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Understanding the Post-Payment Review Process

Auditing bodies and auditors can be as unique as the patients you’re treating. This guide will help explain the differences among those groups that can audit your wound clinic and will discuss what they may be looking for when auditing occurs.

The process of post-payment review can occur with Medicare payment, commercial insurance payment, or workers’ compensation payment. Commercial insurers routinely hire auditing firms to randomly review paid claims for correctness of payment (ie, paid appropriately as primary or secondary coverage), in-network versus out-of-network, and as documentation review on codes that the commercial insurance has noted as “problematic.” Workers’ compensation claims are primarily reviewed prior to payment, and it is rare that a post-payment review occurs and is generally initiated by an audit request from a party involved in the claims process — such as the medical provider or employer of the claimant.

CMS Agencies

The most frequent post-payment reviews are going to be conducted by a Centers for Medicare & Medicaid (CMS) entity. Medicare claims can be re-opened and reviewed by the:

  1. Zone Program Integrity Contractor (ZPIC)
  2. Recovery Auditor Contractor (RAC)
  3. Medicare Administrative Contractor (MAC)
  4. Supplemental Medical Review Contractor (SMRC)
  5. Comprehensive Error Rate Testing (CERT) Contractor
  6. Qualified Independent Contractor (QIC).

Zone Program Integrity Contractor

ZPIC post-payment reviews are primarily looking at claims for potential fraud. The ZPIC will deny payment on claims whenever there is evidence that an item or service was not furnished or not furnished as billed. This denial can occur while a case is being developed for the Office of Inspector General (OIG) and notification of law enforcement.

Recovery Auditor Contractor

The RAC program was created through the Medicare Modernization Act of 2003 as a demonstration project and finalized in the Tax Relief and Healthcare Act of 2006, which required a permanent program to be in place by Jan. 1, 2010. The mission of the RAC is to identify and recover improper Medicare payments paid to healthcare facilities and providers. RACs will review claims on a post-payment basis through one of two methods: Automated (no records are required) or complex (requires a medical record review). RAC auditors will perform post-payment reviews that are consistent with their statements of work that have been approved by CMS. Statements of work can be found on the RAC website available through

Medicare Administrative Contractor

MAC post-payment reviews are focused on compliance by the medical providers to Medicare coverage, coding, and billing rules. MACs have the authority to review any claim at any time. The volume of claims does not allow MACs to review all claims, so the priority for audits focuses on the greatest potential for improper payment. At risk for a post-payment review are those claims that feature:

  • high volumes of services,
  • high costs,
  • dramatic changes in frequency, and/or
  • high risks and problem-prone areas.

MACs will look at the billing patterns of specific providers that utilize the Current Procedural Terminology® (CPT) code that has been designated as “at risk,” looking for patterns outside those expected. MAC reviews per provider are generally limited to 20-40 claims and are audited for accuracy of billing. At the conclusion of the review, the MAC will issue a Review Results Letter that contains specific items including the reason for conducting the review, results of the review, overpayment or underpayment amounts, and liability and appeal information. Based on the determined error rate, MACs can take actions to include, but not limited to, payment suspension, imposition of civil money penalties, institution of future prepayment, or post-payment reviews and additional edits.

Supplemental Medical Review Contractor

The SMRC performs and/or provides support for a variety of tasks aimed at lowering the improper payment rates and increasing efficiencies of the medical review functions of the Medicare and Medicaid programs throughout the country. The SMRC uses the vulnerabilities identified by CMS internal data analysis, CERT program, professional organizations, and federal oversight agencies to focus audits.

Comprehensive Error Rate Testing Contractor

Each year, CERT evaluates a statistically valid random sample of claims to determine if they were paid properly under Medicare coverage, coding, and billing rules. The objectives of CERT are to identify programs that may be susceptible to significant improper payments, to estimate the amount of improper payments in those programs, to submit the estimates to Congress, and to report publicly the estimate and actions the agency is taking to reduce improper payments. CERT contractors will select claims on a random basis and are not required to notify providers of their intention to begin a review. The reviews will be stratified on Part A, Part B, and durable medical equipment prosthetics/orthotics/supplies claims. Claims eligible for review are either claims paid by CMS or claims denied. The provider or facility has 75 days to respond with requested documentation. If no documentation is received, the claim is classed in the “error” category. Determinations are made regarding whether the claim was paid properly under Medicare coverage, coding, and billing rules. Errors will be assigned one of five categories: “no documentation,” “insufficient documentation,” “medical necessity,” “incorrect coding,” and “other.” CMS and its contractors will then analyze improper payment rate data and develop Error Rate Reduction Plans to reduce improper payments.

Qualified Independent Contractor

The QIC generally works in conjunction with appeals. When the QIC is reviewing a claim on appeal it has the latitude to develop new issues and review all aspects related to the claim. If the QIC is reviewing a redetermination of claims following a post-payment review it must limit its review to the reason the claim was denied.

Post-Payment Review & HBOT

Hyperbaric oxygen therapy (HBOT) hit the radar screen of CMS with the accelerated growth of its use in outpatient wound centers in the late 1990s. From 1995-98, payments for HBOT increased by 52 percent. It was this increase in utilization that resulted in several post-payment review audits by CMS. In October 2000, the OIG issued a report that uncovered $14.2 million of $49.9 million paid in error, with an additional $4.9 million paid for treatments deemed to be in excess. The average cost per patient in 1998 for CPT code 99183 was $405 (with $140 for medical provider and $265 for facility). This resulted in an average treatment course costing from $7,000-$12,000 (with extreme cases exceeding $100,000). The states of Colorado, Texas, Louisiana, and Mississippi had the highest rate of utilization. The comment was made in the report that “if other states had the same utilizations as in Texas, reimbursement would increase five-fold.”

Since the OIG report in 2000, there have been multiple subsequent post-payment reviews by MACs focusing on 99183 and C1300. All reviews have recouped funds in the millions paid in error and have recently resulted in CMS implementing a prior authorization model for nonemergent HBOT in the states of Illinois, Michigan, and New Jersey.

A recent SMRC post-payment review audit occurred from April 2012 to March 31, 2013. The purpose of the review was to determine whether HBOT service claims were adjudicated according to Medicare regulations. This review involved both Medicare Part A (1,169 facility claims) and Medicare Part B (831 physician services) claims. The criteria used for this random sample of 2,000 claims involving 146 unique providers were any applicable national coverage determination and local coverage determination guidelines. Documentation was requested on the 2,000 claims randomly chosen, but the SMRC received documentation on only 1,407 claims. As a result, 594 claims were denied and payment recouped as a result of not submitting documentation as requested in the timeframe requested. Of the 1,407 claims reviewed, 836 claims had documentation that substantiated medical necessity and met the appropriate Medicare guidelines. The balance of 570 claims was denied after review. The denials focused on lack of documentation of medical necessity, lack of specific goals and timelines for HBOT, lack of radiologic or pathology reports confirming diagnosis of gas gangrene or osteomyelitis, and lack of documentation of monitoring for improvement or lack of improvement. Specifically stated, a guideline or goal could not be “continue HBOT” or “until healed.” The error of this audit was 58 percent, which translates to recoupment from medical providers and facilities a total of 1,164 claims.

Where Are Audits Going?

The audits and reviews by different designated agencies are not going to stop. The focus of the audits may change, but they are a part of process of payment. So, what strategies can be used to prepare for assumed audits?  For the majority of practitioners who have no intent of fraudulent billing, the problem is documentation.

In today’s practice, with demands of budget, shrinking margins, “doing more with less,” keeping track of changing regulations, incorporating electronic health records (EHRs) into practice, working with insurance payers, converting to ICD-10-CM, and so forth can seem overwhelming and lead to frustration or even a sense of helplessness. There is no panacea to fix all the problems, but as a wise person once asked rhetorically, “How do you eat an elephant? One bite at a time.” Healthcare providers as a whole need to address the processes one step at a time. Practitioners need to look at the tools and culture within their wound clinics. Documentation takes time, and conducting appropriate documentation requires appropriate tools. Most practitioners are not taught to “tell the story of the patient” when documenting, but to record a string of data or facts. Education must improve as well, as the tools used to document in order for the practitioner can effectively tell the story.

Today, the majority of wound clinics have moved to EHRs, a number of which are on the market. But not all EHRs are equal. Some may not be suited to the environment of the outpatient wound clinic, some may not be programed to be specific enough to assist the practitioner in telling the patient story, and some may not be efficient enough. Along with an appropriate EHR, the clinical environment must be conducive to electronic documentation. Fast connectivity with the software product; convenient, ergonomically correct stations or areas to document while the patient and practitioner are interacting; proper training of the practitioner in the use of the software; and a culture that supports the process are necessary.

The second part of the preparation for an audit is an internal quality-improvement program that randomly reviews the documentation to determine completeness and identifies areas for improvement. If the process of reviewing records for completeness rotates among the practitioners, then it is a powerful teaching tool in identifying the patient stories that are told well and those that are simply a string of data containing many holes. Audits by CMS entities will not cease and will most likely increase. More commercial payers are conducting post-payment reviews. If you look at the remark section of remittance advice of the major commercial payers, you see “claim(s) are subject to audit.” Notice is being given:  There will be post-payment reviews. Be prepared on the front end, document well while telling the story, monitor for errors or problem areas, and keep vigilant for changes in documentation requirements.

Valerie Larson-Lohr has worked as a nurse practitioner in hyperbaric and wound care since 1992. She is also a managing partner at TCB Physician Billing Solutions, San Antonio, which specializes in credentialing, coding, and billing for medical providers in wound care and hyperbaric medicine.


1. Medicare Program Integrity Manual, Chapter 3. Verifying Potential Errors and Taking Corrective Actions. Rev 604, 07-24-15.

2. Centers for Medicare & Medicaid. Project Y1P4 - Final Project Results: Hyperbaric Oxygen Services.

3. Department of Health and Human Services. Office of the Inspector General: Hyperbaric Oxygen Therapy: Its Use and Appropriateness. October 2000, OEI 06-99-00090.

4. Medicare Claims Processing Manual, Chapter 29. Appeals of Claims Decisions. Rev. 2926, 04-11-14.

5. Qualified Independent Contractors. Comprehensive Error Rate Testing, Improper Payment Measurement in the Medicare Fee-for-Service Program. Accessed online:

6. Recovery Audit Contractors and Medicare: The Who, What, When, Where, How and Why. Accessed online:

Feature Article
Valerie Larson-Lohr, MSN, APRN
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