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Introduction:
The Targeted Probe and Educate (TPE) audits have emerged as a crucial tool in the Medicare program, utilized by law enforcement agencies and private insurers alike. While these audits aim to educate healthcare providers about proper billing techniques, the potential for legal consequences looms over those who fail to make progress. Providers failing TPE audits risk exclusion from the Medicare program and referral to law enforcement for Medicare fraud investigations.

1. Understanding TPE Audits

A TPE audit involves a thorough examination of a healthcare provider’s billing practices for Medicare claims. These audits are conducted by the provider’s Medicare Administrative Contractor (MAC). If discrepancies or irregularities are found between the claims and the healthcare services provided, the MAC assists the provider in rectifying the issues and provides guidance on avoiding future mistakes.

Although the MAC conducts the audit, the Centers for Medicare and Medicaid Services (CMS) oversee the program. The CMS initiated the auditing process in 2017 as a pilot program to identify inefficiencies in the Medicare payment system. After a temporary pause due to the COVID-19 pandemic, the audits resumed on September 1, 2021.

While the TPE audit program emphasizes education on proper billing techniques, the reality is that failing the audit can result in significant penalties, including potential criminal investigations for healthcare fraud.

2. The TPE Audit Process

Healthcare providers learn about their selection for a TPE audit through a Notice of Review letter from their MAC. This letter explains the reasons for the audit and requests medical records supporting a sample of 20 to 40 Medicare claims.

Providers targeted for TPE audits are not chosen randomly. MACs use data analysis to select providers with elevated claim denial rates or those who frequently use specific billing codes, posing financial risks to Medicare.

Once the MAC receives the medical records, it evaluates whether they align with the Medicare claims. The audit identifies issues such as incorrect coding, lack of documentation supporting medical necessity, missing proof of certification or recertification, and missing signatures.

If the medical records support the claims, the provider passes the audit, and it concludes. Providers audited cannot be subjected to another TPE audit for at least a year, unless significant changes in Medicare billing practices are detected by the MAC.

If the medical records do not align with the Medicare claims, the MAC schedules an educational session with the provider. During this session, the provider learns about the errors made and how to rectify them. The provider then has 45 days to make the necessary changes to their Medicare billing system.

The MAC may conduct a second round of TPE auditing by requesting medical records for another 20 to 40 Medicare claims made at least 45 days before the educational session.

This review process is repeated in the second round. If the MAC identifies additional errors, it schedules another educational session, granting the provider another 45 days to implement the changes. The MAC then conducts a third round of auditing, requesting medical records for another 20 to 40 Medicare claims.

If errors persist in the third round, the MAC can deem the provider as failing the audit and refer the case to the CMS for further action.

3. Penalties for Failing a TPE Audit

If a healthcare provider fails the third round of a TPE audit, the MAC forwards the results to the CMS for follow-up action. This can include:

• Extrapolation of Medicare overpayments from the sample and demanding repayment
• Referral of the provider to a Recovery Audit Contractor (RAC) or a Zone Program Integrity Contractor (ZPIC) for further investigation
• Refusal to approve future Medicare claims without a burdensome prepayment review
• Suspension of Medicare payments
• Exclusion of the provider from the Medicare program entirely

The financial repercussions of repaying an extrapolated overpayment can be severe, especially if the CMS halts Medicare income for the provider. Additionally, failing a TPE audit may lead to civil or even criminal charges for healthcare fraud.

4. Appealing a TPE Audit Outcome

Healthcare providers have the right to appeal a TPE audit failure through the standard Medicare appeals process.

5. Frequency of TPE Audit Failures

According to the CMS, Medicare Administrative Contractors (MACs) conducted approximately 13,500 audits from October 2018 to September 2019, reviewing around 435,000 Medicare claims. Out of these audits, less than two percent failed all three rounds.

6. Avoiding Audit Failures: What Providers Can Do

Given the penalties involved, avoiding TPE audit failures is crucial for healthcare providers, regardless of their frequency. Establishing a robust compliance system and adhering to it strictly is the most effective approach. Regular training sessions for employees ensure awareness and adherence to Medicare rules, minimizing billing errors and reducing the number of TPE audit rounds.

Developing an effective compliance system often requires the assistance of a Medicare compliance lawyer. With their expertise in the intricacies of Medicare billing, these lawyers help providers develop comprehensive compliance strategies.

For healthcare providers receiving a Notice of Review letter from their MAC, engaging a lawyer further reduces the risk of audit failure. By involving a healthcare lawyer early on, providers can conduct internal reviews and address potential issues before the audit takes place, significantly impacting the outcome.

According to Nick Oberheiden, founding attorney of Oberheiden, P.C., a Medicare compliance and audit defense law firm, “A skilled and experienced lawyer can help a healthcare provider prepare for the inevitable TPE audit and guide them seamlessly to a successful outcome with minimal disruption to their business.”

Conclusion:
Navigating the TPE audit process requires healthcare providers to prioritize compliance and adhere to Medicare guidelines. By establishing a robust compliance system and seeking legal support, providers can minimize the risk of audit failures and ensure a secure future within the Medicare program.