In a recent analysis of our audit data, MCS clients decreased their error rate in a Medicare style audit by an average of 4.25% from Year One to Year Three of working with our team. We believe this improvement not only speaks to the value of our compliance services, but the hard work our clients put in to implementing compliant documentation practices. Error rate has a direct impact on payment integrity and how your service fairs in a Medicare audit. In this post we’ll discuss what an error rate is and why it’s important.
Compliance Can Be Hard to Measure
Whether it’s developing policies and procedures, training employees, doing internal audits, or developing corrective action plans when things go wrong, compliance is never-ending and always changing to fit our circumstances. So how do we measure compliance? One way is to measure the error rate when performing an internal audit, the same way Medicare does for its Targeted Probe and Educate (TPE) audits. While one number can’t fully encompass the work your service puts into compliance, the error rate gives an outside auditor a snapshot of how well you’re doing at synthesizing all the aspects of your compliance program into compliant documentation. It’s quantifiable, which makes it easy to see whether there is improvement in your billing documentation over time.
What Is an Error Rate?
For post-payment probes, the improper payment calculation (error rate) is as follows: the dollar amount of the services paid in error as determined by medical review is divided by the dollar amount of the services originally paid for the services under review (Medicare Program Integrity Manual, Chapter 3 – Verifying Potential Errors and Taking Corrective Actions, Section 3.7.1.1 – Provider Error Rate).
Basically, for a selection of transports, what percentage of your payments are considered overpaid after being reviewed by an auditor.
How is Error Rate Used?
Error Rate is used by Medicare and its MACs to identify providers who have problematic documentation in their TPE and CERT audits. It is also used by Medicare and the OIG to extrapolate overpayments when they investigate providers for fraud or other allegations of improper billing. Most likely your service encounters it when you are subjected to a TPE audit by your MAC.
In TPE audits, MACs have an allowable error rate threshold and if your service’s error rate goes beyond the threshold, then you will be subject to education and another round of auditing to see if you’ve corrected your documentation mistakes. If your service continues to have poor error rates you may eventually be referred to the OIG.
As you can tell, it’s very important to have a low error rate when Medicare or the OIG are involved and every percentage point matters. Having a low error rate protects your service in audits from further investigation and protects your revenue from being recouped or drained by fighting appeals on overpayment decisions.
Ask Us About Our Audit Services
Most of our clients hire us to perform an annual audit for their service. Mirroring standard Medicare audit processes, our audits are prepared by identifying a Universe of Claims (a time frame of transports, usually for all paid Medicare claims, though any run type can be targeted), using a program called RAT-STATS (developed specifically for audits by the OIG) to create a random sample of claims from the Universe of Claims, then reviewing all relevant documentation for each transport selected to determine whether it meets Medicare’s coverage criteria. Our audits include a one-on-one session where we review the error rate with your team and present the results in a detailed report breaking down each transport and offering recommendations for improvement.
Getting an unbiased perspective of where you stand in a Medicare style audit can be a valuable tool in your compliance program and prepare you before you inevitably get selected for the real thing.
For more information about our audits or other compliance services, connect with us here!