Navigating Medicare Claims Audits: A Strategic Guide for Providers

For healthcare providers participating in the Medicare program, facing a claims audit can be both challenging and time-consuming. Denials are common during these audits, and when they occur, the appeals process can stretch over months or even years. Each step requires careful strategy and timely action.

Typically, a Medicare audit is initiated when a Medicare contractor requests medical records from a provider. At this early stage, it’s crucial to understand the context of the request. Identifying the type of contractor involved, whether it’s a Medicare Administrative Contractor (MAC), Unified Program Integrity Contractor (UPIC), Recovery Audit Contractor (RAC), or Supplemental Medical Review Contractor (SMRC), can provide important insight into what kind of review is being conducted. The nature of the review itself also matters: is it a pre-payment or post-payment audit? Is it part of a Targeted Probe and Educate (TPE) program, a Comprehensive Error Rate Testing (CERT) audit, or a Potential Payment Error Opportunity (PPEO) initiative? Is there a likelihood that the audit includes statistical extrapolation?

The provider’s own history and operational context can also affect the review. For instance, has the provider faced similar audits recently? Was there a recent ownership transfer? Are any necessary records held by another entity? These details may guide the provider’s next steps. Depending on the scope and risk level of the audit, providers might take proactive measures to support their claims. This could include submitting additional documentation, hiring a clinical reviewer to evaluate the claims, engaging directly with the contractor, or preparing a detailed legal response. In other situations, simply submitting the requested records and awaiting a decision may be the most prudent course.

If the audit results in claim denials, providers generally have access to Medicare’s administrative appeals system, a five-tiered process that offers multiple chances for review, but also comes with strict rules and timelines. The first level, Redetermination, is handled by the same contractor that made the initial decision. If the claim is not overturned, the next step is Reconsideration, which is reviewed by a different CMS contractor. The third level involves a hearing before an Administrative Law Judge (ALJ), where the provider may present testimony and evidence. The fourth level is an appeal to the Medicare Appeals Council within the Department of Health and Human Services. If the claim is still not resolved favorably, the final level is judicial review in federal court. However, this last option is limited in scope and rarely used.

Each stage of the appeals process has its own unique rules governing what evidence may be submitted, whether new information is allowed, the applicable deadlines, and the standard of review. If CMS is actively recouping funds from a provider, it is sometimes possible to halt collection efforts early in the appeal process. However, doing so typically accelerates timelines and can be difficult to implement effectively.

At every point along the way, providers must make critical decisions: how best to present their case, what legal or clinical arguments to raise, whether to involve statistical or clinical experts, and how the audit might impact other business or compliance risks. Working with an attorney experienced in Medicare audits and appeals can significantly improve a provider’s ability to navigate this process. Legal counsel can help assess the audit’s scope, develop a clear response strategy, and ensure that appeals are prepared with the precision needed to increase the likelihood of a favorable outcome.

For over 40 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, including Medicare audits, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to Medicare audits or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.