Medicare Advantage and TPE Audits Surge

Targeted Probe-and-Educate (TPE) audits resumed on Sept. 1.

Everyone in the industry knows about audits of healthcare providers. But what about the billing companies? Or a data-analytics company?

In a complaint filed last week, a New York data-mining company, DxID, was accused of allegedly helping a Medicare Advantage (MA) program game federal billing regulations in a way that enabled the plan to overcharge for patient treatment.

As you likely know, MA plans are paid more for sicker patients. Supposedly, DxID combed medical records for “missed” diagnoses (for example, adding “major depression” to an otherwise happy consumer).

A quick aside: a few years ago, I won an injunction for a provider that relied completely on a billing company to bill. Because this company aggressively upcoded, we used the victims’ rights statutes in the Social Security Act (SSA) to defend the provider. And it worked. Providers often forget about the safety net found in such statutes, if they wholly rely on a billing company.

This DxID complaint cites medical conditions it says either were exaggerated or weren’t supported by the medical records, such as billing for treating allegedly unsupported claims for renal failure, the most severe form of chronic kidney disease. The U.S. Department of Justice (DOJ) is seeking treble damages in the False Claims Act suit, plus an unspecified civil penalty for each violation of the law.

Medicare Advantage has been the target of multiple government investigations, DOJ and whistleblower lawsuits, and Medicare audits. One 2020 report estimated that improper payments to the plans topped $16 billion the previous year. In July, the DOJ consolidated six such cases against Kaiser Permanente health plans. In August, California-based Sutter Health agreed to pay $90 million to settle a similar fraud case. Previous settlements have totaled more than $300 million.

Some breaking news: Targeted Probe-and-Educate (TPE) audits resumed on Sept. 1. Due to COVID, TPE audits had been suspended. Unlike recovery audits, the stated goal of TPE audits is to help providers reduce claim denials and appeals, with one-on-one education focused on the documentation and coding of the services they provide. TPE audits are conducted by Medicare Administrative Contractors (MACs). While originally limited in scope to hospital inpatient admissions and home health claims, the Centers for Medicare & Medicaid Services (CMS) expanded the program to allow MACs to perform TPE audits of all Medicare providers for all items and services billed to Medicare. 

Beware these TPE audits; they are not as friendly as they purport to be. A TPE audit can result in a 100-percent prepay review, extrapolation, referral to a Recovery Auditor, or other action, so a carefully crafted response to a TPE audit is critical. 

The TPE audit process begins when a provider receives a “notice of review” letter from the MAC, which states the reasons the provider has been selected for review and asks that 20-40 records be produced. Once the records are produced, the MAC will review the 0claims against the supporting medical records and send the provider a letter detailing the results of their review. 

If the claims are found to be compliant, the TPE audit ends and the provider cannot be selected for review again for a year, unless the MAC detects significant changes in provider billing. However, if the claims are found not to be compliant, the MAC will invite the provider to a one-on-one education session specific to the provider’s documentation and coding practices. The provider is then given 45 days to make changes, and a second round of 20-40 records will then be requested, with dates of service no earlier than 45 days after the one-on-one education. 

The provider will be given three rounds of TPE to pass. Do not use all three rounds; get it right the first time. If the provider fails after three rounds, they will be referred to CMS for further action.

With MA, TPE, and audits of data-analytics companies ramping up, 2022 is going to bring an audit frenzy.

Programming Note: Listen to the RAC Report with Knicole Emanuel every Monday on Monitor Mondays, 10 Eastern.


Knicole C. Emanuel Esq.

For more than 20 years, Knicole has maintained a health care litigation practice, concentrating on Medicare and Medicaid litigation, health care regulatory compliance, administrative law and regulatory law. Knicole has tried over 2,000 administrative cases in over 30 states and has appeared before multiple states’ medical boards. She has successfully obtained federal injunctions in numerous states, which allowed health care providers to remain in business despite the state or federal laws allegations of health care fraud, abhorrent billings, and data mining. Across the country, Knicole frequently lectures on health care law, the impact of the Affordable Care Act and regulatory compliance for providers, including physicians, home health and hospice, dentists, chiropractors, hospitals and durable medical equipment providers. Knicole is partner at Nelson Mullins and a member of the RACmonitor editorial board and a popular panelist on Monitor Monday.

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