PROVIDERS AND SUPPPLIERS BEWARE…recent audit and program integrity activity has the potential to wreak havoc on your business. The Centers for Medicare and Medicaid Services (CMS), through their contractors, as well as through changes to their manuals, coupled with activity by the HHS Office of Inspector General (OIG) and Department of Justice (DOJ) indicates that audit activity is on the rise.

Targeted Probe and Educate Program

On August 12, 2021, CMS announced the restart of the Targeted Probe and Educate (TPE) program (Targeted Probe and Educate (TPE) program). According to CMS, this program is designed to educate providers and suppliers with respect to the submission of correct claims and reduce denials. Medicare Administrative Contractors (MACs) will be performing the review and providing the education. Some common claim errors that CMS has indicated they might be looking for include missing signatures, missing or incomplete certifications and documentation not supporting medical necessity.

CMS has indicated that providers and suppliers may be subject to TPE if they have high error rates or unusual billing patterns. Topics for review will be identified through MAC data analysis. While it is interesting that CMS has indicated that most providers and suppliers will never need TPE, CMS has indicated that you may be subject to a TPE on the basis that there is a high national error rate on a particular topic or pose a financial risk to Medicare even though you may not have a high error rate on that topic. Unfortunately, you could be doing everything correctly, but because other providers and suppliers are not, you may be subject to a TPE audit.

By initialing reviewing 20-40 claims, the MACs will work with providers and suppliers to identify errors and then provide direction on how to correct those errors. If you are lucky enough to be compliant on the first round, you will not be subject to further TPE review for one (1) year, but only for the particular topic that CMS is auditing. However, if you are found to be non-complaint (CMS has indicated that this might mean that you have “some” claims denied) you will be invited to a one-on-one education session by the MAC and will then be given 45 days to make changes to your claim submission process followed by a second round of claim audits. The MACs will allow you to have up to three (3) education sessions to help you to become compliant, but after that they are required to refer you to CMS for further action, which can include 100% pre-payment review, referral to the RAC, or anything else that CMS deems appropriate.

Invalid CMNs and DIFs – Civil Monetary Penalties

In the past, DME MACs had the authority to deny a claim and initiate an overpayment if they identified a claim where a Certificate of Medical Necessity (CMN) or a DME Information Form (DIF) was invalid. The stakes are now much higher.

Under recent changes to the CMS Program Integrity Manual (Pub. 100-08), chapter 5, section 5.6, CMS made two (2) significant changes. In addition to the DME MACs ability to initiate an overpayment, CMS has now empowered the Unified Program Integrity Contractors (UPIC) (formerly the Program Safeguard Contractor and Zone Program Integrity Contractor) to do the same. The UPIC has the responsibility to perform fraud, waste, and abuse detection, deterrence and prevention activities for Medicare and Medicaid claims processed in the United States. In addition, and more troublesome to DME suppliers is that in addition to being able to initiate an overpayment, both the DME MAC and the UPIC can now initiate a potential Civil Monetary Penalty case against the supplier if they identify a pattern of improperly completing the CMN or DIF. The significance of this could be staggering and will be greatly impacted by your claim volume. Under the CMP provisions, the civil money penalty can be up to $1,000 for each invalid CMN or DIF. There has never a better time to make sure you are properly documenting and completing the CMNs and DIFs.

HHS Office of Inspector General and Department of Justice

There are two (2) major auditors looking at fraud, waste and abuse in the healthcare arena with whom you hope to never have the pleasure of interacting. One is the Health and Human Services (HHS) Office of Inspector General (OIG). It is the largest inspector general’s office in the Federal Government and the majority of their resources and activities are focused upon the Medicare and Medicaid programs. The OIG operates under a Work Plan (Work Plan | Office of Inspector General | U.S. Department of Health and Human Services ( The Work Plan, which is updated monthly, advises the public about various projects including OIG audits and evaluations that are underway or planned to be addressed during the fiscal year and beyond by OIG’s Office of Audit Services and Office of Evaluation and Inspections. Of course, those audits and evaluations could include time consuming activities on the part of providers and suppliers. While the Work Plan usually results in the OIG issuing reports, those reports often include recommendations to CMS to change their processes to address the OIG findings. More importantly, the OIG performs Enforcement Actions, activities that include criminal, civil and administrative legal actions relating to fraud and other illegal activities that can result in jail time, the repayment of wrongfully acquired money and other assets, and exclusion from the Medicare and Medicaid Programs. Most often these activities are referred to the Department of Justice. Here are some notable Enforcement Actions, notable because they were addressed against individuals, small companies and large companies alike, with a variety of different penalties and they all took place within the past few weeks:

  • A licensed pharmacist was arrested for an alleged sale of dozens of authentic Centers for Disease Control and Prevention (CDC) COVID-19 vaccination cards. He is charged with 12 counts of theft of government property with a potential sentence of 120 years in prison. The case is being investigated by the FBI and the HHS-OIG.
  • A Columbia woman pleaded guilty to submitting fraudulent bills for DME on behalf of her small business. She faces a maximum penalty of 10 years in federal prison and a $250,000 fine.
  • A Florida owner of multiple telemedicine companies was charged with orchestrating a health care fraud and illegal kickback scheme that involved the submission of over $784 million in false and fraudulent claims to Medicare. It is alleged that the owner solicited illegal kickbacks and bribes from durable medical equipment (DME) suppliers and marketers in exchange for orders for DME braces and medications. His telemedicine companies then allegedly paid physicians to write medically unnecessary orders for these braces and medications. His telemedicine companies provided orders to DME suppliers that fraudulently billed Medicare over $784 million. Medicare ended up paying over $247 million. In order to conceal and disguise the health care fraud and illegal kickback scheme it is alleged that he directed DME suppliers and marketers not to directly pay his telemedicine companies and instead to pay shell companies that had been opened in the names of straw owners in the United States and foreign countries, such as the Dominican Republic. He then allegedly transferred the funds from the shell companies to his telemedicine companies in order to pay physicians to write the unnecessary orders. It is also alleged that he committed income tax evasion in the calendar years between 2015 and 2018 by receiving the proceeds of the illegal scheme in the accounts of shell companies belonging to nominee owners and using those proceeds to live a lavish lifestyle. He did not file an income tax return or pay taxes on this income.

With all the audit activity in the healthcare arena, it’s no wonder that providers and suppliers are scrambling to take action to submit correct and proper claims, including ensuring they have the documentation to support the medical necessity of the item or service being billed, coding claims properly, and pushing back against auditors that are not themselves properly applying the rules and regulations when adjudicating and auditing claims. One of the best ways to make sure you are maintaining claim integrity is to conduct regular internal audits of your process and operations and adjust, as needed, to ensure the submission of proper claims. The team at Engage Health Solutions can help review your existing policies and procedures to ensure that you are running at maximum compliance and efficiency. Our experts have worked in the auditing space previously. As a result, we are uniquely positioned to offer innovative solutions that will help reduce pressure points you may be experiencing in specific areas. Give us a call or reach out to learn more.