Medicare & Medicaid providers could be at risk of owing the government thousands of dollars due to increased scrutiny of overpayments by the Centers for Medicare & Medicaid Services (CMS). There have been a number of cases lately in which providers have neglected to be attentive to their internal controls and make sure that claims are properly documented and coded, and are entirely medically necessary. To avoid burdensome repayments and a visit from a recovery audit contractor (RAC), providers must diligently monitor the claims process to ensure that no claim is overlooked.

Importance of Internal Controls

I’ve worked with a number of providers in the New England area who have received notices from CMS and State Medicaid programs informing them of improper claims totaling hundreds of thousands of dollars.

This is money that providers have most likely already spent elsewhere, and must now come up with to pay them back. Regardless of the industry or size of the organization, this puts providers in a tough position.

To avoid the chance of an improper claim, it is crucial to implement a system of internal controls. Internal controls will ensure that there is documentation for every claim, that the documentation is sufficient to support the claim, that the service provided was medically necessary and that the service was properly coded.

Common errors found during Medicare audits:

1. Missing Documentation – There needs to be controls in place to ensure that supporting documentation is received prior to submitting a claim, and that it is retained according to your document retention policy.
2. Insufficient Documentation – Client file checklists, periodic chart reviews and other controls need to be in place to demonstrate that the services were actually provided, they were provided at the level billed and that they were medically necessary.
3. Medical Necessity – Not only do providers need to have the documentation showing that a service was medically necessary, but their reasoning has to be correct as well.
4. Incorrect Coding – Part of the internal control process should include a check that ensures that the billed code matches the service provided, that the service was performed by someone other than the billing provider or supplier, that the billed service was unbundled, and that the client was discharged to a site other than the one coded on the claim.

If these controls are not in place or are not operating effectively, you could have systematic errors in your billing and, if you are audited, you could be faced with an unfavorable report.

Recovery Audit Program

According to the annual CMS report to Congress, recovery auditors were credited with saving Medicare over $3 billion in FY 2013 alone. RACs collectively identified and corrected over 1.5 million improper claims which resulted in $3.65 billion being recouped from overpayments to providers. Let’s be honest: money is tight everywhere. Since the nationwide expansion of the Recovery Audit Program in 2010, providers have been under increased scrutiny for their Medicare and Medicaid claims. Federal and state governments are putting serious effort into identifying improper claims.

If you’re a provider and are not being diligent in your efforts to monitor the claims process or you are neglecting to perform internal self-reviews, you could be looking at owing large sums of money if an RAC knocks on your door in 2015.

Questions? Contact us.