Medical Audits Poised to Surge

Providers need to stay alert as to the areas being targeted for review by federally contracted entities.

Medicare Part A covers, among other things, inpatient hospital stays. These services are paid under what are known as Diagnosis-Related Groups (DRGs). 

As most of you reading this know, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) is always seeking to identify potential fraud, waste, and abuse (FWA) risk areas. If you read the OIG Work Plan, you are no doubt aware that various DRG reviews are constantly part of the strategy. By way of a quick overview, when the OIG performs a review of a facility that submits claims under a DRG (either through the Office of Audit Services, a.k.a. OAS, or the Office of Evaluation and Inspection, a.k.a. OEI), it is really a review of the Centers for Medicare & Medicaid Services’ (CMS’s) ability to adequately police the payment of claims. The facility that is audited is being used as a test to ensure that the DRG payments made to the facility were commensurate with the appropriate payment methodology.

The resulting audit findings are made public, and CMS is then put in a position to seek the identified overpayment from the provider (typically through the Medicare Administrative Contractor, or MAC). At the same time, the auditing division (OAS/OEI) will make recommendations to CMS targeting identified weaknesses found in the review. Work plans and their subsequent findings can provide key insights for a facility working to ensure that proper claims are submitted, and the potential for successful adjudication exists. 

It is no secret that data analytics is the driving force behind identifying providers that run askew of their peer field. In the DRG world, there are common areas that are targeted as inherent outliers. In the COVID-19 environment, the bank vault was opened, and CMS (as well as many commercial payors) paid claims at breakneck speed. Keeping in mind that CMS’s goal is ensuring continuity and accessibility of care, any potential FWA issues will be problems that will be dealt with in the future (and the future appears to be now); patient health is the primary focus. 

As we move back to a normal cadence in daily life, we are going to see an incredible uptick in audits and investigations, and DRG payments are going to be part of that. In my consulting space, I am seeing payors seeking large numbers of people to augment existing staff, as the volume of reviews to recoup incorrect payments has begun to expand. Outside of the usual suspects, sepsis, failure to thrive, heart failure, and COVID-19 will be list-toppers. I often state that there is a difference between dying from COVID and dying with COVID. As we have all seen firsthand, COVID-19 as a buzzword was a financial windfall, in some regards. The explosion of testing, treatment, and hospitalizations created a micro-economy within the healthcare economy. 

The audits that are beginning to start up again, and those directly relating to COVID-19 hospitalizations, will be a hard target of payors, regardless of whether they are commercial or government-run. One of the biggest detriments to successful adjudication is the lack of external audits and reviews by vendors in the auditing and consulting space. Payors are engaging in both DRG clinical validation of claims for reimbursement and DRG validation from a documentation perspective. In an instance when large amounts of money have been paid, so too will we see an even larger number of audits and reviews to identify payments made inappropriately. The backlog of audits and reviews will be enormous on the payor side, but there is no doubt that the payors are staffing their audit and review departments to identify instances in which monies can be “clawed back.” Keep an eye on any OIG Work Plan updates through the year. Those updates can provide key insights to the provider community regarding identified areas of FWA and program weakness, and allow in-house audit and compliance teams the ability to be proactive, not reactive.