Episode 112:
What to Do When the Audit Letter Arrives

Episode Transcript

Welcome everybody to another episode of Compliance Conversations. I am CJ Wolf with Healthicity, and today's guest is Christina Kuta. Welcome, Christina. 

Great. Thanks for having me. 

Absolutely. Thank you so much for making the time to to talk to us for a little while. 

And, Christina, before we we jump into our topic, we'd love to hear a little bit about yourself, what you do, and and, a little bit of your background. Anything you you're willing and comfortable sharing. 

Sure. So, I'm Christina. I'm a shareholder with the law firm of Red Cell and Andres, and I concentrate my practice predominantly in the regulatory and transactional health care space. So a lot of work with buying and selling health care practices and a lot of work with compliance and the regulatory component of, healthcare practices and healthcare providers. 

I'm based in Chicago. My firm has offices in in many other states. 

And I've always been very since I was a kid, always very interested in healthcare, health care issues, health care laws. 

For a long time, I was going to be a doctor, and then I took biochemistry in college. 

But I realized that that was not gonna be my forte. 

So I, I I quickly switched paths to be able to still be in the health care industry and still work with health care providers, but, didn't have to do chemistry or a lot of math, which seemed to suit me a lot better. 

Awesome. Well, thank you so much. We're we're glad that you you are where you are and doing what you do because that does affect patient care ultimately. Right? When people are burdened with compliance issues, they can't focus on taking care of patients. And so trying to set things up the right way is is an important mission. 

Absolutely. And, I don't know if your audience would agree with this, but I I see the last few years, things have gotten a lot more, comprehensive with respect to compliance. See a lot more compliance issues and a lot more time practices are having to spend on compliance issues burden for any health care system or provider, particularly for your small providers, your solo providers, your small groups, your small health care businesses. 

You know, it's it's a lot of burden and a lot of effort. So to the extent, you know, you and I can help use that for people, love to. 

Yeah. Well and I I don't know if you know much about me, but I come from a clinical background. I did go to medical school, and I ended up getting into compliance and administration and always felt like any burden I can remove from the the physician lets them, you know, focus their cognitive load on on something that's much more important. Now, of course, there's only there are some things that only the clinician can do. And so as compliance officers and auditors and and attorneys, we all know that that educating folks that are on the front lines is important too. And so we're gonna talk today about what to do if audited. 

Our audience, you know, we have a lot of auditors in the audience and a lot of compliance officers. And so we're gonna kinda walk through that with an expert like Christina who who helps clients out on these types of things. So let's maybe just kinda set the the foundation here and say, I'm a hospital. I'm a doctor practice. I'm whatever, and I received some notice of a third party audit. So I get that notice. I'm like, oh, great. 

This is gonna make my week or my day just the best. 

So what are the first steps you recommend people take when they first get that notice? 

Sure. As cliche as it sounds, don't panic. That is the first thing. I have had people call me, say, I'm going to jail. And I'm like, I have been doing this job for almost twenty years. 

No one I know has gone to jail because they received a compliant audit. So jail's not gonna happen. 

And, you know, we'll get through it. Like, it is a burden. It's a pain. You don't wanna see it. 

It's scary. A lot of times people worry if I get this audit is seven audits going to follow this audit. Right? Or is it wanted done? 

All valid questions, but you'll get through it for sure. 

After you take your breath and you panic a little, because I'll tell you not to panic, but everybody's gonna panic for a minute. 

Review the audit carefully. So a lot of times people don't review it carefully. They review it fast. They see CMS or a Mac, a Medicare contractor name, and they don't really pay attention to what the audits about. And there could be many different reasons for an audit. It can be, just a general compliance audit. There's things we call you pick audits. 

There's audits that could be triggered because somebody made a complaint. So a lot of different reasons. And in in reading why you receive the audit or what the audit says, you often can pick up some clues on on why you're receiving that audit. 

You wanna also pay very good attention to deadlines. So the audit will tell you, we want these records, you know, in this time frame. Often, it'll actually give the names of the patients and the specific dates of service. And it'll give you a deadline. We want it by this day. I've worked with a lot of different people that didn't pay attention to the date and called me and said, oh, I've gotta respond to this audit. And I look at the paper and I'm like, you had to respond to this audit three weeks ago. 

I have found that people third parties requesting audits, government or commercial payers, and we'll talk a little bit about the distinctions there, today. 

But they're generally very flexible with time. If you tell them I need more time, this is burdensome. There are some practices that are still very paper based. And if you haven't respond to an audit, paper based takes a lot longer than just going into an EMR and clicking a few buttons. 

Right? You have to copy you know, we never recommend you give original records to anybody because they say they'll give them back to you, but you can't guarantee it. So Right. It might take time. 

Get ahead of it. If the audit says we want these in thirty days and you think there's just absolutely absolutely no way, call the auditor. If you're going to work with an attorney, have them call the auditor, ask for time, figure out the timeline, dock it the timeline, put it in three different calendars, make sure an administrator in your office has it or your billing folks. Because if you are a busy clinician, which most clinicians are, it's easy to forget about these kinds of things, especially since it's not routine. It's not like, oh, I know every Friday at two o'clock, I have this meeting. Right? 

Right. 

This is out of your ordinary, and easy to forget. And I find that particularly the government is less forgiving if you blow the deadline. 

So you wanna always make sure to to get ahead of the issues for sure. 

Another thing I always tell people is try to consult knowledgeable legal counsel. 

And that doesn't mean the lawyer who does your taxes or the lawyer who does your real estate. Right? Right. Great lawyers. 

I'm sure know about buying and selling a house know about, how to get good tax benefit for you, but don't don't have experience in health care. And, you know, I spend a good part of my month sometimes having to clean up mistakes or issues that other lawyers did, not because they're not good lawyers. They just didn't know. They waited into an area they thought they understood but didn't understood didn't understand. 

And because of that, you know, mistakes were made that now we have to try to unwind. And, again, with the government, particularly, you you never wanna be behind the eight ball as they say. You you wanna sort of stay ahead of everything and not have to ask for forgiveness. They with it was that old adage, do it now and just ask for forgiveness later. 

Right. Right. 

Idea when you're a kid wanting to do something your parents don't want you to do, not a great idea with the government when it comes to health care payments. 

And the the other issue, the immediate is only inform people that need to know. So tell your lawyer, you know, maybe your billing folks need to be involved to help pull records. Obviously, if you have an office manager or an office administrator, he or she may need to know. But don't sit in the front desk front office and be like, oh, we got this Medicare audit. Now I've gotta give Medicare records. 

And there's a few reasons for that. I think, you know, one is you don't want patients to hear because patients don't know what that is. They don't know this routine, and they think why is my gover why is my doctor defrauding Medicare? That's the first thing Right. They think. Right? 

And ninety nine percent of the time, that's not true, but that's Right. What they think. The other issue is you don't wanna panic in your employees. 

You know, sometimes employees get a little jittery. They may not understand as well, and they think, oh, no. We're getting by Medicare. We're a practice that has a lot of, you know, older patients. 

We have a lot of Medicare patients. What if we get in trouble? Are the doors gonna close? Am I gonna lose my job? 

Did I do something wrong? Like, if, you know, and and that's and they're gonna find out about it now, and I'm gonna get in trouble. So most folks don't need to know about the audit. So keep it to an absolute need to know basis. 

Right. I think that's really important to prevent panic, to prevent people making assumptions. And, also, this has happened a couple times in my experience where you have a disgruntled employee who hears about it and they think, well, now's my chance. And they call Medicare and say, oh, I heard you're auditing. 

Well, just so you know, they're also doing x, y, and z. Right? And, you know, sometimes you can't prevent that, but you certainly want to minimize it from happening. You don't wanna give people a sort of a reason to to think that you have done something wrong and that's their opening. 

Yeah. Well, great great, advice. So take a breath. Don't panic, but be serious about it. Read the details of the letter. 

They use in my experience too, the letters are pretty detailed. It'll say what they want, when they want it. I love the fact that you said, you know, if there is a need for maybe a little bit more time, maybe reach out to the requester. 

And I'll give you a good example. Sometimes, like, if you're a lab or if you're a a physician who relies on, referrals, sometimes the medical necessity documentation is in the ordering physician's chart. You might not have it. You might need to get, you know, additional information, and you don't mind requesting it, but you also don't run that other clinic's life. You run your own EMR. You might be able to push a few buttons and get that, but there may be some other documentation you need to get and you're relying on people outside of your control. 

Absolutely. And I'm so great this is a little bit of a a sub comment, but I'm so glad you mentioned, like, labs or third party vendors that rely on the medical necessity of other physicians, like, even, like, independent diagnostic testing facility. Right. A lot of times, those providers get audits. And every single time that I've worked with one of those providers who's gotten that audit, they've told me, well, I don't control medical necessity. So why do I care? 

You care because Medicare will only pay for that lab or that x-ray if it's medically necessary. 

And it really is your job to show that there is medical necessity. Meaning you have to get those physician records or the, you know, the other provider that that ordered the service. And if it doesn't show medical necessity, even though you don't control it, you don't get paid for the service. That's right. 

You're you're gonna Yeah. 

They're gonna follow the money. So they're gonna go who got paid, and that's that's where we can get our recourse. So really good good input. So you had mentioned, just a few minutes ago, kind of differences between government payers and commercial payers. Any thoughts on that? Any considerations for for our listeners? 

Yeah. So to the extent of how you respond, they're pretty similar. You know, again, don't panic, read it, make sure you respond on time, get extra time if you need it. All that stuff still applies. The differences are the potential outcomes. With commercial payers, generally, there's not a law that you may have violated. 

So there are laws related to commercial payers and certainly you have a payer agreement that you have signed or you're subject to as a participating provider. And because of that, there's rules you have to follow. So you have to respond to the audit and and, go through the audit process. But at the end of the day, there's no federal statute like there is that maybe Medicare or Medicaid that governs you submitting that bill. So, less of a potential penalty. 

Generally, I find commercial audits are much more relaxed. 

They're they're not as formulaic or procedural. 

But the one thing with a commercial payer is when you're dealing with a Medicare audit or Medicaid or anything, you know, federal based pay or like TRICARE, the military insurance. It's governed by very specific laws and rules and they all work the same because the contractors who work for those entities have a specific set of rules they have to follow. 

The commercial payers, that's not the case. The commercial payers, there may be state laws on how far back they can go for audit or how far they can go back to recoup. But the process of the audit appeals rights, things like that, and we'll we'll talk about appeals in a bit too, can vary from payer to payer. So you need to make sure that, like, if you get an audit from Blue Cross and then you are unlucky enough a month later to get an audit from Cigna, let's say, you can't rely on the process that you used and went through to to start and finish the Blue Cross audit with the Cigna audit. 

It could look very different. In many ways, they're similar, but it can look different. So that is something to make sure if you get a commercial audit, know what your provider agreement says. And, you know, you there's the the provider handbook that nobody reads until they have to. 

You need to dig that out and find it and look through it and see what it actually says about auditing the payer's rights, appeal process, etcetera. 

Great. Great advice. We're gonna take a quick break, everybody, before we ask some more important questions here. So, stay tuned. We'll be right back. 

Welcome back from the break, everybody. We are talking to Christina about what to do if audited, and we've been having some really good conversations. 

And now I I'd wanna ask a little bit of, you know, should we be doing some of our own exercises beforehand? Meaning, should we be doing some self audits once in a while. Right? 

And are providers required to conduct self audits once a third party audit is received. How does how does that work? Because a lot of us in compliance, we may already be doing some proactive auditing, but then we get this audit request out of the blue. Now we're required to do more and this and that. What are your thoughts on on that kind of scenario? 

Sure. So I always recommend that providers are conducting self audits routinely, whether that's once a year and depending on the size of your organization and the type of services you provide, that might make sense. 

For other providers, it might make sense to do it more frequently, quarterly. I have couple of providers I work with that do it monthly. 

But self audit should be conducted because you want to find problems with billing or claim submission or even compliance issues before they occur super important. And it also goes a long way, you know, with the government. If you find a problem, you let them know of the problem, you resolve the problem, then them coming to you and finding their problem. And you never want them to come to you and find out you knew about the problem and did not. That's that's the biggest of the issue. So you don't want that to happen. So very important. 

There also is the potential that you may have a legal requirement. So, there is a law and I'm blanking what that law is, but I promise you it's out there. And it says that essentially, you like, for Medicare, you have a requirement if you are on notice there's a problem to self audit and self report issues that you find. Okay? Right. And there's some time frames for how you can do that, and there's different mechanisms to sort of self report if you find a problem. But if you get an audit, let's say, from Medicare, for example, and that audit is conducted and the auditor comes back and says, we think there's these problems. 

You are now on notice that there's potentially those problems. And you do have a requirement, a legal requirement to go back and look in the the look back period for this purpose is generally six years to sort of look at those claims and issues and determine, you know, is there a systemic problem here? Was there a problem? Were there issues? 

And if so, self report that and refund, amounts that you were overpaid. And in definition of overpayment is essentially any money you weren't entitled to for some reason. And, again, you know, if if the overpayment was things like just an error, you know, we thought it was the the CPT code should end in one five and ended in in one it should really should end in one four. You know, that's a clerical error maybe. 

Worked with a client once that had a computer glitch. They were putting in the codes, and for some reason, this computer program for eighteen months was changing all their one four CPDs ending in one four to one five. 

So what was happening is they were upcoding and not even realizing they were upcoding. They were self auditing. Had they self audited, they would have been able to catch that before the the auditor caught it. 

But, you know, then there's other situations like I've worked with practices where they realize that they maybe build for services very common is, you know, they they build for services when they thought a doctor was Medicare enrolled and they weren't Medicare enrolled. 

Right. 

So it turned out that there was no ability for this doctor to be able to be paid. You know, those are some circumstances which may be considered more under a fraud category, even though it wasn't purposeful. 

And maybe you have to self disclose that in a little bit of a different way than just returning money to the MAC to the Medicare contractor. 

So, you know, the the the long answer to your question, that was long answer, but the short answer is yes. There may be reasons you have to self audit and self disclose. And if you get into those situations, you absolutely want to have knowledgeable legal counsel working with you because the audit process is very detailed. There's things you have to do, specific timelines you have to meet, and you wanna make sure you do it properly and disclose the proper information. 

If you don't, you could be subject to penalties. 

And, also, if you don't do it properly, it doesn't close the matter. You do it properly, it closes the issue, and you have sort of the understanding that the government's not gonna come back for you with these particular issues. If you don't do it properly, you don't have that certainty. And, you know, in any time during its statute of limitations period, they could come back and reopen the issues, which you never want to happen. 

Yep. Yeah. Such great point. So you you you've kind of been talking about some of these important considerations when conducting the self audit. Anything else that kind of falls in that category of any other important considerations related to conducting the self audit? 

Yeah. So the there's there's two main that I work when I work with all my clients, we talk about. One is you have to make sure that you're using a third party independent auditor. People will say I have the best biller in the world and I'm not gonna deny, you may have the best biller in the world. The problem is your biller is the one making a lot of these billing decisions and educating you on billing issues and billing concerns. 

If they made a mistake, they probably don't know they're making a mistake. 

Right. 

They're not gonna likely find their own mistake. In the example I gave you of the where the computer was up coding randomly, they might find that. But they may think that you can bill a certain code or a certain service is covered when it's not or it's not covered in the way this particular provider is providing the service. And they just don't know that. 

And, that's why you want an independent third party. You want someone else, and there's a lot of auditing companies. Every states have them. There's national companies that can provide auditors. 

And it's also good to look for a third party auditor that has some specialty or folks that have expertise in your particular billing area. 

Billing is so specific to the type of service that you do. Compliance is specific to the type of service and the rules that apply to you. You want them familiar with that. You don't want just someone who says, oh, I've built you know, I've been the biller for chiropractors my whole life, and I'm I'm a certified coder and now you're I mean, excellent at what they do, but they're billing, you know, orthopedic surgery claims. Very different type of service. 

The other main issue is always if you can have the auditor engaged through legal counsel. And the reason for that is it maintains for the most part attorney client privilege of what you find in that audit. So a lot of times we tell people when you get audited, by a third party and they come back and say you did ten things wrong, get a third party audit to look and see if they agree. Yeah. 

You did ten things wrong. Or they may say, no. You did five things wrong, and we think they're they're wrong, and these other five will help you appeal. You wanna make sure that you have legal counsel be the one to engage the auditor. 

The reason is if it turns out that the auditor says, you know what? You did all ten things wrong and you did two other things wrong that the government didn't catch. You can keep that as privilege. It can't be subpoenaed or something that the government can require you to turn over. 

Now the auditor may come back and say you didn't do anything wrong. We don't know what the government's talking about. Great. Then you could voluntarily turn that audit over if you want. 

But keeping the privilege in case it comes back poorly for you is important. 

And a lot of folks don't know that. They don't know that that's even an option, but it's it's very important. I think that's also where having legal counsel that understands health care in general and health care compliance is really important. 

Yeah. 

Those are all great great considerations from when you're doing these self audits. So, you know, we kinda started our conversation with third party audits. Let's maybe kinda get close to wrapping up here with this last question of what are some potential outcomes of third party audits? Like, what could happen? I I'm sure there's a lot of different variations. 

Sure. Sure. So, absolute best case scenario is you get an audit, an auditor comes back and says everything looks great. In my almost twenty years, that's only happened one time. And I couldn't believe it. I actually had an associate of mine read the email too just to make sure I was reading it correctly because I thought this has never happened. 

And it probably isn't gonna happen again. So Right. You know, the next best outcome is they come back and say, hey. There's a few errors. 

We want some recoupment. We want some refund. And it's a small amount. And to be honest with you, practically speaking, if it's a low recoupment amount, appealing is expensive. 

If you get lawyers involved, if you have to get your own if you do your own audit, go through the appeal process, it can be costly. Costly. So if you're looking at a small refund amount, just doing a cost benefit analysis, which I always like to tell my providers to do because we live in the real world. I'd like to fight everything because I think it's just right. 

And my clients want you to And I'll say, hey. They're asking for ten thousand dollars back, but it's gonna cost you twenty thousand dollars to win the appeal. 

Right. 

Don't lose that. Especially if you're a smaller practice or a a smaller type health care engineer. It just doesn't have the money to, you know, blow, the principle. Principles are expensive. 

Right? So that's sort of the the next best scenario. And a lot of people will say, well, if I if I pay it, I'm admitting I did wrong. You're not admitting you did wrong. 

It's you're you're refunding. It's not something that's gonna come back and bite you. It's not something they could use in a court they're gonna use in a court against you. Doesn't mean you're gonna get another audit. 

In in my all my experience, I've never had anybody get one audit and then quickly follow with another audit. So that rolling audit concern doesn't doesn't seem to happen. 

You may get a significant error report or a large recruitment. 

At that point, people generally will consider appealing Cause they'll say, well, this is a lot of money or we really don't think this is right. 

So the appeals process varies for commercial a lot of times it's arbitration process, where it says in the provider manual, your provider agreement, you go through arbitration arbitrator decides, the response. I will tell you commercial payers are generally very willing to settle issues. So, if they come back and say, we think you were overpaid by one hundred thousand dollars. 

Usually, if you you have a a pretty knowledgeable lawyer, you can get them to significantly reduce the amount they'll take to settle the issue without even going to arbitration. 

That tends to be the the case. It's not the rule, but it's Right. What we see often. 

Government doesn't really do that, so you have to go through the appeal process. Typically, there's three, sometimes like two, but typically three appeals processes you go through. 

The important thing to keep in mind with that is interest accrues the entire time. And right now, I think the interest rate's, like, eleven point seven five or something for the government. Don't don't quote me, but it's it's high. It's high. 

Definitely over ten. Right? So if you have a large recoupment and you wanna appeal it, you're gonna increase interest that entire time. So if you lose at the end of the day, you pay what they said you owe back plus you pay interest. 

But you've gotta kinda make that consideration as well. 

The appeal process also can take time. Now if you go through all layers, you're talking a year or more potentially Right. Depending on the backlog and, you know, when you file, you have time frames to file. If you wait till the longer end of the time frame to file, it can stretch it out further. 

Another thing to keep in mind, again, you should work with someone who knows about the appeal process is depending on when you appeal. If you file your appeal within certain deadlines, the government can't self help its money. Meaning it can't take what it believes it can recoup it's entitled to from current Medicare billings. But if you don't file within certain periods of time, even though you still have time to file the appeal, if you don't file it towards the early end, the government can start self helping. 

Meaning it's taking money away from you, but you're still an appeal. Now theoretically, if you win your appeal, you get that money back. I say theoretically because I've not had anyone go through that process and actually get their appeal at the end of the day. Right. 

But that's supposedly what happens. But the government doesn't give you interest on that money that it took. That's right. No. 

If it sells help fifty thousand dollars and a year and a half later, you win, hey. Here's your fifty thousand dollars back. But if you owe them fifty thousand and a year and a half later, you lose, you're gonna pay fifty thousand plus that very high interest rate. 

So Yes. 

Wow. Doesn't necessarily work out in your favor. 

But, you know, typically, people tend to appeal based on a cost benefit analysis and sure I get it from a business decision, but it's tough from for my position as a healthcare attorney when I see, like, I think we could fight it. 

I think you really have a good case here. And I want the government to know that they're not doing this properly, and someone should show them that. And the client's like, but yeah. But it's I gotta think about dollars and cents, and I get that. Because at the end of the day, it's a business, and it has to survive as a business. 

Yeah. So interesting. All these all these options, it does really convince me, and I hope it convinces our listeners to to get somebody that's qualified and knowledgeable, somebody like yourself, Christina. Really appreciate you spending some time with us today. Any last minute thoughts or or parting thoughts be before we wrap up? 

Yeah. Just understand that everybody, if you practice long enough, is going to get an audit somewhere. It's just it's a it's a matter of course. Be it commercial, be it government, It's going to happen unless you are solely taking cash only for services. 

You will have an audit. So, you know, again, important to think about, you know, annual audits at a minimum, try to catch things before they happen, try to engage people that are helping with billing or compliance that really have ex expertise in the field. Your cousin may be super smart, but I don't know if your cousin is the best person to be a biller. 

You really think about those things and try to prevent major problems where they occur. But if they do occur, there's there's always ways to resolve it in a manner that's gonna keep your business going and and keep the status quo. It's gonna be a little bump in the road in the meantime. 

Perfect. Great advice. Christina, thank you again for your willingness to share your expertise and experience in this area. 

Absolutely. Happy to be here and talk to everyone. 

And, folks, we'll include Christina's contact information in the show notes so that if if you feel like you need her help, you can reach out to her and and ask her questions. 

Thank you all for listening. As always, we we always invite you to share with us any topics that you'd like to hear more about. Or if you know a speaker who, you think would be a good guest, we'd love to hear their names and, consider them as as future guests as well. So, until next time, everyone. Take care. 

This transcript has been auto-generated. Please forgive any errors.