Medicare Audits and Program Integrity

A Guide for Audiologists and Speech-Language Pathologists

The Medicare Program Integrity Manual contains the policies and responsibilities for contractors tasked with medical and payment review. As policymakers consider legislative and regulatory action to curb fraud, waste, and abuse, claims and services by audiologists and speech-language pathologists are subject to review by one or several audit contractors.

On this page:

• Types of Contractors that Conduct Audits
• Standards for Medical Review
• Reasons to Deny
• Medicare Appeals Process
• Payment Recovery/Recoupment

Types of Contractors That Conduct Audits

There are several types of Medicare contractors with the responsibility of auditing records, claims, and payments. Each type of contractor may use different methods to conduct audits, but they must all abide by overarching Medicare guidelines for medical review, denials, appeals, and payment recovery, as set forth by the Centers for Medicare and Medicaid Services (CMS).

Medicare Administrative Contractors (MACs) regionally manage policy and payment related to reimbursement. The MAC scope of work includes using data from other contractors to target improper payment and vulnerabilities. MACs have the ability to perform medical reviews for all claims, at their discretion, and will do so by issuing an additional documentation request (ADR) to the provider. For more information on the regional MACs, see ASHA's webpage at Medicare Administrative Contractors.

Recovery Audit Contractors (RACs) detect and correct improper payments and are responsible for reviewing claims where improper payments have been made or there is a high probability that improper payments were made. Notification by RACs is through the ADR to the provider. For more information on the RAC process, see ASHA's webpage at Medicare Recovery Audit Contractors.

Comprehensive Error Rate Testing (CERT) contractors statistically analyze and establish error rates and estimates of improper payments by claims randomly selected for review. They are not required to notify providers of their intention to begin a review, but may issue an ADR to the provider if necessary.

Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractor (PSCs) identify and stop potential fraud and refer these cases to the Department of Health and Human Services (HHS) Office of Inspector General (OIG) Office of Investigations (OI).

Supplemental Medical Review Contractors (SMRCs) are charged with performing and/or providing support for a variety of tasks aimed at lowering improper payment rates and increasing efficiency of the medical review functions of the Medicare and Medicaid programs. One of the primary tasks of the SMRCs is to conduct nationwide medical review as directed by CMS. SMRCs will evaluate medical records and related documents to determine whether Medicare claims were billed in compliance with coverage, coding, payment and billing guidelines. The focus of the reviews may include, but is not limited to, vulnerabilities identified by analysis of CMS data, the CERT program, professional organizations, and federal oversight agencies.

Standards for Medical Review

Medicare contractors with the responsibility to audit are given the same guidelines regarding the type of review and reasons to deny. 

Prepayment review of claims always results in an "initial determination'' and is assessed on the current claim. Once the status has been determined (i.e., services were or were not reasonable and necessary), the claim will be processed.

Postpayment review may result in no change to the initial payment to the provider or may result in a "revised determination" that would require the provider to pay back monies for services determined to be "not reasonable or necessary."

Automatic, or non-complex, reviews occur without clinical review of medical documentation submitted by the provider, such as in cases of medically unlikely edits (MUEs) or when there is no timely response to an ADR.

Complex reviews involve requesting, receiving, and medical review of additional documentation associated with a claim. Reviewers may call upon other health care professionals, such as audiologists or speech-language pathologists, for consultation on the review.

For more information regarding medical review related to the targeted medical review process for therapy claims that have reached the $3,000 threshold, see Medicare Part B Review Process for Therapy Claims.

Reasons to Deny

Audit contractors are instructed to deny services if they meet any of the following conditions.

• The item or service does not fall into a Medicare benefit category.
• The item or service is statutorily excluded.
• The item or service is not reasonable and necessary.
• The item or service does not meet other Medicare program requirements for payment.

Auditors must adhere to CMS issued national coverage determinations (NCDs) and regional local coverage determinations (LCDs). In the absence of NCDs or LCDs, the contractors are responsible for determining whether services are reasonable and necessary, based on the following criteria.

• It is safe and effective.
• It is not experimental or investigational.
• It is furnished in accordance with accepted standards of practice for the diagnosis or treatment of the beneficiary's condition.
• It is provided in a setting appropriate to the beneficiary's medical needs and condition.
• It is ordered and performed by qualified personnel.
• It meets, but does not exceed, the beneficiary's medical need.

A full denial or partial denial can be issued. For a partial denial, the auditor determines that the submitted services was up-coded (a lower service was actually performed) or incorrectly coded.

Auditors can review any documentation submitted with the claim, other documentation subsequently submitted by the provider, or billing history obtained from Medicare databases. Any information submitted by the provider must corroborate the documentation in the beneficiary's medical documentation and confirm that Medicare coverage criteria have been met.

Medicare Appeals Process

Claims denied payment following a determination made by a contractor can be appealed. If a claim was denied due to a small error (e.g., transposed code) or omission (e.g., missing referring provider), the claim can be corrected through a reopening process rather than through appeals. Providers should refer to their local contractors regarding the reopening process.

Appeals are appropriate when a claim has been reviewed for "reasonable and necessary" services and the provider disagrees with the final determination or has additional documentation that can further establish that reasonable and necessary services were provided.

Below are the five standard levels of the appeals process, which apply regardless of the type of Medicare audit contractor that has made the determination.

Level One: Redetermination by a Medicare Contractor

Within 120 days from the date indicated on the remittance advice (RA), the provider can request redetermination from the contractor. The contractor will assign staff not involved in the original determination. The provider should also include any documentation that supports the overturn of the determination. A minimum monetary threshold is not required to request a redetermination. Instructions for appeal are included on the RA or submission forms; requirements can be found on the contractors' websites.

Level Two: Reconsideration by a Qualified Independent Contractor (QIC)

If the provider disagrees with the redetermination results, the provider may request in writing, within 180 days, a reconsideration performed by a QIC. A copy of the RA and any other useful documentation should be sent with the reconsideration request. The QIC reconsideration process includes an independent review of the determination and redetermination and may include review by a panel of physicians or other related health care professionals. A minimum monetary threshold is not required to request reconsideration. Reconsideration request forms are available on the Medicare administrative contractors' websites.

Level Three: Hearing Before an Administrative Law Judge (ALJ)

Within 60 days of the receipt of the QIC reconsideration decision, providers who have a minimum amount still in controversy (determined annually-for example, the 2021 minimum amount is $180) can submit a request for a hearing with the ALJ, housed in the HHS Office of Medicare Hearings and Appeals. Hearings are generally held by video teleconference or telephone, though an in-person hearing may be requested when good cause is demonstrated. The ALJ will make a decision within 90 days of receipt of the hearing request; if this timeframe is not adhered to, the provider may request the case be reviewed at the Appeals Council level. Instructions for requesting a hearing can be found in the reconsideration letter from the QIC.

Level Four: Review by the Appeals Council

Within 60 days of the ALJ's decision, or 90 days of no decision, the provider can request in writing a determination by the Appeals Council. The Council sits with the HHS Departmental Appeals Board. The ALJ decision letter will contain details regarding the procedures for filing a request for the Appeals Council review. There is minimum amount requirement, determined annually ($180 for 2021).

Level Five: Judicial Review in Federal District Court

If a minimum amount (determined annually-for example, the 2021 minimum amount is $1,760) or more is still in controversy following the Appeals Council's decision, the provider can request a judicial review within 60 days. The Appeals Council's decision letter contains the instructions regarding the judicial review request.

For more information, see the Medicare Learning Network's publication on the Medicare Appeals Process [PDF].

Payment Recovery/Recoupment

A Medicare overpayment occurs when a provider receives excess payment due to

• duplicate submission of the same service or claim,
• payment to the incorrect payee,
• payment for excluded or medically unnecessary services, or
• a pattern of furnishing and billing for excessive or non-covered services, as determined in an audit or review.

When Medicare discovers an overpayment of $10 or more, the overpayment recovery process will be initiated with a demand letter. The demand letter includes an explanation of the accrual of interest if payment is not received by the 31st calendar day from the date of the letter. Subsequent demand letters may be sent if payment is not received within 30 calendar days of the first letter. Recoupment procedures begin when there is no response by the provider by 40 calendar days of the first letter.

Recoupment means that the overpayment will be recovered from current payments due or from future claims submitted, unless a valid appeal has been filed. The Department of Treasury is notified within 120 days if offset or collection is necessary. If a provider appeals, the days are not counted during the process; however, interest shall continue to accrue from the date of the demand letter throughout the appeals process.

If the physician or supplier is unable to pay the entire amount of the overpayment in full, the provider may contact the contractor to request an extended payment plan.

For more information, see the Medicare Learning Network's Overpayment Brochure [PDF].