With increased scrutiny on government health care programs, Medicaid providers are subject to being investigated and audited more than ever. When a Medicaid provider receives notice of an audit, it requires prompt responses and thorough documentation. Effectively run, providers can resolve such disputes by anticipating Medicaid audit requests and successfully appealing an overpayment demand. To assist in preparing for an audit, here is a brief breakdown of the general process and potential defenses and strategies for providers.
Florida Statute 409.913 authorizes the Agency for Health Care Administration (AHCA) to oversee the activities of Florida Medicaid recipients and providers. Within AHCA, the Office of Medicaid Program Integrity (MPI) is responsible for conducting reviews, investigations, and/or audits to determine possible overpayments, fraud, or abuse in the Medicaid program.
The Medicaid audit process begins with either an onsite inspection or a request for records or other documentation from a provider. Following a review of this documentation, a preliminary audit report is issued to the provider. The preliminary audit report will set forth the purpose and scope of the review, the auditor’s findings, and importantly, the provider’s rights. At this stage, a provider has several options if an overpayment is found. First, the provider can concur with the findings and submit payment for the overpayment. No sanctions or costs will be applied, and the provider will be required to waive the right to a hearing. Second, the provider can submit additional documentation for further consideration (sanctions and costs may be assessed here as the provider may be deemed in noncompliance for not producing initially). Or third, a provider can do nothing and wait for the issuance of a final audit report. In the event a final audit report is issued, the provider has the right to request a formal or informal administrative hearing pursuant to Chapter 120 of the Florida Statutes. Administrative hearings permit a provider a form of second opportunity to challenge an auditor’s subjective findings. Whether it is a formal or informal hearing request, specific information must be included in a petition for hearing. These requirements are set forth in the Florida Administrative Code. Pre-hearing mediation is also an option if a formal hearing is requested.
Audits are typically initiated based on random selection (e.g. type of provider or service), data analysis indicating a provider is an outlier compared to its peers, third-party complaints (e.g. patient, competitor, or disgruntled employee), and from regulatory body leads (e.g. licensing or law enforcement agency). The most common indications of noncompliance include the following:
- Lack of documentation to support medical necessity
- Licensing deficiencies
- Failure to satisfy provider participation requirements
- Lack of pre-authorization
- Technical non-compliance with provider contracts or payor manuals
- Kickback arrangements
- Upcoding or overutilization
- Excessive and unnecessary tests
- No proof of delivery
- Failure to comply with supervision requirements
Upon receipt of an audit notice, providers can defend based on various grounds. A provider can take a position based on a substantive defense, including medical necessity or expert opinion agrees with the alleged action taken. A provider can also base its strategy and defense on the “treating physician rule,” meaning the treating physician was in the best position to determine medical necessity and such a decision should prevail over a third-party review. A provider may be able to challenge based on timeliness. In other words, MPI initiated the audit action too late and is outside the timeframe permitted by law. Finally, providers could formulate a waiver type defense based on a lack of Medicaid policies, lack of notice to providers, or a failure to follow Medicaid’s own policies in the area at issue.
While audits cannot always be avoided, it is important for providers to know their options and potential defenses. With proper preparation, a sound methodology, and an experienced team working on your behalf, providers can feel confident should an audit occur.
If you have any questions regarding the Medicaid audit process, please do not hesitate to contact attorney Matthew M. Fischer (matt@fischerlawpa.com). Matthew specializes in health law related issues and is a former Assistant General Counsel at the FBI and Senior Attorney Advisor at the U.S. Department of Health and Human Services.