Is Your Practice Audit Ready?
Jennifer Huneycutt, CPA, CMPE
Originally written for and published in RPA News – January 2013 Edition
Used with permission

With the government’s focus on reducing improper payments and eliminating waste in federal programs, many providers are experiencing a significant increase in audit activity. This focus, coupled with the fact that an overwhelming percentage of nephrology services are provided to beneficiaries of government based payors, puts our practices at great risk of being selected for audit. To many, the simple mention of a Medicare, RAC or government audit invokes a sense of fear and great alarm. This fear often causes providers to under code the services they have legitimately rendered and documented, resulting in lost revenue and ultimate devaluation of the work that they do. Getting your practice audit ready is a great way to combat this anxiety and instill confidence in those billing for services. Below are a few tips that will guide you along the path to preparedness.

Stay informed of audit target areas. There are many resources available to keep you up to date on specific review areas of focus relevant to your practice. Recovery Audit Contractors (RACs) are required to publish the CMS approved audit issues they are pursuing. This information is easily accessible on each contractor’s website. RACs also must report their findings to CMS. These results are available on the CMS website. Looking at these will provide insight into what areas are getting their greatest attention. Another resource to identify government audit focus is the annual Office of Inspector General (OIG) Work Plan. This document is published by October 1st for each fiscal year (October – September). The Work Plan outlines the department’s current focus areas and states the primary objectives of each project. Audit information can be also be found on the CMS website and more specifically, your particular Medicare Administrative Contractor’s (MAC) website.

Conduct internal audits. Now that you know what is being targeted, create and follow through on a plan to assess your practice’s risk level in those areas. Conduct routine internal audits to determine areas needing improvement and provide feedback to your providers. Use this information to develop a performance improvement plan and follow through. Even if you have the knowledge and experience to conduct this internally, you may not have the time to devote to a perpetual project such as this. Don’t save this step for when you might have time. There will never be a good or convenient time to get this done. Get outside help if necessary.

Monitor practice performance data consistently. Stay on top of your denials. What are the most common denials you are receiving? Are there things that can be done proactively to reduce or eliminate these denials? Consider benchmarking your provider E&M coding patterns against the Medicare statistics for nephrology.  How do you compare? Are there differences that put you at risk?

Conduct routine provider and staff education. Ultimately it is the provider who is responsible for the codes billed. Using practice performance data and the information from internal audits you can develop or acquire a training program to meet the needs of your practice. Make certain that this education is provided at regular intervals with specific feedback given to each provider on his/her performance against predetermined measures. Keep your practice informed of the audit targets you’ve identified and the efforts taken to ensure audit readiness and a group culture of compliance.
Now, you’ve educated the providers. You’ve prepared the staff. Your coding and documentation are solid. All practice improvement goals have been met. When the inevitable happens, be ready by having an audit strategy in place ahead of time. This will ensure the highest probability of a favorable outcome and quickest reimbursement in the case of a prepayment review of claims.

Identify a dedicated resource in your office to handle all audit requests. Not all audit requests are created equal. Audit requests come from various sources and in a variety of formats. They may be for previously paid claims or claims undergoing a prepayment review. Audits may be conducted by the RAC, your MAC, and the agency for Comprehensive Error Rate Testing (CERT). Some audit requests are related to services billed by other providers such as DME companies, labs or pharmacies. And let’s not forget the chart reviews that are requested by the Medicare Advantage Plans. Notifications may come via fax, mail or even be delivered in person. They may be addressed to the physician, the practice or an individual who hasn’t worked for your practice in years. Sometimes they are sent to the address where the service was rendered. You may never see that notice if it’s mailed to the dialysis unit! There is however, a way to improve your chances of receiving the most important notifications. Each RAC must enable providers to identify the appropriate contact information for sending audit or recovery notices. This ability or instructions for updating the information are typically available on the contractor’s website but a call to the RAC may be necessary. Your MAC also has a mechanism for identifying this information which is handled through the credentialing process. Another entity that enables you to identify contact information for requests is the body responsible for CERT Reviews. This information can be updated via their website, Lastly, these audit requests often look grossly similar to other overpayment requests that are routinely received by your billing office such as refund requests for coordination of benefit issues. Proper identification and routing of an audit request is a must. One individual identified as the point person for all of these requests provides an advantage when the audit request is received.

Maintain an audit activity log. Use Excel or a similar application to create a history of all audit activity. This document should include claim identifying details such as the patient name, medical record number, date of service, line item/code under review, etc. It should track the date the request is received, audit type and requesting entity, response due date, actual response date, outcome and resolution date, and any other information that will help you stay on top of your audit activity. This truly becomes important as that activity increases. Some programs have limits on the number of medical record requests they can make in a certain time frame. RACs aren’t allowed to audit a claim that has previously been or is currently under review by the MAC, CERT or other governmental agency. The window in which a claim can be selected for review will vary based on audit type. All of these things can be monitored using the audit activity log. The tool is also useful in following claim status and resolution as well as identifying trends.

Gather documentation and respond promptly. Different programs have different requirements for response times and overlooking due dates can and likely will result in an unfavorable decision. Pull all supporting documentation together and review for completeness. Submit your complete documentation by carefully adhering to the instructions provided in the request letter. Follow up to verify the documentation has been received.  If you find that you have made an error, provide that information with an explanation of how the mistake occurred and what is being done to prevent it in the future.

Proactively monitor claims status. Don’t wait to hear back from the audit entity. Most times if the decision in is your favor, you will receive no specific written notification of the outcome. The only evidence may be a notation on a remittance advice (RA) or simply payment of the claim in the event of a prepayment review. This type of notification is easy to miss, especially on a claim that was paid prior to the audit request. If your claim is denied or downcoded, you may or may not receive a written notification. If you do receive written notification, it may not provide a clear indication of why the claim was denied. A downcoded claim may only be communicated by a payment adjustment or recoupment on an RA. When these unfavorable decisions are made, the clock begins ticking on your time to appeal. Proactive monitoring is the only way to ensure you have every opportunity to receive a favorable outcome.

Be prepared to appeal. If you believe that you have correctly documented and billed a service, don’t accept an unfavorable determination. Take it to the next level, and the next and the next, if necessary. Nephrology billing can be complicated and often the auditors lack knowledge of the specialty. Education is necessary. Coding and documentation guidelines are not always straightforward and every auditor has somewhat of a different perspective. Sometimes payment policies vary by carrier and a flawed claim identification approach is applied across all carriers in a RAC’s jurisdiction. Don’t settle for less than a favorable determination if your documentation supports the claim and your local payment policies are satisfied.
Being the subject of any kind of audit is unsettling and disruptive to your practice but there are steps you can take to mitigate your risk and improve your chances of sailing through. The steps can be labor and resource intensive depending on your practice dynamics but will prove worthwhile when the unavoidable happens. When faced with an audit, front end preparation and follow through could mean the difference between dealing with a nuisance and a catastrophic financial loss.


For more information on the Renal Physicians Association please visit