illustration of files and ladders
by Mary Ellen Conway

It’s hard to sum up audit activity in 2022, as it was a roller coaster in the almost-three-year-long public health emergency (PHE) that resulted from the COVID-19 pandemic. It’s equally hard to predict what will happen in 2023 if—and when—the PHE ends.

Perhaps it’s wiser to review what was in place for Medicare audits before the PHE.

For those of us in the durable medical equipment, prosthetics, orthotics and supply (DMEPOS) world, our claims are paid by the regional DME Medicare Administrative Contractors (MACs) in Regions A, B, C and D. Other than with some mobility equipment, which requires pre-authorization of the item, Medicare operates in a “pay and chase” model; that is, they pay the claim and then chase the dollars that were paid. Audits can occur either prior to or after payment (i.e., pre- or post-payment). If you have satisfied all of the requirements and become a Medicare-approved supplier for DMEPOS items, you generally get paid for an item once you submit a compliant claim. There are several reasons why a supplier may receive an audit of their claim, either pre- or post-payment. Let’s take a look.

Finding a Target
Medicare may identify a specific claim or a group of claims through data analytics, which might flag the claim for a variety
of reasons:

  • An increase in the volume of claims being billed by the supplier
  • A trend of aberrant claims, outliers or unusual billing patterns is discovered
  • The supplier is in a “heat zone” identified by Medicare where other fraudulent providers have been discovered
  • An increased number of claims submitted for certain products with high reimbursement rates
  • An increased number of claims being submitted per beneficiary

Other reasons might include:

  • A complaint to Medicare by a patient or family member
  • A report from a whistleblower against
  • the supplier
  • A complaint from a competitor that the supplier is engaging in unfair or illegal business practices
  • Possibly during the testimony or evidence that was obtained during the investigation of another supplier.

This is certainly not the complete list of reasons why a claim might get flagged for audit, but it’s a start. Medicare is not an open door where suppliers can submit a claim for any DMEPOS items without ever being questioned. Claims can be subject to an audit either upon billing or after the payment has been made.

Look at it this way: Medicare would need to employ or contract out for legions of case management staff to review every claim being submitted to ensure that the patient’s medical condition indicates the need for that item. In the case of private insurers and Medicare Advantage plans, DMEPOS items are authorized by a case manager who gives an authorization number for that item to be provided to the beneficiary and then billed to the insurer with that unique authorization number. This system does not exist for fee-for-service Medicare suppliers; this is the reason documentation from the prescriber is required to be submitted when responding to an audit—to ensure that all of the criteria for reimbursement (listed in the Local Coverage Determination) for that item has been determined to be in place.

A Temporary Pause
The rules for Medicare audits were largely put on hold during the first 12 or 14 months of the pandemic. At the beginning of COVID-19, you will recall, many prescribers were not seeing patients in their offices, nor did Medicare beneficiaries want to leave their home and go out into public areas where they ran the risk of contracting
the virus.

Before that time, the rules for providing telehealth were very strict and reimbursement for telehealth services was only available when specific criteria was met. Telehealth was paid by Medicare initially to accommodate rural clinics and health centers that used the services of a prescriber via video call that met certain criteria when a local prescriber was not always available to be in person on-site. A prescriber could not be reimbursed for seeing beneficiaries from their home or through the use of Zoom. At that time, the prescriber had to be located in an approved telehealth location, which was most likely a preapproved telehealth center in an authorized facility with approved telehealth electronics.

In 2022, we’ve seen the world start to open up again, with schools and classrooms back in session and prescribers’ offices once again open for patients. Contracting COVID-19 in the earlier days of the pandemic could be lethal. But now, infections, while they still can be very tough, are largely much less severe and can be managed at home, without needing hospitalization, thanks to the widespread adoption of the vaccine and boosters.

TPEs Return
As life returns to normal, we have been starting to see an uptick in the Targeted Probe and Educate (TPE) audits that Medicare performs.

These audits come before the supplier is paid for a claim (thus, they are a pre-pay audit) and/or are targeted to a specific item or health care common procedure coding system (HCPCS) code.

They progress in the following stages:

A TPE audit begins with an initial review of 10 claims. If all 10 claims are determined to be correct and complete, the supplier is determined to have successfully completed the audit and that product or HCPCs code is not audited again for a period of 12 months.

If there are one or more claims that do not pass this initial audit, the supplier is placed into Round 1 of a TPE, during which the DMEMAC reviews between 20 to 40 claims. If the supplier passes this round, the audit is determined successful and the 12-month hiatus on that particular product being audited begins.

If the supplier fails Round 1, they are placed on Round 2. The DMEMACs have not provided a specific percentage of bad claims that lead to failure, but our experience has shown it is around 20%
or higher.

If still unsuccessful, a Round 3 is scheduled. Hopefully a supplier does not fail a Round 3 TPE. If they do, they may be referred to other entities where things can get a lot worse than just an audit.

The End Is Near?
We have been assured by the White House and the Department of Health and Human Services that they will issue a 60-day warning of the date of when the PHE will be ending. In the latter months of 2022 and as 2023 begins, we are seeing an increase in TPE audits and the expectation is that they will continue to grow. What you can do in the meantime is to make sure you have reviewed your compliance plan and that you are performing internal audits on your claims.

Ensure that you are collecting the prescriber’s documentation upon referral in anticipation of potential future audits. Don’t accept an office telling you that “no one else asks for that;” insist that you have the information you need to protect yourself. Others may not have required the documentation in prior years, but these
days it’s required every place a prescriber makes a referral—from DMEPOS to a
lab test.

If you request the medical records at the time of the referral, you have time to review it and be certain it’s in compliance or to ask for any additions you might need added to their documentation before you provide the item or bill the claim. Often it is too late to start requesting this by the time your claim gets audited, whether it’s during a pre-pay or post-pay audit.

By knowing that you have compliant documentation on hand, you can detect any problems you might have and work to fix them long before a Medicare audit arrives on your doorstep.

Mary Ellen Conway, RN, BSN, is president of the Capital Healthcare Group and a member of the HomeCare Editorial Advisory Board. Reach her at