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Hospital administrators, physicians, and members of every healthcare office billing department know that if their practice or hospital provides services to Medicare patients, they must be prepared to possibly receive a request to be audited from the Medicare Parts C and D Oversight and Enforcement Group. The Centers for Medicare and Medicaid Services (CMS) is responsible for both devising the audit strategy and enforcing it on a year-to-year basis. They have placed several documents online to help you further understand the process in more detail, which you can locate here.

What is the Medicare audit process?

The Medicare Audit process is divided into four phases:

  • Phase 1 – Audit Engagement and Universe Submission
  • Phase 2 – Audit Field Work
  • Phase 3 – Audit Reporting
  • Phase 4 – Audit Validation and Close Out

The Audit Engagement and Universe Submission phase involves formally notifying the organization that the audit will indeed take place, as well as a request for pertinent materials. CMS will test the integrity of the organization’s universe submissions and select sample cases to be tested during the audit fieldwork.

The Audit Field Work phase consists of a review of sample cases and supporting documentation, CMS documentation analysis, and the organization’s presentation of compliance tracer reviews and supporting documents. CMS will then issue a preliminary draft report with their observations from the audit.

The Audit Reporting phase includes CMS classification of non-compliance and an audit score, a notice of immediate corrective action required (ICAR), a corrective action plan (CAP) from the organization, and draft and final audit reports from CMS.

The Audit Validation and Close Out phase includes the organization’s submission of non-ICAR CAPs, CAP review and acceptance by CMS,  a validation audit in which the organization demonstrates the correction of audit conditions, and the audit closeout when CMS evaluates whether conditions have been substantially corrected.

For more information, you can read an overview of the audit process provided by the CMS here.

One of the most vital strategies that a medical administrator or physician can undertake in order to pass a Medicare audit is to outsource their medical credentialing to Advantum Health’s subsidiary MedAdvantage. By doing so, they will better position themselves to avoid a number of common errors that cause practices and hospitals not to pass their Medicare audits, or to receive corrective action notices.

How to prepare for a medicare audit

  1. Comply with deadlines.  Most CMS notifications arrive by mail, so make sure your front office knows what to do with these letters when they’re received. CMS only allows a window of 45 days to respond, so time is of the essence and unpaid claims may be the result of missing the deadline.
  2. Educate your office staff. A medicare audit is not something to take lightly and everyone must understand how important it is to comply with.
  3. Gather all requested information and documents. The CMS will notify your organization of submissions under review and which supporting documents are needed. Select team members to run point on this to streamline communication within the office and with the Medicare contractor.
  4. If you’ve been audited by CMS previously, review those audits. Make sure your staff took the proper steps to rectify the problems that triggered the previous audits. Medicare can look at claims as old as 4 years, so review as many claims as possible and look for mistakes. If you have a plan in place to correct the mistakes you discovered, it will save time during the audit.
  5. Who will meet with the auditor? Your point person is critical in the auditing process – he or she must be knowledgeable and well-informed on medicare billing practices and your own internal billing systems.

A Medicare audit is not something that should be taken lightly, but it can be prepared for ahead of time by instituting best practices. By knowing what errors are most common, you and your staff can determine what areas you are already proficient in and which areas you may need to improve on. When it comes to a Medicare audit, being prepared and ahead of the curve is always the best course of action.