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Why It’s Important to Appeal that Medicare Audit

There are many types of Medicare audits, conducted by many types of Medicare contractors: Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), Unified Program Integrity Contractors (UPICs), the Supplemental Medical Review Contractor (SMRC), and others. Sometimes, where a Medicare audit results in a relatively small overpayment demand, a healthcare provider may consider simply paying it and moving on. However, there are several reasons why Medicare audits should be appealed, regardless of the dollar amount at issue, that providers should consider.

First and foremost, the audit results and overpayment determinations issued by Medicare contractors are often erroneous. This may be because the contractor either misunderstands Medicare requirements, misapplies them to a provider’s records, or misapprehends the medical documentation in the first place.

Second, a provider who does not appeal a Medicare audit result may unwittingly signal to the contractors a tacit admission that the audit findings were correct, and that the provider is non-compliant in some way. This may expose the provider to additional, larger audits on the same issues. Further, some contractors are paid a percentage of the overpayments they demand from providers and may have an incentive to conduct further audits. On the other hand, appealing an audit signals that the provider believes it is following Medicare requirements and are entitled to payment.

Third, failure to appeal an overpayment determination may results in liability under the False Claims Act (FCA). Originally introduced to address unscrupulous government contractors during the Civil War, the FCA has become a popular tool for prosecuting alleged healthcare fraud. In general, the FCA imposes civil liability for knowingly submitting false claims to the government. Importantly, the FCA carries severe consequences, including treble damages and a per-claim penalty that increases each year with inflation ($11,803 per claim for 2021). The FCA also allows individuals to initiate the prosecution under a qui tam action, in which the government may decide to intervene and wherein the individual is entitled to a share of the government’s recovery.

When a Medicare provider learns that it has received an overpayment, such as through an audit, this may trigger a duty on the part of the provider to review all of its Medicare billings for the prior 6 years to see if it has received any other, similar overpayments, and to report and return any other payments within 60 days of discovering such overpayment. A provider who does not conduct this 6-year lookback may be subject to liability under the FCA. This theory of liability is sometimes referred to as the 60-day rule, the reverse False Claims Act, or an implied false certification. Therefore, a provider who does not appeal an audit or overpayment determination may inadvertently trigger this duty. However, where a provider disputes that it received an overpayment through an appeal, any duty to look back under the FCA is generally not triggered until the appeal process is complete.

Finally, a provider’s Medicare billing privileges may be revoked for a pattern or practice of submitting claims that fail to meet Medicare requirements. CMS has opined that as few as three non-compliant claims can constitute such a pattern. However, like liability under the reverse FCA, determinations that claims do not meet Medicare requirements generally do not become final until after the appeal process is complete.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding Medicare audits and appeals. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney  at 248-544-0888 or

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