What to Do When Your Medical Practice is Audited


Medical practices may face external audits by both governmental entities and private health insurance providers. The audits are undertaken on behalf of those who pay claims to review billing practices and ensure the integrity of the process. Government audits can include Medicare, Medicaid, and recovery audits. The results of the audit can have significant implications for a medical practice. Therefore, it is essential you take the audit seriously and apply certain defensive strategies. Preparing ahead of time is essential because you may not get advance notice that an audit is happening.

There is little doubt that an audit can be a scary experience for a healthcare practice. Many employees are afraid of the auditor, given what they represent and the potential repercussions for the practice. However, an audit does not necessarily mean your practice will be punished. Instead, you should focus on the audit itself and deal with the possible fallout later. That’s because if you make a mistake during the audit, it can make your practice’s situation worse.

There Are Different Types of Medical Audits

First, not every audit is the same. Some may be routine in nature and not in response to any specific allegation of wrongdoing. These audits are becoming increasingly rare these days, as the trend has been for auditors to conduct their examinations when data analysis indicates possible wrongdoing. Other audits may occur when the government may believe there are billing irregularities at a specific medical practice. However, you may not know the scope of an audit at first because the auditors are intentionally vague. They do not want a practice to be able to “sanitize” their books and hide evidence of wrongdoing. The element of surprise can work to an auditor’s advantage.

Insurance audits are somewhat different because they are based on contracts as opposed to federal regulations. Nonetheless, insurance companies may be even more aggressive about auditing than the government because they are for-profit companies—but the government still has an interest in these audits as there could be the possibility of insurance fraud charges based on the findings of the audit. If an insurance company uncovers wrongdoing during an audit, it may attempt to reduce payments to your practice and recover money it has already paid.

Audit Defense Is All About Preparation

Much of your audit defense work is done ahead of time by ensuring your practice remains in compliance with applicable regulations. When your practice devotes time and resources to compliance, there will be fewer issues for auditors to spot. You may not even be subject to an audit because your billing may not trigger any warnings or indicators that your practice needs to be audited in the first place. You should consider a robust program of internal auditing to ensure your billing is mistake-free and compliant with regulations.

One of the most important things your practice can do is prepare ahead of time, even if you do not know there is going to be an audit. In some cases, the auditor may show up at your door unannounced, and an unprepared employee could cause serious problems for your business. Although you should cooperate with the auditors as requested, you should already have an audit response playbook in place detailing what to do so your employees are ready once you learn of an audit.

Designate an Audit Response Team

There should be a small team ready to deal with an auditor whenever they show up at your practice. Each employee on the team should have their own role and responsibility, and they should be careful not to exceed either. Your employees should generally plan to redirect questions to their supervisor. Be careful about allowing all employees to speak to an auditor because they are trained to ask the same questions to several people to see if their answers are consistent.

Monitor the Auditor and the Scope

When the auditors actually arrive, you should try to obtain as much information as possible about the audit and its scope. While the auditor may not give you much insight into why they’re there or what they’re looking for, you should at least be able to learn what they intend to inspect. Here is where your practice can face a major problem. If the auditor exceeds the scope of the audit, and they access records that are not a part of the examination, they may discover additional information they can use against your practice to penalize you.

Your employees should keep a close watch on the auditors to ensure they are remaining within the scope of the audit. Although we said above that your employees should be cooperative and respond to questions, you and they must also limit the auditors to the scope of the inspection. Your practice will face a significant challenge here because you must have justification to say “no” when an auditor is asking to see certain documents outside the scope of the audit. If you are wrong, the results of the audit may be even worse.

Always Consult with an Experienced Audit Defense Attorney

It is crucial for your medical practice to contact a healthcare audit defense attorney as soon as you know you or your practice is subject to scrutiny in the form of an audit. Your attorney can give you advice on how to handle the audit and respond to the auditor’s questions. If there are any findings from the audit that may result in potential punishment, your attorney can defend you against allegations of irregularities and misconduct. Remember that you are always entitled to due process, even after the audit results are finalized. You have the right to challenge the audit findings and any punishment that is potentially imposed on you or your practice.