willing to furnish them to that particular beneficiary.

In Bader v. Wernert, MD, we successfully obtained an injunction enjoining the State of Indiana from terminating a health care facility. We sued on behalf of a geneticist – Dr. Bader – whose facility’s contract was terminated from the Medicaid program for cause. We sued Dr. Wernert in his official capacity as Secretary of the Indiana Family and Social Services Administration. Through litigation, we saved the facility’s Medicaid contract from being terminated based on the rights of the consumers. The consumers’ rights can come to the aid of the provider.

Keep in mind that some States’ Waivers for Medicaid include exceptions and limitations to the qualified and willing provider standard. There are also limits to waiving the freedom of choice of provider, as well.

Appealing consumers’ denials.

This is kind of a reverse RAC Audit. This is an easy way to increase revenue.

Under 42 CFR § 405.910 – Appointed representatives, a provider of services may appeal on behalf of the consumers. If you appeal on behalf of your consumers, the obvious benefit is that you could get reimbursed for the services rendered that were denied. You cannot charge a fee for the service; however, so please keep this in mind.

One of my clients currently has hired my team appealing all denials that are still viable under the statute of limitations. There are literally hundreds of denials.

Over the past few years, they had hundreds of consumers’ coverage get denied for one reason or the other. Allegedly not medically necessary or provider’s trainings weren’t conveyed to the auditors. In other words, most of the denials are egregiously wrong. Others are closer to call. Regardless these funds were all a huge lump of accounts’ receivables that was weighing down the accounting books.

Now, with the help of my team, little by little, claim by claim, we are chipping away at that accounts’ receivables. The receivables are decreasing just by appealing the consumers’ denials.

RAC Audit Update: Renewed Focus on the Two-Midnight Rule

In RAC news, on June 1, 2021, Cotiviti acquired HMS RAC region 4. Don’t be surprised if you see Cotiviti’s logo on RAC audits where you would have seen HMS. This change will have no impact in the day-to-day contract administration and audit timelines under CMS’ guidance. You will continue to follow the guidance in the alleged, improper payment notification letter for submission of medical documentation and discussion period request. In March 2021, CMS awarded Performant an 8.5 year contract to serve as the Region 1 RAC. 

There really cannot be any deviations regardless the name of the RAC Auditor because this area is so regulated. Providers always have appeal rights regardless Medicare/caid RAC audits. Or any other type of audit. Medicaid RAC provider appeals are found in 42 CFR 455.512. Whereas Medicare provider redeterminations and the 5 levels of appeal are found in 42 CFR Subpart I. The reason that RAC audits are spoken about so often is that the Code of Federal Regulations applies different rules for RAC audits versus MAC, TPE, UPIC, or other audits. The biggest difference is that RAC auditors are limited to a 3 year look back period according to 42 CFR 455.508. Other auditors do not have that same limitation and can look back for longer periods of time. Of course, whenever “credible allegations of fraud” is involved, the lookback period can be for 10 years.

The federal regulations also allow States to request exceptions from the Medicaid RAC program. CMS mandates every State to participate in the RAC program. But there is a federal reg §455.516 that allows exceptions. To my knowledge, no State has requested exceptions out of the RAC Audit program.

RAC auditors have announced a renewed focus on the two-midnight rule for hospitals. Again. This may seem like a rerun and it is. You recall around 2012, RACs began noticing high rates of error with respect to patient status in certain short-stay Medicare claims submitted for inpatient hospital services. CMS and the RACs indicated the inpatient care setting was medically unnecessary, and the claims should have been billed as outpatient instead. Remember, for stays under 2 midnights, inpatient status may be used in rare and unusual exceptions and may be payable under Medicare Part A on a case-by-case basis.

Goodbye, 2020: New Resolutions for Health Care Providers

By Ashley Thomson. (Knicole Emanuel‘s law partner. See below for a bio).

As 2020 ends and we look forward to starting a new chapter in 2021, we offer you this little nugget of advice—a resolution that sounds deceptively easy—read your mail.  Yes, friends you heard it here first. . . the best thing you can do to protect yourself, your business, your patients, and your loved ones is to read the dang mail.  Email, text messages, real mail, carrier pigeon or messages in a bottle.  READ THEM!  

2020 brought us a lot of curve balls and unexpected events but some of those events could have been avoided had mail been opened and read.

CMS and its third party contractors hold a lot of power in the healthcare world and can cause your practice to come crashing down by hitting send or putting a forever stamp on a letter.  A regular practice of reading your mail can avoid that CMS avalanche of doom. [1]

You may be reading this and thinking, you’ve got to be crazy I always read my mail.  Or perhaps you are thinking, this is the easiest new year’s resolution yet—all I have to do is read the mail.

Don’t be too hasty with your self-confidence. This is a hard practice to establish and an even harder one to maintain.

First, you have to actually read the mail.  All of the mail.  Even the mail you think will contain bad news.  Constitutional due process requires only notice NOT successful notice. If successful notice were required, “then people could evade knowledge, and avoid responsibility for their conduct, by burning notices on receipt—or just leaving them unopened.” See Ho v. Donovan, 569 F.3d 677, 680 (7th Cir. 2009). “Conscious avoidance of information is a form of knowledge.” Id.

Second, you need a policy or procedure regarding the opening and reading of mail.  One client we worked with did not have a system for logging mail once it was received in the office.  Mail was lost.  Deadlines were missed.  Payments from the largest payer were suspended. The cost – too much to print.

It’s like that old Mastercard ad, yes, I’m talking to those of you out there who were around in the late 90s.[2] 

The cost of establishing a policy for logging in mail. . . zero.   

The cost of reading mail. . . zero.

The cost of neglecting your mail, missing deadlines, and losing your practice. . . priceless.

So, as this year ends and you contemplate ways to improve your practice in 2021, please, please, please take our advice and READ YOUR MAIL.


[1]It’s not just CMS that has holds the mailbox power.  Just ask the City of North Charleston, SC.  A motorist’s emailed complaint to the city over injuries sustained in an accident was not forwarded to the insurance carrier resulting in a multi-million dollar default judgement against the city.  See Campbell v. City of North Charleston, 431 S.C. 454,459 (SC Ct. App. 2020) (holding that “the failure to forward an email did not amount to good cause shown for failure to timely file an answer).   

[2] For those of you who have no idea what we are talking about see https://www.aaaa.org/timeline-event/mastercard-mccann-erickson-campaign-never-got-old-priceless/  

Click for past blogs with other helpful tips to avoid Medicare and Medicaid recoupments. medicaidlaw-nc.wordpress.com – Tip #2. 4. 6.

Ashley Thomson brings 20 years of extensive in-house, hospital counsel and law firm experience to our team.  Well-versed in a variety of disciplines, her emphasis is in health care, insurance and compliance, specifically medical malpractice, employment, healthcare and privacy law compliance and defense, including matters involving HIPAA. Ashley has also been heavily involved in risk management, patient safety, corporate governance, contract and policy drafting, negotiations and healthcare management. Prior to joining Practus, Ashley served as Associate General Counsel for Truman Medical Center (TMC) where she oversaw litigation, managed all aspects of their corporate compliance matters, including governmental audits and investigations, cybersecurity issues, HIPAA enforcement, 340B compliance and provider-based billing.  As their Staff Litigation Counsel, she defended and litigated medical malpractice and general liability matters on behalf of the hospital, its employees, physician group and residents. Prior to joining TMC, Ashley was an Associate Attorney for Husch Blackwell.

Ashley is an outdoors woman at heart. When she’s not working, she’s hiking, walking, working in her yard, or playing with her kids. She’s also an avid reader and a football fan especially when she’s watching her favorite team, the Kansas City Chiefs! 

RAC Audits Expected During the COVID Pandemic

Even though the public health emergency (“PHE”) for the COVID pandemic is scheduled to expire July 24, 2020, all evidence indicates that the PHE will be renewed. I cannot imagine a scenario in which the PHE is not extended, especially with the sudden uptick of COVID.

Center for Medicare and Medicaid Services (CMS) has given guidance that the voluminous number of exceptions that CMS has granted during this period of the PHE may be extended to Dec. 1, 2020. However, there is no indication of the RAC, and MAC audits being suspended until December 2020. In fact, we expect the audits to begin again any day. There will be confusion when audits resume and COVID exceptions are revoked on a rolling basis.

Remember the emergency-room physician whom I spoke about on the June 29 on Monitor Mondays? The physician whose Medicare enrollment was revoked due to a computer error or an error on the part of CMS. What normally would have been an easy fix, because of COVID, became more difficult. Because of COVID, he was unable to work for three months. He is back up and running now. The point is that COVID really messed up so many aspects of our lives.

The extension of PHE, technically, has no bearing on RAC and MAC audits coming back. Word on the street is that RAC and MAC audits are returning August 2020.

This month, July 2020, CMS released, “Coronavirus Disease 2019 (COVID-19) Provider Burden Relief Frequently Asked Questions (FAQs).” (herein afterward referred as “CMS July 2020 FAQs”).

The question was posed to CMS: “Is CMS suspending most Medicare-Fee-for-Service (FFS) medical review during the PHE for the COVID-19 pandemic? The answer is, according to CMS, “As states reopen, and given the importance of medical review activities to CMS’ program integrity efforts, CMS expects to discontinue exercising enforcement discretion beginning on Aug. 3, 2020, regardless of the status of the public health emergency. If selected for review, providers should discuss with their contractor any COVID-19-related hardships they are experiencing that could affect audit response timeliness. CMS notes that all reviews will be conducted in accordance with statutory and regulatory provisions, as well as related billing and coding requirements. Waivers and flexibilities in place at the time of the dates of service of any claims potentially selected for review will also be applied.” See CMS July 2020 FAQs.

Monday, July 13, 2020, we began our fourth “COVID-virtual trial.” The Judges with whom I have had interaction have taken a hard stance to not “force” someone to appear in person. It appears, at least to me, that virtual trials are the wave of the future. This is the guidance that conveys to me that RAC and MAC audits will begin again in August. Virtual audits may even be the best thing that ever happened to RAC and MAC audits. Maybe now the auditors will actually read the documents that the provider gives them.

Another specific issue addressed in the CMS’ July 2020 FAQs is that given the nature of the pandemic and the inability to collect signatures during this time, CMS will not be enforcing the signature requirement. Typically, Part B drugs and certain Durable Medical Equipment (DME) covered by Medicare require proof of delivery and/or a beneficiary’s signature. Suppliers should document in the medical record the appropriate date of delivery and that a signature was not able to be obtained because of COVID-19. This exception may or may not extend until Dec. 31, 2020.

The upshot is that no one really knows how the next few months will unfold in the healthcare industry. Some hospitals and healthcare systems are going under due to COVID. Big and small hospital systems are in financial despair. A RAC or MAC audit hitting in the wake of the COVID pandemic could cripple most providers. I will reiterate my recommendation: In the re-arranged words of Roosevelt, “Speak loudly, and carry a big stick.”

Programming Note: Knicole Emanuel is a permanent panelist on Monitor Mondays. Listen to her live reporting every Monday at 10 a.m. EST.

New Revisions to the Additional Documentation Request (ADR) Process

The ADR rule went into effect Jan. 1, 2019. Original blog post published March 6, 2019, on RACMonitor.

The Centers for Medicare & Medicaid Services (CMS) has updated its criteria for additional document requests (ADRs). If your ADR “cycle” is less than 1, CMS will round it up to 1.

What is an ADR cycle?

When a claim is selected for medical review, an ADR is generated requesting medical documentation be submitted to ensure payment is appropriate. Documentation must be received by CGS (A Celerian Group Company)  within 45 calendar days for review and payment determination. Any selected and submitted claim can create an ADR. In other words, a provider is asked to prove that the service was rendered and that the billing was compliant.

It is imperative to understand that you, as the provider, check the Fiscal Intermediary Standard System (FISS) status/location S B6001. Providers are encouraged to use FISS Option 12 (Claim Inquiry) to check for ADRs at least once per week. You will not receive any other form of notification for an ADR.

To make matters even more confusing, there are two different types of ADRs: medical review (reason code 39700) and non-medical review (reason code 39701).

An ADR may be sent by CGS, Zone Program Integrity Contractors (ZPICs), Recovery Audit Contractors (RACs), Supplemental Medical Review Contractors (SMRCs), the Comprehensive Error Rate Testing (CERT) contractor, etc. When a claim is selected for review or when additional documentation is needed to complete the claim, an ADR letter is generated requesting that documentation and/or medical records be submitted.

The ADR process is essentially a type of prepayment review.

A baseline annual ADR limit is established for each provider based on the number of Medicare claims paid in the previous 12-month period that are associated with the provider’s six-digit CMS Certification Number (CCN) and the provider’s National Provider Identifier (NPI) number. Using the baseline annual ADR limit, an ADR cycle limit is also established.

After three 45-day ADR cycles, CMS will calculate (or recalculate) a provider’s denial rate, which will then be used to identify a provider’s corresponding “adjusted” ADR limit. Auditors may choose to either conduct reviews of a provider based on their adjusted ADR limit (with a shorter lookback period) or their baseline annual ADR limit (with a longer lookback period).

The baseline, annual ADR limit is one-half of one percent of the provider’s total number of paid Medicare service types for which the provider had reimbursed Medicare claims.

Effective Jan. 1, 2019, providers whose ADR cycle limit is less than 1, even though their annual ADR limit is greater than 1, will have their ADR cycle limit round up to 1 additional documentation request per 45 days, until their annual ADR limit has been reached.

For example, say Provider ABC billed and was paid for 400 Medicare claims in a previous 12-month period. The provider’s baseline annual ADR limit would be 400 multiplied by 0.005, which is two. The ADR cycle limit would be 2/8, which is less than one. Therefore, Provider ABC’s ADR cycle limit will be set at one additional documentation request per 45 days, until their annual ADR limit, which in this example is two, has been reached. In other words, Provider ABC can receive one additional documentation request for two of the eight ADR cycles, per year.

ADR letters are sent on a 45-day cycle. The baseline annual ADR limit is divided by eight to establish the ADR cycle limit, which is the maximum number of claims that can be included in a single 45-day period. Although auditors may go more than 45 days between record requests, in no case shall they make requests more frequently than every 45 days.

And that is the update on ADRs. Remember, the rule changed Jan. 1, 2019.