Medicare Audits: What You Need to Know

This article is the fourth in a series developed by the Chiropractic Summit Documentation Committee. With the significant increase in chiropractic providers across the country being audited by Medicare, there seems to be much confusion and uncertainty in how best to respond. We hope this article will help.

There are several types of audits/reviews within the Medicare system. Most practitioners have heard of Comprehensive Error Rate Testing (CERT) reviews and Office of Inspector General (OIG) reviews. However, there is a different type of review—the reviews that may result in denials requiring repayment to the Medicare fund and the appeals of those denials. Most of these reviews are referred to as “probe” reviews; however, they are not the only reviews that may result in refunds to Medicare.

Understanding Medicare Contractors
The Centers for Medicare and Medicaid Services (CMS), a division of the Department of Health and Human Services (HHS), is the federal agency responsible for administering Medicare, as well as Medicaid and several other health-related programs. From Medicare’s inception, the federal government has used private insurance companies to process claims and perform related administrative services for the program’s beneficiaries and health care providers. Today, CMS relies on a network of contractors to process nearly 1 billion Medicare claims each year from more than 1 million health care providers. In addition to processing claims, the contractors, in conjunction with other entities, enroll health care providers in the Medicare program and educate them on Medicare billing requirements, process claims appeals, answer beneficiary and provider inquiries, and detect and prevent fraud and abuse.

Most, if not all, DCs’ interaction with Medicare is with Medicare contractors. Chiropractic and other private provider offices interact almost exclusively with contractors known as Part B carriers or A/B MACs (Medicare Administrative Contractors). All contractors are required to perform certain functions, which include defending the integrity of the Medicare Trust Fund.

CMS is required by the Social Security Act to ensure that payment is made only for reasonable and necessary health care services. To meet this requirement, CMS contracts with carriers, MACs and program safeguard contractors to perform claim data analysis that will identify atypical billing. After data analysis, the contractors must verify any billing problems through probe reviews. The contractor then determines the severity of the problem and the appropriate actions to be taken, such as further medical review.

Medical Review
Medical review (MR) is an important part of the Medicare Integrity Program, which requires contractors to identify inappropriate billing and develop interventions to correct the problem. MR is defined as a review of claims to determine whether services provided are reasonable and necessary, as well as to follow up on the effectiveness of previous corrective actions.

Atypical billing patterns and/or specific errors can prompt MR. Some MRs happen as a result of random selection. Contractors can perform MR functions on any claim appropriately submitted to a carrier or MAC in meeting their contractual obligation to CMS.

Please note that whether you are a participating provider or a nonparticipating provider (non-par), accepting or electing not to accept assignment, your claims are subject to the review process. Even if you are a non-par provider or a provider who chooses not to accept assignment, you are not exempt from this review process.

Through data analysis and information evaluation (e.g., complaints), suspected billing problems are identified by contractors. These contractors then use progressive corrective action to ensure that MR activities are targeted to problem areas and that the imposed corrective actions are appropriate considering the severity of the problem. Before assigning significant resources to potential claim problems, contractors must validate claim errors through probe reviews.

For more information, watch upcoming ACA publications or go to The next article will continue discussion on the contractor-provider relationships, including the rationale for audit, the MR process and the appeal process available for denied claims.

Ritch Miller, DC, served as principal author of this article, with contributions from members of the Summit Documentation Committee: Drs. Carl Cleveland III, John Maltby, Peter Martin, and Frank Nicchi; Susan McClelland and David O’Bryon.

First convened in September 2007, the Chiropractic Summit represents leaders from some 40 organizations within the profession who meet regularly to collaborate, seek solutions, and support collective action to address challenges with the common goal of advancing chiropractic. A major focus of the summit is to improve practitioner participation, documentation, and compliance within the Medicare system.