Are You Prepared for a Billing Audit?

(Excerpted from Healthcare Financial Management, June 2008)

Over the past several years, federal and state authorities have been focusing on the elimination of opportunities for Medicaid fraud, waste, and abuse. One of the strongest efforts was created under the federal Deficit reduction Act of 2005: the Medicaid Integrity Program (MIP) under the direction of the Centers for Medicare and Medicaid Services (CMS). MIP is charged with the task of identifying, recovering and preventing overpayments resulting from fraud, waste and abuse in Medicaid.

Unlike some federal and state programs with no enforcement teeth, CMS is contracting with private entities known as Medicaid Integrity Contractors (MICs). The MICs are reviewing and auditing contractors, as they continue to develop more effective data mining tools. Findings are referred to applicable federal and state agencies for prosecution.

MIP is broken into three objectives:

1. A comprehensive review, through the billing databases, of Medicaid providers that furnish items or services, with an eye to fraudulent, wasteful, or abusive billing activities.
2. A comprehensive audit of claims for payment for items or services furnished, as identified by reviewer MICs.
3. The identification and collection of overpayments made to providers identified through the initiative.
   

All of this means that providers need to ensure the billing integrity of their practice:

1. Review every aspect of their billing integrity compliance programs.
2. Review the existing quality and methods of their statistical sampling.
3. Examine an agency's or prosecutor;s findings of loss to ensure accurate loss calculation.
   

This MIP initiative will likely result in an increase of the number of investigations and even criminal prosecutions of healthcare providers, both large and small. Because government agencies and prosecutors arrive at multimillion-dollar findings by reviewing a limited number of claims that often involve small dollar amounts per claim, the methodology used to claim huge losses from a small sampling should be viewed with some degree of skepticism. Should an investigatory agency arrive at such findings based on a review of samplings, it may very well be worthwhile to undertake an in-depth review of both the sampling method and the projection of damages. Such an undertaking could save the provider significant restitution dollars.

With this increased focus on reviews and audits, healthcare providers should also investigate Physician's Billing Errors & Omissions insurance coverage, which could provide defense against payor audits from public and private payors and indemnification of fines and penalties. Your RGI Insurance professionals can provide additional information and guidance in this area. Simply e-mail your request to info@RGIInsurance.comor or visit the RGI website at www.RGIInsurance.com.