PRACTICE BRIEF
practice guidelines for managing health information
Understanding Governmental Audits
TODAY, ARMED WITH enhanced fraud and abuse laws, the federal governmenthaslaunched new auditsthatorganizations and providers must contend with on a regular basis. Recent ad- ditions include Recovery Audit Contractors (RACs) and Zone Program Integrity Contractors (ZPICs). Otherssuch as Compre- hensive Error Rate Testing (CERT) auditors have been around for a number of years. Some of these government auditors have overlapping juris- dictions. In addition, each auditor has different operational requirements, which healthcare organizations can find over- whelming to meet. This practice brief provides an overview of current governmental auditors and their purposes. AHIMA’s “Governmental
Audit Toolkit,” available online at www.ahimastore.org, outlines
additional information, such as the record request limit, scope
of work, and the appeal process for each.
Audit Process
Government auditors are authorized to investigate claims submitted by any entity or provider that provides Medicare beneficiaries with procedures, services, and treatments. In addition,
anyone who submits claims to Medicare and/or their fiscal intermediaries, regional home health intermediaries, Medicare
Administrative Contractors (MACs), durable medical equipment suppliers, and/or carriers are also subject to investigation.
Each government auditor is established independently with
a different mission and scope of work. Therefore, there is no
standard for the number of record requests, timeline, appeals
process, or type of review. As such, organizations often struggle
to understand their operational and financial impact of these
audits.
Preparation Checklist
Organizations should prepare for government audits with the
following steps:†
x Identify who needs to be involved in the process
x Develop policies and procedures that clearly designate
roles and responsibilities for each piece of the audit pro-
cess, including coders who assign codes, business office
staff who may receive denials, revenue integrity auditors
who review records, and HIM clerks who process or copy
charts for each request
x Develop organizational education regarding the increase
in government audits and the need for clear and concise
documentation
x Develop education specific to each department in the rev-
enue cycle process and the department’s role in the audit
program
x Determine the different types of record requests and time
frames
x Distinguish the various types of appeals to secure each
claim
The preparation checklist in appendix A of AHIMA’s “Govern-
mental Audit Toolkit” provides a big-picture overview to help
HIM professionals understand these action steps. It also in-
cludes references to key resources.
Extrapolation Method
Sampling and extrapolation are standard audit practices designed to reduce the cost of auditing in exchange for accepting
a small amount of risk in the results. In fraud and abuse audits,
extrapolation is the use of statistical sampling to calculate and
project (i.e., extrapolate) overpayment amounts to be recovered
by recoupment.
This method is used when a statistical sampling determines
that a sustained level of payment error exists or when documented educational efforts fail to correct the error. A sustained
level of payment error may be determined to exist through a variety of means, including probe samples, data analysis, provider
history, and information from law enforcement investigations
or Office of Inspector General (OIG) evaluations.
Government auditors must use the services of a qualified statistician to determine the sample size and selection method.
They must also explicitly document the sampling methods.
Once the sample size and selection method are determined,
the auditor will request records from the provider. Following a
review of the records, the auditor will calculate the average per-claim overpayment amount of the sample. This amount is then
multiplied by the number of claims in the review population to
