TPE Audits: Three Strikes and You’re Out

TPE audits appear to be on the rise.

The old baseball adage, “three strikes and you’re out,” now has relevance in the Medicare audit arena. Targeted probe and educate (TPE) audits are the latest type of audits facing Medicare providers and suppliers. TPE audits are unique in that, unlike other Medicare audits, providers and suppliers may be subject to up to three rounds of record reviews. If the provider or supplier fails to improve the accuracy of their claims after three rounds, they will be referred to CMS for possible further action.

The Centers for Medicare and Medicaid (CMS) initially launched TPE as a pilot program in one Medicare Administrative Contractor (MAC) jurisdiction limited to certain types of claims. In October 2017, CMS expanded TPE reviews to all MACs for all Medicare providers and suppliers and all items and services billed to Medicare. The focus of TPE audits are providers and suppliers with a history of high claim error rates or unusual billing practices compared to their peers, and items and services that have high national error rates and are a financial risk to Medicare. Common claim errors subject to TPE include: (1) the signature of the certifying physician was not included; (2) documentation does not meet medical necessity; (3) encounter notes did not support all elements of eligibility; and (4) missing or incomplete initial certifications or recertification.

Providers selected for a TPE audit will receive an initial notification letter or “Notice of Review” from the MAC. The Notice of Review will provide the reason the Medicare provider or supplier was chosen for a TPE audit, as well as a description of the TPE audit process. Once the TPE process is initiated, the provider or supplier may be subject to up to three rounds of record reviews, known as a “probe.”

Each probe consists of a review of between 20 to 40 claims and the supporting medical records. If the Medicare provider or supplier is deemed in compliance with the Medicare rules by the MAC following the first round, the provider or supplier will be removed from the TPE process and the MAC will not review the provider or supplier on the selected topic for at least one year absent significant billing changes. If the MAC detects claim errors during the first round, the MAC will issue a letter detailing the errors and will offer the provider or supplier a one-on-one education session with the MAC’s provider outreach and education staff. While the one-on-one education session is offered after the MAC’s review, providers and suppliers should be aware that they have the ability to communicate with the MAC during the review process.

Following the one-on-one education session, the provider or supplier will be given at least 45 days to improve their billing and documentation practices. After the expiration of the 45-day period, the MAC will initiate the second round by reviewing another 20 to 40 claims and supporting documentation. The MAC will issue a second results letter identifying any claim errors during the second probe. If the provider or supplier is deemed in compliance during this round, it will be removed from the TPE process and not subject to review for at least one year absent significant billing changes. If the MAC detects claim errors, it will again offer the provider or supplier an individualized education session.

Medicare providers and suppliers who continue to have a certain error rate will be subject to a third round. CMS has indicated that the error percentage will vary based on the service or item under review, but an important factor in determining whether a provider or supplier moves on to additional rounds is based upon improvement from round to round. If a provider or supplier fails to adequately improve its claim accuracy after three rounds, the MAC will refer the provider or supplier to CMS for additional action, including but not limited to, prepayment review, extrapolation of overpayment, referral to a Recovery Audit Contractor, or other disciplinary action.

TPE reviews and overpayment determinations may be appealed through the Medicare appeals process. Specifically, a provider or supplier may request redetermination of an overpayment determination. If an unfavorable redetermination decision is issued, the provider or supplier may request reconsideration by a Qualified Independent Contractor. If the reconsideration decision is unfavorable, the provider or supplier may present their case before an Administrative Law Judge. If the Administrative Law Judge’s decision is unfavorable, the provider or supplier can appeal to the Medicare Appeals Council, and then to a federal district court.

Given the potential consequences of a TPE audit, it is critical that Medicare suppliers and providers be proactive about ensuring compliance with Medicare billing and documentation requirements to reduce the risk of being selected for a TPE audit. If a provider or supplier is selected for a TPE audit, it should timely submit the requested records and communicate with the MAC throughout the TPE process to address and resolve any claim errors.