The Center for Medicare and Medicaid Service (CMS) has announced new guidelines for Medicare Audits which will give recovery auditors enhanced powers to demand information from medical providers during the course of audits. The new guidelines, implemented in May 2016, give auditors the ability to issue more Additional Documentation Requests (ADR) to medical providers in a given period, thus creating additional burdens on medical providers to respond to audits and providing auditors with more of a scope in which to review and potentially reject Medicare claims, resulting in demands for return of overpayments.

Higher Rates of Denials Can Result in Increased ADRs

Under the new CMS guidelines, the baseline ADR limit that recovery auditors can request remains at 0.5% of a medical provider’s paid Medicare claims. The ADRs, however, must be spaced out over the course of the year in 8 separate 45-day cycles, such that a recovery auditor can only request ⅛ of the .05% of paid claims through an ADR in a given 45-day ADR cycle.

What’s new is that the 0.5% ADR limit can increase for a given provider based on the percentage of claims that had been denied by a recovery auditor in the three previous 45-day ADR cycles. Essentially, the higher a percentage of claims that were denied, the higher a percentage of ADRs that the recovery auditor can request in a later cycle, and the percentage may go down if a very low percentage of claims were denied and can even result in no ADRs being issued for a given number of cycles

The percentage of claims denied in previous periods corresponds to a medical provider’s ADR rate as follows:

  • 91% to 100% denied: 5.0% ADR Limit
  • 71% to 90% denied: 4.0% ADR Limit
  • 51% to 70% denied: 3.0% ADR Limit
  • 36% to 50% denied: 1.5% ADR Limit
  • 21% to 35% denied: 1.0% ADR Limit
  • 10% to 20% denied: 0.5% ADR Limit
  • 4% to 9% denied: 0.25% ADR Limit
  • 1% to 3% denied: No Reviews For Three Cycles

Thus, medical providers who have faced higher rejections in previous recovery audits should prepare for increased ADRs. Likewise, there is an ever greater incentive for providers to reduce their denial right as it will prevent the cost and exposure of more intensive audits in the future.

Work with Experienced Counsel in Responding to Medicare Audits

A Medicare audit conducted through the CMS Recovery Audit Program can result in significant demands for return of “overpayments” if the recovery auditor makes the determination that portions of your organization’s claims should be denied. As a medical provider, you are entitled to obtain the assistance of experienced counsel in responding to recovery audits and appealing overpayment determination.

At the Martin Law Firm, P.C., our attorneys routinely represents Physicians, Chiropractors, Physical Therapists, and other healthcare providers in the defense of the Medicare audit and overpayment determination. We have the experience to help your organization effectively respond to audits and defend your work.