Help! I'm Being Audited!
Know your options in the event you are the recipient of a medical records investigation.
By Douglas J. Jorgensen, DO, CPC
No longer do we solely fear malpractice attorneys or a litigious patient. Additionally,
we have big brother watching us in the form of a federal agency designed
to protect the taxpayer’s dollars and to keep a handle on “fraud
and abuse.”
Honest Mistakes
Fortunately, federal payors have toned down their rhetoric and over the last
year have made monumental changes in their handbooks and their attitudes regarding
physicians. No longer are we villainously perceived as money-grubbing doctors,
but, by and large, we are seen as honest, hard working physicians making errors
in a system that is convoluted, ever changing, and at times contradictory.
According to HCFA, greater than 92 percent of physicians “get it right” and
of the remaining eight percent, over seven percent are simple “errors.”1 The
Office of the Inspector General (OIG) and Medicare are mindful of the difference
between innocent errors and reckless or intentional conduct.2
Furthermore, “honest mistakes” are not subject to criminal or civil
prosecution.3 However, federal law confuses the issue by admonishing
acts that a provider “should know” are illegal or an instance where
a provider “acts in deliberate ignorance” or “reckless disregard
of the truth or falsity.” 4
In such situations, the federal government need not prove intent to prosecute
for “fraud”– it simply must have occurred. How is this fair?
On the back of your HCFA 1500 form, you signed that you were personally, civilly,
financially and criminally responsible for billing done by you or your designee.
This is a contractual agreement and thus, you need to know what is being billed
regardless of whether it is a solo practice or multispecialty, multiprovider
group. You are ultimately responsible.
However, fear not, for in most cases it is not the doctor being prosecuted,
but durable medical goods companies, hospitals and/or other healthcare entities.
Last year of all the audits performed by Medicare, only 0.06 percent were of
Medicare enrolled providers.5
Thus, the likelihood that you will be audited by the feds is small. However,
in recent years the private payors see dollar signs and they have jumped on
the “fraud train” looking for “legitimate” means to deny
or limit payments as well as impose penalties. Making changes in your compliance
plan to “detect and correct” potential pitfalls and being aware of
what to do in the event of an audit will help in the event of a private or
federal investigation.
According to federal standards, the fines are $5,000-$10,000 per claim or $15,000
for each individual given misleading information. The fines may be further
increased by up to three times the amount claimed.6 This is not
pocket change.
This article will review your options in the event you are audited. Legal counsel – competent,
experienced healthcare attorneys – are a necessity. Your local attorney
who helped with your will, taxes, incorporation, etc., should be part of your
legal team, but you need a professional familiar with this scenario on your
side from the beginning. If you get a letter that you are being audited, this
should be your first telephone call.
Also, your office should have a system in place, as part of a larger compliance
plan, of the actions to be taken in the event of any perceived or actual legal
action pending against you or the practice. Findings of potential misconduct
by a federal agency, in most instances, would fall under this description. See
below for an outline of the three options to consider in the event you
are fined or found guilty of “overpayment” by Medicare.
Overpayment
What, Where, When and How?
Overpayment means that your local carrier paid you more money than you should
have received. This could be because it was an uncovered service,7 the
documentation did not support the code(s) billed, the date of service is in
error (i.e., the date the service was performed is different than the date
listed on the HCFA 1500 form), the wrong provider is listed, etc.
Regardless of the cause, the result is that they paid you too much (per their
audit) and they want their money back. Remember, in terms of how far back an
audit can go, November 1994 was when the first federal documentation guidelines
came out. If the audit is based on improper documentation and the date is prior
to this, this is not acceptable and should be challenged.
Furthermore, you have the option of using the 1995 or 1997 guidelines in the
audit. The 1995 guidelines allow for more liberal interpretation by auditors,
resulting in fewer downcoded visits. Therefore, this is usually your best bet
in an audit situation.
Once the audit is done, a formula is utilized to calculate what you owe. This
is based on your practice demographics, the audit findings, fines, etc. A calculation
worksheet is usually given to break this down, although it sometimes difficult
to interpret.
Another recommendation is that in the event of an audit, you hire an agency
to perform an audit of the charts at hand. This is known as a defensive audit.
This is done to refute the claims of the federal or private auditors in the
event you decide to challenge the audit’s findings.
However, do not hire this company yourself, but do it via your attorney in
order to invoke attorney-client privilege. If you hire this company yourself
and not via your attorney, the information is potentially discoverable by the
party trying to prove your guilt.
If a penalty phase or potential penal action is not present, the attorney-client
privilege cannot be invoked. Consult your healthcare attorney for specific
details regarding this process as well as the specific rules and laws germane
to your state.
One last area of interest is that some malpractice carriers are now offering
professional liability coverage in addition to the standard malpractice insurance.
Many are not even charging extra fees for this coverage, nor are they investigating
the potential risk they are assuming in offering this option.
Often, these plans will not only help defend you, but may pay all or a portion
of the fine, should your case come to that, as part of this coverage. It would
be worth asking at the time of your renewal for malpractice coverage.
Conclusion
While an audit is not a pleasant topic, it can be avoided or survived with
minimal scarring. As mentioned, a compliance plan can help avoid potential
exposure by finding the problems internally before they are discovered by an
outside entity in a penal process.
The seven steps to compliance can be found in Figure 1 and
scratch the surface of how to avoid potentially dangerous situations, in and
around the office as it relates to not only billing and coding issues, but
many areas of risk. The OIG home page, http://oig.hhs.gov/ contains
the compliance plan and what specifically is recommended.
Audits can be triggered from any number of sources. From statistical outliers or a random sampling, to a disgruntled patient or employee. Working together as a team in your office to minimize your exposure will create a comfortable, safe and pleasant work environment.
Be prepared, but most of all, know your options in the event you are the recipient of a medical record investigation.
References
1. HCFA Audio conference November 20, 2000.
2. Office of the Inspector General Compliance Plan Draft June 2000.
3. Volume 31 of United States Code 3729-3733.
4. Section 1128A of SSA, HIPAA of 1996, Public Law 104-91.
5. HCFA Audio conference November 20, 2000.
6. Civil Monetary Penalty Law Volume 42 United States Code 1320a-7a.
7. Uncovered services or potentially uncovered services require an ABN or advanced
beneficiary notification. This is a signed and dated form that the patient
understands that Medicare may not cover the service and that he/she will possibly
be billed in the event it is not covered. Cosmetic, experimental, most preventive
medicine and some surgical, laboratory procedures fall under this category.
Call your regional Medicare carrier for a more complete listing.
8. NHIC, Hingham, Massachusetts; Appeals information letter. For further details
of option one two or three consult your local carrier or Medicare.
9. NHIC, Hingham, Massachusetts; Appeals information letter. For further details
of option one two or three consult your local carrier or Medicare.
10. NHIC, Hingham, Massachusetts; Appeals information letter. For further details
of option one two or three consult your local carrier or Medicare.
11. NHIC, Hingham, Massachusetts; Appeals information letter. For further details
of option one two or three consult your local carrier or Medicare.
