How Better RCM Can Reduce Medicare Fraud Audits

Medicare fraud audits have major ramifications, and inefficient revenue cycle management (RCM) practices only increase the risk. Discover how better RCM can help reduce the chances of an audit.

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With Medicare claims, a simple mistake can result in rejections and denials. While these are part of the business, recurring minor errors leading to higher-than-average rejections have unwanted ramifications. They raise serious red flags behind the scenes, putting your healthcare facility under the microscope to be examined by auditors for negligence or, even worse, potential Medicare fraud. It’s a nightmare scenario affecting everyone from the CFO to healthcare providers and can even disrupt service.

Fortunately, this situation can be avoided if your facility has a strong handle on its revenue cycle management (RCM) practices — the area most susceptible to these simple mistakes.

Medicare fraud audits carry weight

As enrollment into Medicare and Medicare Advantage has more than doubled in the past decade, so has the cost to support it, swelling to a staggering $427 billion. With so much at stake, the government keeps a close eye on Medicare claims and payments, sending auditors from regulatory agencies, such as the Centers for Medicare & Medicaid Services (CMS), to investigate every suspected Medicare fraud.

This type of audit is not a quick look through the books. It is a comprehensive investigation where auditors scrutinize every billing record in your healthcare operation to the extent your facility may struggle to function optimally. Even worse, irregularities can lead to criminal and civil prosecutions with significant fines, penalties, and imprisonment.

Furthermore, these auditors don’t come quietly. If your facility is under investigation, everyone will know. This is not the spotlight you want because it negatively affects perceptions and reputations, painting a picture of negligence and dishonesty — a hard-to-shake image even if accusations are unfounded.

Common Medicare fraud triggers

Medicare fraud is an illegal activity involving intentionally submitting false claims to gain unjustified reimbursement. It is a serious federal offense exploiting Medicare, costing taxpayers billions, and putting the entire healthcare program at risk. Therefore, it is guarded by a rigorous regulation and billing system with numerous statutes to catch fraudulent behavior.

These complexities have an unfortunate consequence where unintentional or accidental mismanagement can be misconstrued as attempted fraud. The most common practices are listed below:

  • Billing for extra services or supplies not medically needed or left unused
  • Billing for extra services and supplies not provided, also known as phantom billing
  • Attaching erroneous patient medical records to claims
  • Making referrals to companies who have a financial relationship with your facility
  • Misusing Medicare codes in a claim, including unbundling services and upcoding

This list of suspicious practices could go on and on. Without a system of checks and balances, you put your healthcare facility at risk. Even the smallest oversight or inefficiency from facility personnel, staff, and physicians can lead to accusations and audits.

Reducing the potential of an audit

The best way to reduce the potential of a Medicare fraud audit is to self-audit your patient-billing operations from patient registration to final payments. The key areas to assess include:

  • Data collection and recording
  • Documentation practices
  • Technologies and software systems
  • Employee knowledge
  • Insurance company communications

Once error-prone activities have been identified, you can make corrections to your operation, such as:

  • Improving your billing compliance to align with Medicare coding regulations
  • Enhancing all relevant billing documentation
  • Refining medical record-keeping practices
  • Streamlining Medicare claims-processing and payment procedures
  • Reducing billing errors and inconsistencies
  • Educating and training healthcare personnel to understand and follow best practices

While these changes can drastically reduce the potential of claim rejections and accusations of Medicare fraud, such a thorough assessment is a daunting task with the potential to overwhelm you and your employees. In these cases, consider bringing an expert on board who can objectively evaluate your revenue cycle and help you identify problem areas.

With such expertise on your side, you can implement effective RCM solutions to streamline and safeguard your billing operations from start to finish. After all, an efficient healthcare facility is less likely to make mistakes, thus protecting itself from being audited.

Managing claims with integrity

A Medicare fraud audit is a major strike against any healthcare provider, even if there is no wrongdoing. At its best, an audit is a sign of negligent billing practices, which deters patients. At worst, it marks your facility as one engaging in shady practices, which can close your doors for good. Either way, there is no good outcome.

Learn how to identify potential Medicare fraud flags at