Understanding Claim Audits
Information for Healthcare Providers
Why Claims are Audited
Audits of provider claims are a core service provided by of HMS, delivered out of the extensive cost-containment expertise developed over more than four decades of experience. Due to the company’s experience and industry reputation for accuracy, health plans and providers turn to HMS for audits to discover claims that are coded or billed incorrectly, or where it seems other payment errors are likely.
Navigating the Process
This site is designed to help providers and their staff understand the healthcare claim process, provide instructions for completing the audit, answer questions and provide solutions.
For More Information
If you have questions, need further instructions or wish to speak to an HMS representative, contact information for speaking to an HMS representative are available on the Provider Relations page. You can find specific instructions for submitting a rebuttal or appeal of an audit determination on the Rebuttals and Appeals information tab.
Healthcare Cost Containment is Our Business
HMS is a leader in healthcare cost containment. Since 1974, we’ve helped commercial, Medicare Advantage and Medicaid managed care plans reduce or control cost, minimize risk and improve quality. Today, our 250-plus health plan clients, 45 state Medicaid and dozens of federal plan clients cover more than 100 million Americans. We save these plans billions of dollars each year.
Health plans and providers both turn to HMS for audits that help discover claims that aren’t coded or billed correctly, or where it seems other payment errors are likely.
The type of audit HMS conducts on any group of claims can vary and determined by the criteria set by the health plan.
The majority of claim audits HMS performs include:
Automated Edits and Analytics
Automated edits and analytics-based audits use proprietary data analysis queries and algorithms developed by HMS to compare the claim history and specific billing against the health plan’s rules for coding, utilization, billing and reimbursement.
The plan chooses from the library of edits maintained by HMS to apply to the claims under review.
No medical record is required to confirm validity. Instead, this type of audit relies on plan-approved data analysis and claim verification. However, any overpayments detected are manually verified by a coding or clinical professional before a repayment letter is issued. In the case of Medicare or Medicaid, claims are vetted before an offset file is submitted to the plan to allow reductions in future claims reimbursement until overpayments are recovered.
Hospital Bill Audit
A hospital bill audit evaluates provider claims reimbursed at a discount from the billed charges. The review ensures an itemized bill accurately reflects the services and procedures allowed by the health plan, were ordered by a physician and performed, and are accurately documented in the medical record.
This audit may also include a review for correct coding and for accurate and appropriate billing combinations based on CMS guidelines. Bill audits are conducted on site at the provider’s facility or performed remotely.
Clinical Claim Reviews
Clinical claim reviews cover many instances of care, including:
- Place of Service. Review of targeted inpatient claims to confirm that the services provided matches the documentation provided in the medical record.
- Diagnosis-related Group (DRG) Validation. Targeted inpatient claims are reviewed to validate proper coding of diagnosis and procedure codes and any other elements affecting DRG reassignment, ensuring proper reimbursement.
- Medical Drug. The medical record is reviewed to verify the billed units are correct based on medication administered and any applicable medication wastage.
- Skilled Nursing Facility (SNF). SNF claims may be reviewed to validate coding accuracy and compliance with MDS assessment and documentation requirements. SNF claims may also be reviewed to ensure the level of care is appropriate and coverage criteria met in accordance with the Centers for Medicare & Medicaid (CMS) guidelines
- Inpatient Rehabilitation Facility (IRF). Review of targeted IRF claims to verify that documentation requirements and coverage guidelines were met for IRF level of care
- Readmission. Targeted readmissions pairs are reviewed to determine if the readmission was clinically related with a) a reasonable expectation that it could have been prevented with optimal quality of care during the initial hospitalization, or b) optimal discharge planning and post-discharge follow-up.
What to Expect During a Claims Audit
Claim audits are an important tool health plans use to control cost – with help from HMS. Plans are required to manage risk, remain in compliance with government regulations and meet their own fiduciary requirements.
Some types of claim audits include a request for related medical records – but not all (see Audit Types). HMS requests medical records when a claim seems likely to include improper payments, determined through analysis conducted using our proprietary algorithms against our comprehensive data set.
After claims are identified for review, HMS will request relevant documentation from the provider. The provider may receive a Medical Record Request letter, including additional information on the audit being performed and instructions for submitting medical documentation to HMS.
After they are received, members of the HMS clinical review team will perform an in-depth review of the medical records. An audit packet will be mailed to the provider, informing them of the results.
Submitting Medical Documentation
The preferred method to send medical documentation files is electronically, either through a secure file transfer protocol that we will set up for you, or via the optional Provider Portal (if your health plan has chosen this service).
Electronic file transfer is also the fastest and most convenient method for most providers, and providers industry-standard security for protected health information.
Set Up an SFTP Connection
To set up an SFTP connection call the HMS Provider Relations center at (866) 875-1749. HMS will need contact information for the appropriate individuals in your Health Information Management and Information Technology teams. Our electronic data interchange department will contact them to begin the setup process for the transfer.
Additional options are noted in the record request notification you received, including instructions for submitting records via fax, U.S. Mail or on CDs or DVDs.
Ensure Your Documentation Meets these Standards
Following these tips for submitting medical documentation will help ensure your documentation is received and processed properly the first time.
- Provide clear, legible documentation with good quality image scans. These records should support the services provided for the dates of service requested, including inpatient admission orders, physician documentation and notes, and physician orders.
- Some medical records systems, such as PowerPlan, use a digital method for authenticating physician orders or validating provider intent for inpatient status. This detail is not visible in a standard printout of the record. If your system uses a method similar to this, please ensure that the authentication or validation is included with your medical record submission – it may not be included automatically when sending electronic records.
The 24/7 Provider Portal
For health plans that have chosen access, the HMS Provider Portal is designed to give providers a convenient primary point-of-access during the claim audit process.
The portal is a secure, web-based application providing 24-hour access to audit status, reporting, documentation review and documentation upload capability. The application also allows providers to manage multiple facility addresses and provider information about their organization or practice.
Download Provider Portal Registration Instructions or follow these steps:
- Go to https://ecenter.hmsy.com
- Select Start here for new access
- Select New Provider Portal User
- Complete Registration Form, including the Medical Provider Number assigned by the Centers for Medicare and Medicaid Services (CMS)
- The HMS security department will verify the account and send a notice that your Provider Portal access is live.
Findings and Audit Determination Letters
When the claims audit is complete, HMS will send the provider a letter that explains the findings. If applicable, a list of claims that were incorrectly paid will be included along with the reasons for the determinations.
Providers may dispute the findings if they believe there are appropriate reasons. The letter will include instructions for disputing the audit findings, including a time period for rebuttals established by the health plan.
No Finding Determination
The letter may notify the provider of a “no finding” determination, indicating the review of medical records revealed no improper payments and no further action will be taken.
An overpayment letter will be part of an audit packet. Along with instructions for next steps there are other important documents, including:
- Findings summary. This summary lists all claims that were reviewed and shows which were approved and which are identified as an overpayment.
- Denial letter. For each denied claim, a denial letter will be included providing specific information to understand why it was denied.
HMS sends a technical denial letter if the requested medical records weren’t received by the deadline or if they were incomplete. When a technical denial is issued, HMS may include a recommendation that the payer recoup payment from the provider for the claims in question.
Appealing Audit Findings
HMS has confidence in the accuracy of the provider claim audits the company, conducts, gained from a long history with great results. HMS works with providers to help them understand the findings, though sometimes they disagree and want another review of the information to validate the results.
HMS supports a provider’s right to appeal claim audit findings if they believe there has been an incorrect determination. Providers receive written notification of their rights to appeal in the audit packet they receive along with a determination letter. Instructions for contacting HMS to discuss related questions are also included.
After receiving audit findings, providers have a period to request an appeal with HMS. This period may be determined by the state or by the contract between the health plan and HMS. Additional documentation can be submitted to support their point of view at this time.
When HMS receives the request, a second review of the medical record is conducted along with a review of any additional documentation provided. Additional steps are taken when audit findings are appealed. The disputed findings are reviewed by a clinical team completely distinct from those who reviewed the records during the original audit. They review any additional documentation providers send, along with the original findings.
After this second review, HMS will send the provider an appeal determination notice. This notice will provide information about the rationale used to arrive at a determination and include additional appeal options. Those can vary depending on the policy of your health plan.
Clinical claim audits for appropriate reimbursement is a complex process for providers and health plans. When providers receive a medical request notice due to an audit, HMS can help them understand the process and provide instructions and context.
The HMS provider relations team is available to support communication between providers and plans throughout the process, including answering questions and addressing concerns.
Opening a Conversation
Providers can contact HMS with their concerns and questions. One-to-one discussions, often conducted by telephone, are ideal opportunities to provide education. These conversations can alleviate provider unease with the audit process, help them understand what is required to complete the audit process, and understand HMS’ findings. These conversations often lead to greater provider understanding and satisfaction with our work and our results.
Call the HMS Provider Relations line at (866) 875-1749, Monday-Friday, to make letter inquiries, ask questions about the audit process, verify claim status or to ask other questions.