Providers are experiencing a significant increase in commercial payer audits and recoupments that are not only an administrative burden, but are also costly and have a negative impact on the organization’s revenue. This rise in commercial/private insurers audits is a direct result of the success of the governmental audits. Although providers have become expectant of the regulatory audits, the RAC, MAC, ZPIC, UPIC and others, the recent uptick in commercial audits and recoupment requests have caught most providers off guard. These audits differ from the regulatory audits in that the commercial insurers will withhold payment, rather than asking for the money back. It’s very difficult to stop an audit once it is in motion so if you understand what triggers an audit and what steps to take once an audit begins, you may have a better chance for a successful outcome.

Often you will not be told what initiated the audit, however there are a few circumstances that have been identified to trigger an audit.

The most common reason for an audit is a higher than average utilization of certain procedures or outlier payments. Claims data by provider are typically monitored and compared to providers of same specialty, similar practices, and geographic area to identify practice patterns and outliers. CPT utilization and/or payment data can be used to trigger a payer audit by individual provider or an entire group, and the guidelines are specific to the commercial payer policy.

Patient complaints can also trigger an audit. Unfortunately, disgruntled patients or patients who do not understand their bill, may take their complaint to the payer if they don’t feel that the practice is taking appropriate action.

New or expanded services in a practice may raise a red flag and trigger an audit. When a new service is introduced to the practice or a new piece of equipment is purchased, the provider billing pattern changes, again based on the individual payer policy, an audit may trigger.

Do not ignore any payer communication related to utilization or peer comparison.

It is important to involve healthcare audit experts or counsel with payer experience as early as possible after the receipt of the audit or recoupment request. The early stages of the request are crucial. How you respond will shape the entire process. If you receive a questionnaire, involve the subject matter experts in the response since it could later be used against you. Identifying the dollars at risk should also be completed prior to the audit. This will provide insight into the potential revenue impact as well as information to prepare a carefully focused and accurately documented response to the audit findings or recoupment request. Failure to respond to a documentation or audit request could result in providers being placed on a pre-payment audit.

A well-defined and comprehensive audit management process in conjunction with an effective compliance plan provides a strong foundation and defense in response to an audit or recoupment request. A compliance plan including annual chart auditing, will provide a proactive analysis of a provider’s CPT and ICD 10 utilization and the appropriateness of the code selection based on the supporting documentation. While the compliance chart audit will not protect a provider from an audit, the results and corrective action will provide management with the information in order to correct any significant error rate prior to an audit or recoupment request.

Written by: Lorraine Ludwigsen – Vice President Operations & Compliance
Healthcare Compliance Network

Lorraine Ludwigsen is a senior level management professional with an extensive background in compliance, HIM, operations and revenue cycle management for ambulatory surgery centers, large and small physician group practices, inpatient/outpatient programs, as well as project management with a focus on strategic planning and execution. She has held the role of director in both hospital health systems as well as physician organizations. She has 26 years of experience working as a subject matter expert in organizational compliance and revenue cycle management for ASC, facility, and medical practice organizations. Lorraine is a Certified Paralegal, a Certified Professional Coder, a Certified Healthcare Compliance Consultant and a Certified Healthcare Compliance Officer.