Medicare Audits and Appeals

The MAC (Medicare Administrative Contractor) is the Medicare contractor responsible for processing and paying Medicare claims for a certain geographic region. They are responsible for identifying and correcting Medicare overpayments and underpayments. In addition, the MAC is responsible for processing Medicare provider appeals. One tool the MAC uses to target improper claims is prepayment edits. There are two types of prepayment edits: NCCI Edits (National Correct Coding Initiative) and MUE Edits (Medical Unlikely Edits). These are automated edits based on methodology developed using CPT coding guidelines and input from the AMA and other medical providers across the country. Medical providers may see these edits on their Medicare explanation of benefits.

The NCCI Edits are intended to promote correct coding methods and to control improper payments. Just because a claim hits an edit does not mean the claim is not payable. If the services were appropriate based on the specific circumstances and an appropriate modifier was used when the claim was billed, the claim can be eligible for payment. The provider’s medical record must contain information that supports the need for the service and the use of the modifier.

The MUE Edits (Medical Unlikely Edits) attempt to reduce inappropriate payments by setting the “maximum units of service that a provider would report, under most circumstances, for a single beneficiary on a single date of service.” Because these edits are based on normal or average circumstances, sometimes the care provided for a patient may vary from the norm. Given this possibility, there are several modifiers the medical provider can use to represent why or how a service was provided. As with the prior edits, the provider’s medical record must contain information that supports the treatment given and the modifier used when billing. Documentation is vital to ensuring correct payment for medical services that were rendered.

In addition to claim edits, the MAC utilizes a process known as the Medical Review Program.  MAC’s perform data analysis to identify patterns in provider billing. If the MAC data analysis indicates that a provider-specific potential error exists, the MAC will review a sample of representative claims.  This is called a “probe” sample. Usually, the sample is 20-40 claims. If a medical provider receives a request for documentation under the Medical Review Program, this should raise a flag with the practice managers. Although it does not confirm that a problem or violation exists, it does confirm that Medicare has a suspicion that a problem exists and that they are looking into the issue further. Great care should be taken in responding to this documentation request.  The MAC is required to note, on the request, the reasons the claims have been targeted. The MAC must list the law, the NCD or the LCD that is the basis for the audit.  In addition, the MAC should state what documentation is needed for the MAC to make their determination.

When a MAC verifies that an error or problem exists with a specific medical provider through the review of sample claims, the MAC will classify the severity of the problem:  minor, moderate or significant. There are several corrective actions that the MAC can take based on the severity of the problem. They are Provider Notification/Feedback, Prepayment Review and Postpayment Review.

If the error is minor, the MAC will notify the provider and inform the medical provider of the appropriate billing procedure. If the error is more severe, the MAC may opt to utilize Prepayment Review where a percentage of the provider’s claims undergo medical review before the MAC authorizes payment. If a physician or medical provider is subject to prepayment review, the provider may reestablish the practice of billing correctly and the prepayment review may be lifted.  The MAC may also utilize Postpayment Review where statistically valid sampling is used to target claims. After a provider has been paid, the MAC may send out a request for documentation to support the medical services billed.  If a medical provider receives either a prepayment or postpayment request for documentation, the provider has 45 days to respond. In a prepayment review, if the information is not received within 45 days, the claim will be denied. In a postpayment review, an extension may be granted based on the volume of information that has been requested and the burden of submitting the requested information.

Once again, documentation in a patient’s medical record is vital to avoiding further audit requests and denial of Medicare claims. Further, if a patient’s medical record does not support the services provided and billed, the medical provider or physician may be subject to a comprehensive Medicare fraud investigation and the case may be referred to law enforcement.

Chapman Law Group is familiar with MAC claim audits and is available to assist and consult with physicians and medical providers about responding to these document requests.  Engaging counsel at a very early stage of the process may save you valuable resources and ensure a more appropriate outcome.


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