(April 5, 2023): In the sphere of healthcare compliance, providers must manage audits coming from every possible authority whether it be from public agencies, a private payor, or other third-party authorities. CMS has announced that the FY 2022 fee-for-service improper payment rate was 7.46%. While this is a slight increase in the error rate from the past two years (6.27% and 6.26% respectively), it is still a significant improvement over a decade high of 12.09% in 2014. Specifically, we have noticed an uptick in Special Investigations Unit (SIU) requests from Medicare managed care organizations (commonly referred to as “Medicare Advantage plans”). Medicare Advantage plans are required by law to establish and maintain an effective compliance program, which includes the development and implementation of an anti-fraud plan. The SIU plays a critical role in carrying out the anti-fraud plan and protecting the integrity of the Medicare program. In this article, we will focus on Medicare Advantage SIU audits and provide examples of what we have been seeing around the country. For more details regarding SIU requests and their process, please refer to Liles Parker’s overview of the SIU process.
I. What is a Medicare Advantage Special Investigations Unit (SIU)?
SIUs have a long, established history protecting payor interests. Since first established, insurance companies have come to heavily rely on these units to monitor and protect the interests of both plan participants and the financial integrity of the plan itself. Today, virtually every insurance company has an SIU. Medicare Advantage plans heavily rely on SIUs to protect the fiscal integrity of the Medicare program. Simply put, the purpose of an SIU is to ferret out fraud, waste and abuse. SIUs are also charged with the recovery of fraudulently acquired monies from health care providers. The SIU is responsible for identifying and investigating suspicious or fraudulent activities, such as billing for services that were not provided, overbilling, or performing unnecessary procedures. As one SIU described its work:
“Our Special Investigations Unit (SIU) proactively addresses questionable activity and investigates referrals of illegal and unethical conduct. Investigative findings are forwarded to state and/or federal law enforcement agencies for appropriate legal action upon a substantiated finding of fraudulent conduct.” 
Depending on their findings, Medicare Advantage SIUs may refer cases to Federal law enforcement agencies if evidence of fraud or abuse is identified.
II. Why Should Providers be Concerned About Medicare Advantage SIU Audits and Investigations?
As you will recall, Medicare Advantage plans work to control healthcare costs by managing and coordinating the care that patients receive. Under a Medicare Advantage plan, the insurance company contracts with healthcare providers (such as doctors and hospitals) to create a network of providers that patients can choose from.
A. Benefits of Participating in a Medicare Managed Care Plan.
There are a number of reasons why Medicare eligible patients have chosen to participate in a managed care plan instead of selecting traditional Medicare coverage. The primary reasons cited by Medicare beneficiaries include, but are not limited to the following:
- Lower Out-of-Pocket Costs. Many Medicare Advantage plans, which are a type of managed care organization, offer lower out-of-pocket costs than traditional Medicare plans. This can include lower copayments, coinsurance, and deductibles for healthcare services.
- Additional Categories of Coverage. Medicare Advantage plans may offer additional benefits that traditional Medicare plans do not cover, such as dental, vision, hearing services. Some advantage plans even cover acupuncture services.
- Coordinated Care. Managed care plans often have networks of healthcare providers who work together to coordinate a patient's care. This can help ensure that patients receive the right care at the right time and avoid unnecessary hospitalizations or medical procedures.
- Prescription Drug Coverage. Many Medicare Advantage plans include prescription drug coverage, which can be convenient for patients who take multiple medications.
- Predictable Costs. Managed care plans often have predictable costs, such as fixed copayments for doctor's visits or hospital stays. This can help patients budget for their healthcare expenses and avoid unexpected bills.
B. As Medicare Advantage Enrollment Rises, the Likelihood of an SIU Audit or Investigation Grows
As the chart below reflects, since 2006, the percentage of Medicare beneficiaries participating in a managed care plan has more than doubled. As of 2022, approximately 48% of Medicare beneficiaries have foregone traditional Medicare and have chosen to participate in a Medicare Advantage plan. Moreover, the Congressional Budget Office (CBO) projects that the percentage of Medicare beneficiaries enrolled in managed care plans will rise to 61% by 2032.
As the percentage of participation in Medicare managed care plans continues to rise, the role and relative importance of Medicare Advantage SIUs will continue to rise. From a provider standpoint, this is an important development. Unfortunately, health care providers participating in Medicare Advantage plans don’t necessary enjoy the benefits supposedly conferred to Medicare beneficiaries. Several problems encountered by participating providers include:
- Reduced Reimbursement. Under traditional Medicare, health care providers are paid on a fee-for-service basis. That isn’t the case under Medicare Advantage plans. Medicare Advantage plans use a capitation payment system to pay health care providers for services provided to Medicare beneficiaries. Depending on the provider, this approach can reduce the amount of revenue that is received for services rendered.
- Prior Authorization Mandates. Medicare Advantage plans may require prior authorization for certain procedures, medications, or referrals, which can be time-consuming and may delay care for patients
- Abbreviated Appeal Rights. It's important for health care providers to keep in mind that in the event of a postpayment audit, if a Medicare managed care denies payment, the provider can’t utilize the five-level administrative appeals process applicable to traditional Medicare claims. Medicare Advantage plans have their own abbreviated appeals process – a process that has triggered significant criticism by providers.
III. Overview of Relevant SIU Responsibilities:
Medicare Advantage SIU duties are quite broad. They include, but are not limited to:
- Review of suspicious claims flagged by claims personnel.
- Investigation of fraud, waste and abuse complaints filed by patients, claims section personnel, and others against billing providers and suppliers.
- Sharing information (such as new fraud schemes detected) with other SIUs and with government enforcement entities.
- Referring instances of civil wrongdoing to the payor’s legal counsel for possible legal action.
- Making criminal referrals to Federal law enforcement agencies for their review and possible prosecution.
IV. What Should You Expect in the Event of a Medicare Advantage SIU Audit or Investigation?
Medicare Advantage SIU audit requests are similar in severity and significance to those initiated by a Unified Program Integrity Contractors (UPIC) audit of traditional Medicare claims. Generally, an audit request will initially consist of a letter of notice (it may, or may not be sent Certified), which will include a list of the claims and / or medical records being sought from the provider for review by the payor’s SIU. This letter should be immediately addressed upon its receipt, as failure to do so will result in further, and almost always more retributive, action.
A. Types of Fraud Investigated.
Examples of conduct and allegations of fraud investigated by SIUs include the following:
- Failure to properly document support for medical necessity.
- Improper billing for the services of a non-credentialed provider.
- Improper use of incident-to billing.
- Failure to sign / close out an EHR entry.
- Failure to screen – employment of an excluded individual.
- Improper E/M coding practices (e.g. 25 modifier problems, lack of supervision, unqualified provider, substandard quality).
- Allegations that a provider is paying members incentives (either monetary or non-monetary) for their patronage.
- Allegations that a provider is provider is providing kickbacks to referral sources.
It should be noted that this is not an exhaustive list of conduct which could prompt an SIU request. As always, compliance with billing practices is paramount for the prevention of such audits. However, due to the growing importance of the Medicare Advantage program, providers are likely to inevitably face an audit request sooner or later from a managed care SIU.
B. Actions SIU’s May Take During Investigation.
Upon request for information, Medicare Advantage SIUs have expansive authority to perform invasive investigations, including the following:
- Unannounced Site Visits. Representatives of a Medicare Advantage payor’s SIU may show up unannounced at your office. In this case, they may attempt to obtain records at that moment. This is extremely unfair to providers and patients whose care will be interrupted. Additionally, this is an easy way for SIU representatives to push incomplete assembly of the records requested as the timing and pressure is higher in the moment. Call your health lawyer promptly if the SIU shows up at your office.
- Prepayment Audit. SIU requests are largely utilizing this option to hold or postpone payment to providers based on preventing fraud and abuse. Prepayment review can be extremely detrimental to the financial stability of a practice, so, again, contact your health lawyer if the SIU uses this form of investigation against your practice.
- Postpayment Audit. Like prepayment audits, SIUs continue to expand their use of postpayment audits and have tried to extrapolate damages in many of our client’s audits. As a firm, we have been very successful in having the extrapolated damages dismissed based on contractual and state law arguments.
- Payment Hold. Depending on the nature of the SIU’s concerns, a provider may be placed on payment hold until the payor is satisfied that the billing practices are compliant. Again, this can be debilitating financially for providers.
C. Additional Actions Medicare Advantage SIU’s May Take.
If the document request and additional assessments find a provider lacking in any area of compliance, SIU’s may take several additional steps. Extension of prepayment and postpayment reviews made be implemented, or any of the following may occur:
- Corrective Action Plan. If an SIU believes that fraud and/or abuse identified resulted from an error or mistake, or that training and education were a part of the issue, it may permit a provider to remain as a participating provider as long as the provider enters into and abides by a corrective action plan. This option must include proof of the provider’s tangible improvements in compliance over time.
- Termination From Plan. If a Medicare Advantage SIU concludes that a participating provider is intentionally engaging in improper conduct or fraud, the SIU may recommend that the plan terminate the provider agreement. Your right to appeal a proposed termination action varies from contract to contract, so contact your health lawyer if you are facing such as adverse action.
- Referral to Law Enforcement. The most serious action that an SIU can take is to allege that you are engaging in fraud and report you to the OIG or DOJ for investigation and possible prosecution. This can lead to administrative and/or criminal penalties including payment treble damages, exclusion from Federal health benefit programs, and potential criminal convictions.
As more Medicare beneficiaries enroll in Medicare Advantage plans, providers should expect the level SIU claims scrutiny to increase. Now, more than ever, it is essential that providers review their contracts and ensure that their medical necessity, documentation, coding and billing practices fully comply with applicable Medicare requirements and payor contractual obligations. Unfortunately, Medicare Advantage audits and investigations can be quite complicated. We recommend that if your practice is subjected to an SIU audit, you should engage experienced health law counsel to represent you in the process.
Liles Parker attorneys have extensive experience representing healthcare providers and suppliers around the country in connection with SIU claims audits and investigations. Notably, many of our health lawyers are also Certified Professional Coders (CPCs) and / or Certified Medical Reimbursement Specialists (CMRSs). Need assistance, Give Ashley Morgan a call. For a free consultation, we can be reached at: 1 (800) 475-1906.
-  CMS. 2022. “Improper Payment Rates and Additional Data." Center for Medicaid and Medicare Services. https://www.cms.gov/research-statistics-data-and-systems/monitoring-programs/medicare-ffs-compliance-programs/cert/additionaldata (March 9, 2023). See also CMS. 2022. “Fact Sheet Fiscal Year 2022 Improper Payments Fact Sheet.” Center for Medicare and Medicaid Services. https://www.cms.gov/newsroom/fact-sheets/fiscal-year-2022-improper-payments-fact-sheet (March 9, 2023).
-  A Medicare Advantage plan is a type of health insurance plan that is offered by private insurance companies that have been approved by Medicare. These plans are not government agencies, but rather private companies that contract with the federal government to provide healthcare coverage to Medicare beneficiaries. Medicare Advantage plans, also known as Part C plans, are required to provide at least the same level of coverage as traditional Medicare (Part A and Part B), but they may also offer additional benefits such as prescription drug coverage, dental and vision services.
-  Clifford D. Shearing, Philip C. Stenning, Private Security: Implications for Social Control, Social Problems, Volume 30, Issue 5, 1 June 1983, Pages 493–506, https://doi.org/10.2307/800267
-  HealthPartners Plans, description of the payor’s SIU.
-  Kaiser Family Foundation (KFF), article titled “Medicare Advantage in 2022: Enrollment Update and Key Trends.” (August 25, 2022).
-  Under a “capitation payment system,” the Medicare advantage plan pays a fixed amount of money per member per month to healthcare providers within the plan's network, regardless of the number of services provided.