Updated on: March 16, 2017

Self-Auditing: Don’t Fight Yourself

Original story posted on: March 15, 2017

When you get a request from a MAC, RAC, ZPIC, BISC or other entity in the alphabet soup of government contractors seeking records for an audit, what should you do?

Do you immediately contact your legal counsel? Do you thoroughly review each of the records? This is an area where experts often disagree, but here are my recommendations. First, I do think it is worth contacting legal counsel upon receipt of the request.

While that may sound self-serving, especially because defending against an audit is my favorite activity, that is not the reason for the recommendation. The initial conversation with counsel should be extremely short, but it serves two purposes. First, there is a slim possibility that counsel will help you identify a problem that you may wish to correct while the investigation continues. Second, and more importantly, if you do any work related to the audit, you want that work to be privileged. The privilege requires direction from counsel. I want to emphasize that this contact should be a 10-minute phone call, not 20 hours of research.
Now, for the bigger question: Do you conduct your own thorough review of the charts while awaiting the results from the contractor? In most cases, I believe that the answer is no. I am inclined to wait for the contractor’s analysis before diving into the records. Why? The short answer is economics. There are two benefits to waiting for the contractor’s review. First, it is unlikely that the contractor will fault every chart. By waiting, you can focus your review only on the charts the contractor challenges.

For small reviews, this savings is minimal, so the real reason I wait is the second one: If you conduct a shadow review and find a chart for which you believe an error has occurred, there is a respectable argument that the 60-day rule requires you to refund within 60 days of your conclusion.

What if you don’t have the results of the contractor’s review during that period? You then will refund on a claim without knowing whether the contractor agrees. In my experience, there is tremendous disagreement between reviewers. In every single instance in which a client has reviewed charts, it has failed charts on which the contractor passed.

When you conduct your own review, you may wind up in a situation in which you are refunding on claims the government audit ultimately allows. Strategically, I think it makes more sense to wait for the contractor to finish its review, then focus on the charts for which the contractor has identified an issue.

Admittedly, this can leave you with time pressure, but if you have engaged your reviewer and are ready to go, it should be possible to complete your own review expeditiously. The only review I recommend is validating that you have pulled all of the requested records and considered adding other information that may justify my advice. Do that before submitting the records, then sit tight and see how you fare.

As always, I am interested in hearing logical arguments that undermine my position. Absent a counterargument, my advice is to let the government go first. It’s hard enough fighting the government. Don’t make it worse by having to fight yourself as well.

David M. Glaser, Esq.

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and a member of the RACmonitor editorial board.


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