How Whistleblowers Can Stop Fraud With a Medicare Audit

Medicare fraud is a significant issue that costs the U.S. government billions of dollars each year. Whistleblowers play a crucial role in identifying and stopping fraud. By reporting fraudulent practices, whistleblowers can prompt or accelerate federal investigations, including Medicare audits, which help ensure that healthcare providers comply with federal laws and regulations.

In this blog post, we will explore how different types of Medicare audits are used to fight fraud and why audits are important in qui tam cases

Whistleblowers Reporting Fraud Can Lead to a Medicare Audit

When healthcare providers engage in fraudulent practices, such as overbilling, false claims, or unnecessary medical procedures, whistleblowers can step forward to report these activities. Often, these reports are made under the False Claims Act (FCA), allowing whistleblowers to file qui tam lawsuits on behalf of the government. This process enables private citizens to act as a powerful resource in the fight against fraud.

Once Medicare fraud is reported via a qui tam action, it is investigated under seal by the Department of Justice (DOJ) in cooperation with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  These investigations may lead to audits by the Centers for Medicare & Medicaid Services (CMS) or third-party contractors. These audits aim to uncover any billing discrepancies, including overpayments, improper claims, or unnecessary services.

Medicare audits can happen for a variety of reasons and are not necessarily an indicator that someone has filed a qui tam action.  Additionally, just because a qui tam action has occurred does not necessarily mean a Medicare audit will be conducted. Regardless of what triggered the audit, obtaining a provider’s audits during a qui tam action can provide crucial evidence.

The Role of the Centers for Medicare & Medicaid Services (CMS) in Identifying Fraud

The Centers for Medicare & Medicaid Services (CMS) oversees various fraud-fighting programs, including audits. For example, CMS contracts with several third-party auditing firms, including Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), and Unified Program Integrity Contractors (UPICs), and may direct these contractors to focus on specific areas of concern.  CMS provides the framework and resources necessary to identify fraud and ensure that providers are held accountable for any improper billing practices.

The Role of Medicare Administrative Contractors (MACs) in Identifying Fraud

Another key player in the Medicare auditing process is the Medicare Administrative Contractor (MAC). MACs are private companies contracted by CMS to process claims for Medicare Part A and Part B. These entities play a crucial role in enforcing Medicare rules by ensuring that claims are processed accurately and that providers adhere to local coverage determinations.

When a Medicare Administrative Contractor identifies discrepancies or signs of fraud during the claims process, it can prompt further investigation, refer the matter to specialized fraud contractors, or trigger an audit. MACs also assist in educating providers on Medicare billing guidelines to prevent future errors or fraudulent claims.

What Happens During a Medicare Audit?

A Medicare audit is a detailed review of a healthcare provider’s billing practices, documentation, and claims submissions to ensure compliance with Medicare regulations. The audit process typically begins with a data analysis of the provider’s billing records. This phase allows auditors to identify patterns that may suggest fraud, such as unusually high billing rates, services not rendered, or unnecessary medical procedures.

Next, auditors issue an Additional Documentation Request (ADR), where the provider must submit relevant medical records and billing information to the auditing entity. These medical records help auditors determine whether the services billed were necessary, appropriately coded, and compliant with Medicare guidelines.

During the audit, auditors closely examine the claims for accuracy, compliance with billing requirements, and the medical necessity of services provided. This can result in various outcomes, including claims denials, recoupment, exclusion from the Medicare program, and recommendations for improving billing practices. The audit also helps identify any systemic issues within a provider’s practice that may lead to future fraudulent activities.

If the audit identifies improper payments, the provider may receive a demand letter requesting repayment. Providers can challenge these findings through the appeals process if they believe the audit results are incorrect. This process allows providers to present additional evidence and make their case for reducing or reversing the audit’s findings.

Types of Medicare Audits

Several types of Medicare audits are designed to uncover different forms of noncompliance, waste, and fraud. Some audits target known or suspected issues, while others proactively look for errors.  All are vital for fighting Medicare fraud.

There are two general types of audits under which all other audit types fall: pre-payment audits and post-payment audits. Pre-payment audits occur before Medicare reimburses a provider for services rendered. This allows CMS or its contractors to ensure that the claim is accurate and compliant before payment is made. In contrast, post-payment audits occur after the provider has been paid. These audits focus on identifying improper payments, such as overcharges or unnecessary services, and recovering any funds paid in error. CMS often prefers post-payment audits, following what is often called a “pay and chase” model.

Targeted Probe and Educate Program Audits

The Targeted Probe and Educate (TPE) program is another important audit that focuses on providers or services with high error rates. TPE audits are designed to educate providers about correct billing practices, helping to reduce the likelihood of future errors. This approach may be favored where the data suggests the errors are minimal and unintentional, though in some situations even unintentional mistakes can lead to False Claims Act liability.

RAC Audits

Recovery Audit Contractors (RACs) are private companies contracted by Medicare to conduct routine audits of flagged claims. RAC audits primarily review claims for fee-for-service payments, ensuring that billing is accurate and compliant with Medicare standards. These audits can focus on many claims or as few as one, and can be triggered by a variety of factors.

Unified Program Integrity Contractor Audits

Unified Program Integrity Contractor (UPIC) audits investigate fraud, waste, and abuse in Medicare and Medicaid programs. Unlike routine audits, UPICs operate as an investigative arm that focus on systemic fraud, making them especially vital in fighting Medicare fraud.. UPIC audits often begin with a data analysis and involve both medical records and provider claims to identify patterns of fraudulent behavior.

Supplemental Medical Review Contractor Audits

Supplemental Medical Review Contractor (SMRC) audits are conducted at a national scale and focus on vulnerabilities that have been identified by CMS as well as special projects assigned by the agency.

Comprehensive Error Rate Testing

Comprehensive Error Rate Testing (CERT) assesses whether Medicare payments were made correctly by reviewing random samples of past claims.  This process helps CMS identify potential trends in billing to spot potential areas of concern. 

The Role of the Whistleblower Attorney

Whistleblower attorneys help their clients understand the filing process, gather corroborating evidence, and file qui tam lawsuits under the False Claims Act while ensuring absolute statutory confidentiality under seal.  A whistleblower attorney also works to protect the rights of their client, ensuring that their role in exposing fraud leads to meaningful action and pursuing any claim they may have for unlawful employer retaliation. If the qui tam action is successful, a whistleblower attorney will negotiate with the government to maximize your whistleblower award.

A whistleblower attorney also plays a role in ensuring Medicare audits are put to use in your qui tam action.  Many whistleblowers are shocked to learn that the government typically does not automatically share documents, including Medicare audits, with whistleblowers in qui tam actions. If the qui tam case is “declined,” meaning litigation is left to the whistleblower’s attorney rather than the government, the attorney must request these documents directly from the agency that produced them.  This can be a complicated process, so retaining a False Claims attorney  who knows the correct procedure for requesting audits and other information from CMS is essential. For expert legal guidance, The McCabe Law Firm specializes in representing whistleblowers in Medicare fraud cases, ensuring your disclosures are presented persuasively to federal authorities.

Conclusion

Whistleblowers play a crucial role in identifying and stopping Medicare fraud. By reporting fraudulent activities, whistleblowers help the government recover improper payments and hold healthcare providers accountable for their actions. Medicare audits can assist in that process and provide valuable information during the litigation of qui tam cases.

If you suspect Medicare fraud, working with experienced qui tam whistleblower lawyers at The McCabe Law Firm can guide you through the process and help bring fraudulent practices to light. With the help of a skilled attorney, whistleblowers can stop fraud, protect taxpayer dollars, and ensure the integrity of the Medicare program.