Medicare & Medi-Cal Audits

The Law Office of Alexander W. Kirkpatrick represents health care providers, including pharmacies, physicians, and clinical psychologists, in all aspects of Medi-Cal and Medicare audits throughout Southern California. Although most enrolled Medi-Cal and Medicare providers have dealt with reimbursement issues relating to individual claims, few have experienced full audits.

Audits are frequently initiated by Medi-Cal and Medicare when a preliminary review of a provider’s claims indicates a possible problem. In many cases, these audits involve large sums of money, often hundreds of thousands of dollars. Recently, the U.S. Department of Health and Human Services broadened and made permanent the authority of the Recovery Audit Contractor (RAC) program, which investigates provider payments and initiates audits for recovery.

Medi-Cal Audits

In the case of the Medi-Cal program, audits are usually initiated by the Medical Review Branch, Audits and Investigations, of the Department of Health Care Services (DHCS). These audits often come on the heels of smaller, focused reviews of 20 to 40 patient records, which are frequently obtained by the auditors in an unannounced visit. If overpayments are claimed by the auditors on the more limited review, it can be expanded to a full “audit for recovery” (AFR) in which DHCS may assert it has overpaid the provider and demand disallowances for these overpayments. However, providers are entitled by law to appeal disallowances. This appeal includes the right to discovery of the Department’s evidence supporting the disallowances and the right to an administrative hearing under the Administrative Procedure Act. If the outcome is still unfavorable, or the audit could not be settled earlier, the provider may further appeal to the Superior Court via a petition for writ of mandate.

Medicare Audits

A similar process applies to Medicare reimbursement reviews and audits, but under a completely separate and far more complex set of laws and regulations. Similarly to Medi-Cal audits, Medicare audits start with a limited review, or “probe,” which may escalate to a full audit. Probes may be initiated by many different parties, including the regional Medicare carrier, an RAC, the “benefit integrity contractor” (Safeguard in California), an LLC, or even the Office of the Inspector General of the Department of Health and Human Services. The complex, five-part formal appeals process is set forth in a 168-page set of federal regulations called “Subpart I” and includes redetermination, reconsideration, administrative law judge hearing, Medicare Appeals Council review, and U.S. District Court review.

Pitfalls of Audits

Both Medi-Cal and Medicare audits share certain common pitfalls for health care providers, including:

Medi-Cal and Medicare enforcement methods can be highly intrusive and may involve collection efforts through the U.S. Department of the Treasury. Medi-Cal may even record its final audit decision as a civil judgment, which operates like a lien on the provider’s property.
Audits, adverse findings, and the records reviewed by auditors are often referred to the provider’s licensing agency. As a matter of policy, the Medical Board of California will open an investigation of the licensed health care professional based only on a referral from DHCS.
The final audit findings can be extremely punitive and cause irreparable damage to the provider.

Our Successes

Mr. Kirkpatrick has extensive experience representing Medi-Cal and Medicare providers at all stages of the audit for recovery process. In many of these cases, he works closely with Dona Hall, president of ADEPT Management Systems and highly-experienced in medical documentation and reimbursement. Ms. Hall assists with every aspect of the case, including the evaluation of records, research of regulatory and reimbursement issues, analysis of Current Procedural Technology (CPT) and Healthcare Common Procedure Coding System (HCPCS) issues, and testimony at the hearing. Some of our recent successes in audits include:

Representing a pharmacy that dispensed Anti-hemophiliac Factor (AhF), a very costly drug, under a contract with a national distributor. The pharmacy received a net of 1% of the total Medi-Cal reimbursement for AhF. Medi-Cal changed the amount of reimbursements it considered “reasonable,” and over $21 million was disallowed. There were no disallowances against the distributor, since it was not a provider. Working with a national law firm representing the distributor, Mr. Kirkpatrick was able to completely remove the pharmacy from the overpayment and settle the case. The national distributor also reimbursed the pharmacy for Mr. Kirkpatrick’s legal fees.
A Medicare audit disallowed over 70% of reimbursement to our client, a family practitioner and cardiologist, resulting in an overpayment demand of almost $700,000. Following an administrative hearing, the judge accepted our expert’s analysis of the overpayment issues. Ultimately, Medicare reduced its overpayment demand to $25,000 and the matter was concluded with no other actions against the physician.
Mr. Kirkpatrick represented an OB/GYN whose documentation of the enrollment of patients in a Presumptive Eligibility program had an error rate of at least 90%, often with multiple significant errors. Even though the overpayment was correctly calculated, we were able to settle the case for less than 50% of the overpayment.
Following an administrative hearing at the Office of Medicare Hearings and Appeals, we were able to obtain a 63% reduction of a Medicare audit, from approximately $170,000 to $62,000.

Seek Experienced Representation

Even the most experienced health care attorneys are rarely familiar with both Medi-Cal and Medicare regulations and the complexities involved in full audits. Alexander W. Kirkpatrick has over 25 years of experience dealing with Medi-Cal and Medicare audits and has achieved successful results for a wide range of clients facing serious financial harm. To schedule a consultation to discuss a possible audit, contact the Law Office of Alexander W. Kirkpatrick today.