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Preparing for a UPIC Audit? Examine These Eight Claim Elements

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Preparing for a UPIC Audit(Updated January 9, 2021):  Each year, our attorneys and paralegals review and assess literally thousands of Medicare claims which have been audited (and denied) by Unified Program Integrity Contractors (UPICs) and other contractors working for the Centers for Medicare and Medicaid Services (CMS).  Are you preparing for a UPIC audit?  If your Medicare or Medicaid claims haven’t already been audited by a UPIC, chances are that it will eventually happen. As UPIC audits increase during 2021, it is essential that health care providers and suppliers review their processes to better ensure that services and supplies billed to Medicare and Medicare fully comply with applicable coverage, coding and billing requirements.  While defending physicians and other health care providers in UPIC audits and government reviews, we have identified a relatively straight-forward approach for determining whether a particular claim qualifies for coverage and payment.  Generally, we refer to this approach as an examination of the “Eight Elements of a Payable Claim.Notably, this has proven to be extremely helpful tool when developing an effective Compliance Plan for a client.  As set out below, physicians and other non-hospital health care providers can often use this approach to determine whether specific services billed to the Medicare and Medicaid programs.

I.  Assessing Your Claims — Preparing for a UPIC Audit:

A discussion of the eight elements which must be carefully assessed for each and every claim is provided below.  This is especially when you are preparing for a UPIC audit of the medical services or supplies you have billed to the Medicare and Medicaid programs.

Element #1: Medical Necessity — In addressing this element, a treating health care provider should ask the following question: Were the services administered medically necessary?”

Just because a certain treatment regime is medically necessary does not mean that it will be covered by Medicare or Medicaid.  We believe that this element constitutes the most important question to be answered by a provider.  Government payors only cover medically necessary services and supplies.

Element #2: Services Were Provided The second issue addressed is whether the services at issue were actually provided.

As you can imagine, regardless of the fact that services ordered were medically necessary, the services must actually be provided in order for those services to be billed and paid.  When you are preparing for a UPIC audit, as part of your internal auditing and monitoring, should you find instances where you cannot show that a medical service or piece of durable medical equipment was provided, you must return any funds that have been received.  Equally important, medical services must actually be provided at a level of quality consistent with Medicare’s expectations or the expectations of the covering payor.

Element #3 No Statutory Violations Are the services “tainted” by any statutory or regulatory violation, such as the Stark Law, Federal Anti-Kickback or a False Claims Act violation?

Remember, a UPIC is specifically instructed to detect and refer instances of fraud, waste and abuse. [1]  When you are preparing for a UPIC audit, your review of claims should not be limited to merely a review of the documentation.  You need to also examine your organization’s business relationship and business practices.  For example, is there any evidence that the service or supplies are linked in any way to a breach of the Federal Anti-Kickback Statute or Stark’s prohibition against improper self-referrals?  Similarly, is the service or claim associated with a possible violation of the civil False Claims Act? In recent years, we have see an increasing number of cases where otherwise payable claims were tainted due to the fact that the referring or servicing provider was excluded from participation in the Medicare or Medicaid programs. [2]  The bottom line is fairly straight-forward: it is insufficient to merely show that a claim appears to meet the government payor’s basic medical necessity, billing and coding rules. You need to also verify that the way the business was generated or referred was proper and not due to a statutory violation.

Element #4:  Meets all Coverage Rules – Do the services meet Medicare’s coverage requirements?

The next point to be addressed when auditing a claim is to determine whether or not it is covered by Medicare or Medicaid.  It is important to keep in mind that a medical service or supplies can be medically necessary yet still not qualify for coverage and payment.   Ultimately, every service or claim, regardless of whether the beneficiary is a Medicare or a Medicaid plan participant, must be examined to see if it qualifies for coverage.

Element #5Full and Complete Documentation – Have the services rendered been properly and fully documented?

It is essential that you pull each and every regulatory issuance, along with any guidance issued by the state which sets out the documentation requirements associated with a particular service or claim.  After auditing literally thousands of claims, we have found that over a majority of the health care providers we have audited have never fully researched and reviewed applicable  documentation requirements.  As UPIC clinical reviewers of both Medicare and Medicaid claims are quick to state in hearings before an Administrative Law Judge (ALJ), “If it isn’t documented, it didn’t happen.”   When made during an ALJ hearing by a UPIC, this point is quite effective—it is extremely difficult for a provider to prove that a service was provided if there is insufficient documentation of the work conducted in the patient’s medical records.  Therefore, research, review, and confirm the precise documentation requirements to be met, then ensure that you take the time to fully and accurately document the work you have performed.

UPIC auditors are excellent at identifying one or more ways in which your claims do not meet applicable coverage requirements.  While you may very well disagree with their assessments, especially in “medical necessity” determinations (when you file a request for redetermination appeal and later, a request for reconsideration appeal), you will find that your Medicare Administrative Contractor (MAC) and your Qualified Independent Contractor (QIC) agree with the UPIC’s denial decision.  Rather than endure significant costs and stress when defending against an overpayment assessment, you need to take steps to avoid a denial in the first place.  To that end, health care providers should ensure that clinical staff members are fully trained and educated regarding Medicare’s documentation, coding, and billing processes.  It is very important that you show your clinicians that UPICs  enforce a strict application of Medicare’s documentation and coverage requirements.

Element #6: Proper Coding – Were the services rendered correctly coded?

Unfortunately, even if the foregoing rules have been met, it is quite simple to make a coding mistake, therefore invalidating the claim.  The coding rules are both complicated and dynamic, potentially changing from year to year.  We recommend that you either engage a qualified third-party billing company to assist you with coding and billing or ensure that your in-house staff members handling these duties are experienced and provided regular opportunities for updated training.

Element #7: Proper Billing Practices – Were the services rendered correctly billed to Medicare?

As a final requirement, health care providers must ensure that the services or claims performed fully meet Medicare or Medicaid;s billing rules.  Once again, you need to ensure that your staff is properly trained to handle the organization’s billing responsibilities. As you review your billing practices, you should abide by the following:  First, “If it doesn’t belong to you, give it back.” [3] Conversely, if you don’t owe the money, don’t automatically throw in the towel.  Discuss these claims with our attorneys to determine if there may be other arguments in support of payment that may be asserted.  

II.  Final Considerations — UPIC Audits:

The likelihood that your practice or organization will be subjected to a Medicare or Medicaid audit is increasing every day.  As a participating provider in one or more Federal health care programs, you have an affirmative obligation to ensure that your claims are properly provided, documented, coded, and billed.  Unfortunately, many health care providers have never researched and reviewed the proper rules covering the care and treatment services they provide.  When conducting a “GAP Analysis” [4] of your organization, a sample of your claims is an important proactive step you can take to help ensure that your current practices are fully compliant with applicable laws and regulations; such analyses do not have to be statistically significant.  Should you identify deficiencies, remedial steps should be taken (immediately) so that future claims for care and treatment will meet all applicable requirements.  Keep in mind—any identified overpayments must be repaid promptly to the government in order to avoid possible False Claims Act liability.

Healthcare LawyerRobert W. Liles represents health care providers in UPIC Medicare and Medicaid audits. In addition, Robert counsels clients on regulatory compliance issues, performs GAP analyses, conducts internal reviews, and trains healthcare professionals on various legal and compliance issues Do you need help preparing for a UPIC audit? Call Robert for a free consultation: 1 (800) 475-1906.


[1] A detailed discussion of the UPIC audit process can be found at the following link.

[2]  For an overview of the impact of an “exclusion” action, please see Paul Wiedenfeld’s article titled “A Provider’s Guide to OIG Exclusions.”

[3] A detailed discussion of a provider’s repayment obligations when an overpayment has been identified can be found at this link.

[4]  For a detailed discussion on how to conduct a “GAP Analysis” of your health care claims, please see our page titled: “How to Conduct a GAP Analysis of Your Health Care Practice.”