Provider Strategy

Addressing the 'New Normal'

Outsourcing the workload for audits and appeals.

At a recent meeting of HME Industry executives, one noted, “Audits are just a part of doing business now.” It is certainly a sign of the times when companies are now considering outsourcing their audit and appeal workload. That, however, is the reality facing many suppliers in this environment of strict regulatory oversight. Recent reports from CMS revealed that Medicare contractors were sending out approximately 15,000 audits per week. Meanwhile the appeal backlog is quickly approaching 1 million claims at the Office of Medicare Hearings and Appeals. Dealing with this high audit volume, in addition to normal daily activities, creates quite a challenge for all suppliers — whether you’re a small “mom and pop” or a large national.

Just as many suppliers have elected to outsource their billing to experts, many others have begun or are considering the idea of outsourcing their audit and appeal workload to entities that provide those types of services. And while The van Halem Group provides audit and appeal services on behalf of our clients, from simple tracking and reporting to additional documentation requests (ADR) response and appeal representation to name a few, the purpose of this column is not to encourage suppliers to outsource this work if they have control over it, but rather to advise suppliers what they should consider when choosing an entity to submit your audit responses and appeals.

Just like billing, ADR responses and appeals are an integral part of a supplier’s operational activities. Submitting ADRs or appeals incorrectly could lead to denied claims, additional overpayments, or increased scrutiny of a supplier’s claims. For that reason, a supplier considering outsourcing this work should practice due diligence in doing so, and with the same care it would apply when choosing a billing company. Due to the increase in audits, there is no shortage of options available to you when choosing the individual or entity that will assist in your audit and appeal workload. Companies that did not offer these services in the past are now doing so. The reality is, the process is complex and requires that the individual or entity possess the appropriate knowledge and expertise in which to navigate the process, as well the ability to handle all different types of situations that may arise. What follows are some tips we suggest a supplier take when attempting to outsource this workload.

First and foremost, do your due diligence. Because of the number of individuals and entities that are now available to provide audit and appeal support services, the quality of those services will vary, as this is true in any industry. So you will want to do your research. Ask for references of other customers or clients that are utilizing them for same or similar services that you intend to subcontract. Contact those references and discuss the quality of the services, the success rate, and the knowledge base of the individual or employees of the entity you are considering. Ask them to discuss their successes and provide some examples as well as what they feel are their challenges and strengths.

We strongly urge you to test them on their knowledge, not only of the audit and appeal process, but also of the Local Coverage Determinations, claim denials, and the wide range of Medicare policies. We would even suggest providing some examples of situations that can sometimes occur and ask how they would handle that situation, as we have personally seen suppliers run into unnecessary problems because the entity handling their appeals did not submit them properly. Ask them to describe for you their process when submitting appeals. Do they specifically address the denials? Do they provide a documentation summary? In some cases, we’ve seen entities just submit the same documentation with a note that says, “Please review for payment.” Using a blanket statement would not be helpful, due to the fact that in most cases, the denial reasons are accurate and should be directly addressed in the appeal process. They should, instead, have knowledgeable and experienced staff that can get “down in the weeds” and summarize the documentation as to how it supports the need for the services provided. While the past process may have been to abstractly appeal the denials, hoping to have them overturned and the claim paid upon ALJ Hearing, the truth is that this is no longer the environment we are in. Today, suppliers wait nearly three years to go before an Administrative Law Judge, and even then the overturn rate is not as positive as years past. The reality of the situation is that it is imperative that issues are corrected and addressed at the earlier levels of appeal.

Another relevant item to consider when making the determination to outsource your audit and appeals workload is whether or not there is an educational component in the services they provide. By that I mean that these entities should be providing consistent feedback and education to your staff so that when they see a pattern of problems or issues, they are reporting back and providing the necessary support to avoid them in the future.

It’s also important to discuss their processes and the tools they utilize to manage the workload. Do they provide reporting and tracking and, if so, how? The ability to accurately report and track audits and appeals is of utmost importance since there are deadlines and requirements that must be met and often no wiggle room when they are not. Ask them how can they assure that this does not happen and in the instance that it does, what would they do about it? This can also help you determine how successful they are in the process. Also find out what, if any, technology they have implemented to automate the process.

The last suggestion I would make would be in regards to their capacity to manage the workload. Provide them with an accurate volume and the number of employees you have currently handling this workload and discuss the capacity in which they would be able to handle it. Most entities will be able to manage the workload more efficiently than a supplier, as they are likely more focused on those tasks alone, wherein the supplier is managing those along with several others.

If you are having difficulties with audits or the workload associated with responding and appealing them successfully, it is very reasonable to consider outsourcing this workload to an expert. However, as with any important decision you make, consider your options dutifully, as the decision you make is one with a goal to improve your operations and make your business run more efficiently. The right decision will allow you to manage the audit and appeals process more effectively, thereby allowing you the time and resources to better focus on patient care.

This article originally appeared in the January 2015 issue of HME Business.

About the Author

Wayne van Halem is the founder and President of audit consulting firm The van Halem Group ( Established in in 2006, the Atlanta-based firm merged with VGM Group in 2014. The van Halem Group helps providers navigate complex issues related to audits, appeals, enrollment, coding, education and compliance. Since its foundation, van Halem's company has saved clients over $100 million in over-payments and denial recoveries.

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