Weathering a Medicare audit

July 1, 2007

Once a dermatologist receives a letter regarding a Medicare audit, it is best to take notice and get prepared, says Jack Resneck Sr., M.D., F.A.A.D., of Shreveport, La., who was audited two years ago.

Once a dermatologist receives a letter regarding a Medicare audit, it is best to take notice and get prepared, says Jack Resneck Sr., M.D., F.A.A.D., of Shreveport, La., who was audited two years ago.

Because the Medicare audit laws have changed, Medicare has independent contractors who perform audits of doctors.

"Now, there is a policy which, after being tested in five states, including Louisiana, will go nationwide this year," explains Dr. Resneck, who hired an attorney to appeal results of his audit.

These independent companies can, without provocation, decide to audit a doctor. They are under the protection of the federal government, so physicians cannot sue them.

At first, Dr. Resneck thought the company was just not knowledgeable about dermatology coding.

"In the beginning, I thought that they just didn't understand dermatology coding, and I could explain it to them. I found they did not want to understand. Even after they were informed of the national policy on actinic keratoses by my attorney, they proceeded with their findings."

New law

Congress has changed the Medicare law.

Previously, a physician was notified of an audit, then he or she would appear before an administrative law judge and, in most instances, the case was dismissed. However, now physicians must go before a Medicare employee and present their entire case the first time out.

"Anything that is not presented at the first hearing can never be presented again. Therefore, you can't try to defend yourself, and then, if it goes to a higher level of appeal, hire an attorney. You have to hire a real attorney from day one," says Dr. Resneck, who hired a Medicare attorney from Washington.

"We went through the appeals process and tried to get the case thrown out prior to the formal hearing. Medicare would not dismiss it, so we were forced to proceed to a Medicare hearing, where it was finally decided that the independent reviewer had made errors in the vast majority of its findings. We were well-prepared and were required to go through every office visit code and explain the reasoning behind each charge," he explains, noting that he retained a lawyer for more than a year and a half.

Tips for surviving an audit

When dermatologists get a letter from Medicare or one of the so-called "Integrity Contractors" regarding an audit, they need to take it seriously.

"Being a straight-arrow sort of person I thought naively that Medicare just wanted to know if I had actually seen each patient and that this was just an honest effort to protect my tax money from unscrupulous physicians. Wrong!" he says.

Dr. Resneck advises doctors to send Medicare typewritten transcriptions of their notes if they hand write them.

"It is crucial that Medicare can't accuse you of illegible notes and disallow them. Dermatologists need to do a lot of work before they send their very first response to Medicare," he advises.

He also recommends that physicians hire a good attorney early in the process.

"An attorney that is very familiar with Medicare is very expensive to hire, so you have to decide if a specialized attorney is worth the expense or whether to defend yourself, or hire a local attorney. It depends on the amount of money that is involved in the case," he says.

Once a physician is accused, an appeal is scheduled within several months. During this time, Medicare withholds payment to the physician, affecting the cash flow in that office.

"Consulting with a coding expert was important for me. I was lucky enough to hire Inga Ellzey, a dermatology coding expert, who has a great deal of experience with Medicare audit proceedings. Her review of my notes and her suggestions were very helpful," he says.