Be Prepared in Case of CMS Audits
Maintaining good documentation in your files is essential because CMS audits are not going away and most likely will occur more often in 2013. What types of audits could a company expect from CMS?
- Diagnostic coding
- Utilization review
- Prospective audit
- Retrospective Audit
While none of the audits is less important, the pre-payment review associated with a prospective audit is likely to be of most concern. In simple terms, this means that documentation must be provided as services are rendered, and until the exam is completed, no payments are issued for services. There is no timeline as to how quickly the auditor must complete the exam. You might not get paid for several months, but your costs will not be deferred during this time.
In comparison, retrospective audits occur after services have been rendered and typically after payment has been received. A retrospective exam may be linked to a company's history of problems with coding, over payments, poor documentation, or the like; however, there will be instances when none of these issues has occurred. We should start seeing more random types of exams in the future, although they should not be the norm.
Most audits are conducted with the intent of taking back revenues that you have already been paid. A company can buffer itself from audits by doing a few things strategically:
- Maintain a good bank relationship.
- Maintain cash reserves to cover expenses for at least three months.
- Establish a line of credit.
- Maintain a good credit score, since many loans require a personal guarantee.
- Keep financials current in case a loan is required, discussing these with a lender on a regular basis.
- Involve your CPA firm with reviewing/participating in the financials, not just the annual tax return filings.
- Diversify sources of revenue that are not from Medicare, although this might not be practical.
An important factor of any type of audit is to have attorney involvement. The reason for this is to make sure that you have attorney-client privilege that extends to all those who might have to provide documentation - be it the biller or coder, CPA firm, officers of the company, or any other person involved. All the documents requested should be copied, and all copies should be routed through the attorney and not given directly to CMS or a RAC auditor. This will ensure a process of how documents will be handled. Two copies of all requested files or documents should be made at a minimum - one for the attorney and one for the auditor.