Responding to Medicaid Audits - Practical Tips

Thursday, July 30, 2015
By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

    The Agency for Health Care Administration (AHCA)Office of Inspector General and Bureau of Medicaid Program Integrity—is the Florida agency responsible for routine audits of Medicaid health care providers. The agency ensures that the Medicaid program was properly billed for services.  Health care professionals receiving the greatest amounts of Medicaid payments are also the ones most likely to be audited.  These include pediatricians, Ob/Gyns, family practice physicians and dentists.  The Medicaid audit usually requests information in a questionnaire the medical practice is required to complete. It also included a request for copies of medical records (including X-rays and other diagnostic studies) for the patients selected for the audit.

    If AHCA determines that Medicaid overpaid for services, it will use a complex mathematical extrapolation formula to determine the repayment amount.  The amount of the repayment to the Medicaid program can be considerably greater than (30 to 100 times as much as) the actual amount of overpayment disclosed by the sample of records audited.  Additionally, fines and penalties can be added by the Medicaid program.  However, you can eliminate or reduce the amount of any such repayment by actions taken both before and during the Medicaid audit.

    General Practice Tips.

    There are ways to run your everyday practice that will help you in the event that you are selected for a Medicaid audit.

    1.    Every patient record entry should be clearly dated and signed or initialed by the provider.  Make sure this is always done.

    2.    When documenting the patient's record, make sure that you document exactly what services were needed and completed in order to support what was billed to Medicaid.

    3.    Communicate with the person responsible for your billing so that the actual services provided are billed for. Do not bill in advance for anticipated services needed as indicated in the appointment calendar or on a treatment plan.

    4.    Keep the patient records organized and ready for copying, if necessary.  Using only one-sided documents and securely fastening small forms (prescriptions, telephone memos, small sticky notes) onto 8-1/2" by 11" paper will help for those still using paper charts.  Scan all such documents into the patient record if using an electronic health record (EHR).

    5.    Services provided by a physician who is not enrolled in the Medicaid program to a Medicaid patient may not be billed to or paid by the Medicaid program.  Therefore, never allow any other physician associated with your practice who is not enrolled as a Medicaid provider to provide services to Medicaid patients.  Do not allow a new physician coming in to your practice treat Medicaid patients until he or she actually has received his or her Medicaid provider number.  The group may not bill for the services, nor may another physician bill for the services.

    6.    Ensure that all health care professionals' licenses and permits are kept up to date.  Ensure that all X-ray, clinical lab and diagnostic equipment are permitted and kept up to date.  Ensure that any CLIA license or exemption certificate is correct and kept up to date.  Services billed by unlicensed personnel or services provided by improperly-licensed facilities may not be paid by the Medicaid program.

    7.    Use only standard abbreviations in your medical records documentation, orders and reports.  While an abbreviation may seem common to you or your practice, if it is not a universally accepted abbreviation, the auditors may not recognize it.

    8.    Make sure all records are timely made, accurate and legible.  Safeguard them, and never let the original leave your office.  Illegible records are treated as a non-record, and payment completely disallowed for an illegible note or order.  A missing record, X-ray or chart entry will result in a complete repayment being directed for those services.

    The Medicaid Audit.

    If you are being audited, AHCA will send you a letter notifying you of the audit.  AHCA will also supply you with a list of patients to be sampled. A standard sample will include a list of anywhere from 30 to 150 patient names, as a general rule, depending on the size of the practice.  Regular audits routinely request 30 to 50 patients' records.  The audit letter will also include a questionnaire to be completed (Medicaid Provider Questionnaire) and a "Certification of Completeness of Records" form to complete and return with the copies of the patient records.  (Please note: This will be used against you in the future if you attempt to add to or supplement the copies of the records you provided.)

To read a past blog that will let you know if you are the subject of an audit, click here.

    It is crucial that you retain the services of an expert consultant or experienced health care attorney in correctly and accurately completing the questionnaire.  The letter will also request that you provide copies of the patient records for the list of patients included with the letter.  You will only be given a short time to provide these documents.

    1.    When receiving a notice of a Medicaid audit, time is of the essence.  Be sure to calendar the date that the records need to be in the AHCA office and have the records there by that date.  Note: The due date is not the last date for which you can mail the records but rather is the date that the records must be at AHCA.

    2.    Obtain and review a copy of the claims you submitted and what Medicaid has paid on each of the patients being audited.  This information can be found on the Medicaid portal, in your billing system, or in the Explanation of Benefits.  Compare this information to the medical records to see if any issues may arise when AHCA reviews the records.  (Keep this for your use. Do not provide it as part of the audit records.)

    3.    Provide a complete copy of the entire record, not just the parts from the period of time covered by the audit.  Remember that even other physicians records obtained as history, including reports, consultants and records from other physicians or hospitals, should be included.  Consent forms, medical history questionnaires, histories, physicals, other physicians' orders, may be a crucial part of the record.

    4.    If you suspect that an issue may arise with a particular patient, prepare a separate explanation to submit with the patient's file.  AHCA will have an expert review the records so the explanation ahead of time will help the expert to assess if there is in fact an issue.  Any explanatory notes or other explanations should be clearly labeled as such and dated as of the date actually prepared so there is no confusion possible about whether or not it was part of the original record.

    5.    If your practice involves taking X-rays or using other diagnostic studies, these studies are part of the patient's record.  If the X-rays are digital, they can be submitted on a compact disc.  Be sure to include the number of X-rays or the compact discs on the Certification of Completeness of Records.

    6.    Be sure to complete the Medicaid Provider Questionnaire in its entirety to send with the patient records.  Use "not applicable" or "none" if necessary.  Do not leave any section blank.  Attach all required documents.  Consult with an experienced health law attorney to assist in completing the form.

    7.    If you do use any uncommon abbreviations, be sure to explain what they mean so that the expert reviewing the records is able to understand that services you provided.

    8.    Include an explanatory note and any supporting medical literature, clinical practice guidelines, local coverage determinations medical/dental journal articles, or other documents to support any unusual procedures or billings, or to explain missing record entries.  See item 4 immediately above.

    9.    Contact an attorney with experience in Medicaid audits to help you through the process.

    Don’t Expect Credit For What You Did Not Bill.

    AHCA will have one of its auditors (usually a registered nurse or other experienced health care auditor) conduct the initial review of the charts and compare them with the itemized lists of claims you submitted to Medicaid.  These preliminary audit working papers will later be reviewed and confirmed by a medical or dental expert in the same field as the Medicaid provider being audited.  Any line item claim that was submitted to and paid by Medicaid is subject to:  a)  being confirmed,  b)  being completely disallowed,  or  c)  being adjusted downwards.  You will not be given credit for what you did not bill.  Your claims will not be upcoded (with credit given) when you have billed at a lower code than justified.  The audit is completely one-sided in this respect.

    A Preliminary Audit Report Will Tell You How Much You Were Overpaid.

    A preliminary audit report (PAR) will be prepared and sent to you advising you of the amount the audit disclosed you were overpaid by the Medicaid program.  You will then be given a short time period to submit any additional documents, records or explanations to challenge the PAR amount.

    Again, the PAR will usually contain an actual figure that was determined you were overpaid, based solely on the exact records audited (e.g., $1,400).  The statistical extrapolation formula will then be used to calculate the total amount you are deemed to probably have been overpaid based on your entire Medicaid patient base and all Medicaid claims you were paid during the entire audit period.  Therefore, for an actual overpayment of $1,400, you may be deemed to owe a $150,000 overpayment back (for example only) to the Medicaid program (plus fines and penalties).

   Challenge Adverse Findings and Hire an Attorney Experienced with Audits.

    There are ways to challenge this after the fact, and some insurance policies will pay for Medicaid audit defense.  You do have the right to request an administrative hearing to challenge this, but it must be requested in a very formal and specific manner, and it must be requested within a very short time period.

    Your best approach and most efficient way of handling an audit is to obtain experienced health counsel to assist you at the very beginning of the audit.  This is the most efficient use of your legal fees and will usually yield the most favorable results.  After the audit has been completed and you are facing a large overpayment demand, your options and chances of a complete success are far more limited.

Click here to read a recent blog about a Florida woman who was sentenced to prison because of a Medicaid scam.


As a health care entity owner, have you ever been subjected to a Medicaid audit? What did you do? Please leave any thoughtful comments below.

Contact Health Law Attorneys Experienced in Handling Medicaid Audits, Investigations and other Legal Proceedings.

Medicaid fraud is a serious crime and is vigorously investigated by the state MFCU, the Agency for Healthcare Administration (AHCA), the Zone Program Integrity Contractors (ZPICs), the FBI, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (DHHS). Often other state and federal agencies, including the U.S. Postal Service (USPS), and other law enforcement agencies participate. Don't wait until it's too late. If you are concerned of any possible violations and would like a confidential consultation, contact a qualified health law attorney familiar with medical billing and audits today.  Often Medicaid fraud criminal charges arise out of routine Medicaid audits, probe audits, or patient complaints.
The Health Law Firm’s attorneys routinely represent physicians, dentists, orthodontists, medical groups, clinics, pharmacies, assisted living facilities (AFLs), home health care agencies, nursing homes, group homes and other healthcare providers in Medicaid and Medicare investigations, audits and recovery actions.
To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida area.  The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

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