The Centers for Medicare and Medicaid (CMS) has designed the Targeted Probe and Educate (TPE) program to help providers and suppliers reduce claim denials and appeals by providing one-on-one help. The CMS resumed TPE audits in September 2021 after suspending the TPE program during the earlier stages of the COVID-19 pandemic. For healthcare providers targeted in these audits, knowing what to expect—and how to prepare effectively—can be critical for avoiding unnecessary consequences. While TPE audits are not enforcement mechanisms as such, providers that are found in non-compliance during the TPE audit process can face follow-up enforcement action, and this can potentially lead to recoupments, prepayment review, and other consequences. 

As a result, Medicare-participating healthcare providers that are facing TPE audits need to handle their situations carefully. Providers cannot assume that TPE audits are trivial or inconsequential. While they might be for providers that have a strong compliance record and the documentation to prove it, they can also be dangerous if not handled effectively. 

“Facing a Medicare TPE audit isn’t necessarily as straightforward as it may seem. While these audits ostensibly focus on education and correction, issues uncovered during TPE audits have the potential to lead to CMS enforcement action if targeted providers do not address them effectively.” – Dr. Nick Oberheiden, Founding Attorney of Oberheiden P.C.

So, what do healthcare providers need to know about Medicare TPE audits in 2022? Here are some of the highlights: 

1. The Focus of a Medicare TPE Audit is “Improvement” 

According to CMS, the goal of a TPE audit is to help the targeted provider “quickly improve.” This refers specifically to improving the targeted provider’s billing compliance rate. Billing fraud costs CMS tens of billions of dollars annually; and, while some cases of billing fraud are intentional, many involve inadvertent mistakes that result from failure to adopt an effective Medicare billing compliance program. 

2. Medicare Administrative Contractors (MACs) Conduct TPE Audits for CMS

As CMS further explains, during a TPE audit, “Medicare Administrative Contractors (MACs) work with you, in person, to identify errors and help you correct them. Many common errors are simple . . . and are easily corrected.” Medicare Administrative Contractors are private companies that work with CMS to uncover billing violations. They have access to providers’ billings submitted to Medicare, and they have the authority to obtain and review providers’ billing records on CMS’s behalf. 

TPE audits are intended to help providers address easily correctable errors that are not indicative of intentional Medicare fraud. Education is a key aspect of the process—in contrast to non-TPE Medicare Administrative Contractor (MAC) audits during which providers will often struggle to understand why they are being penalized. When conducting TPE audits, MACs are supposed to work collaboratively with providers to either (i) confirm that the providers’ billing practices are compliant, or (ii) identify and implement specific necessary improvements. 

3. MACs Select Providers for TPE Audits Based On Their Billing Data

Medicare Administrative Contractors do not choose providers for TPE audits at random. Instead, MACs analyze providers’ billing data and choose targets for TPE audits based on one or more of the following factors: 

• High Claim Error Rates

• Unusual Billing Practices

• Billing for Items or Services that Have High National Error Rates 

Given that this is the case, while it is possible that a TPE audit could result in a finding of compliance, MACs generally go into TPE audits with the expectation that they will identify flaws in the provider’s Medicare billing compliance practices and procedures. This is important to keep in mind—even though TPE audits are supposed to be non-adversarial and educational in nature, providers will still often find themselves struggling to convince MACs that no corrective action is warranted. 

4. Medicare TPE Audits are Subject to Strict Rules

Unlike other types of Medicare compliance audits, TPE audits are subject to strict rules. For example, the Medicare Administrative Contractor (MAC) may only select 20 to 40 claims for review, and it may only request that the targeted provider supply supporting medical records for those specific claims. If the MAC determines that these 20 to 40 claims are compliant, the process ends. However, if the MAC determines that any of the subject claims violate the Medicare billing rules, the process will continue. 

5. Issues Uncovered During a TPE Audit Will Lead To an “Education Session”  

Once a MAC determines that one or more of a targeted provider’s subject claims are non-compliant, the MAC and the provider must schedule an “education session.” According to CMS, “experience has shown that this education process is well received by providers/suppliers and helps to prevent future errors.” Whether or not this is truly the case is up for debate. In any event, MACs and providers must both participate in the education session in good faith; and, following the education session, the provider must be given at least 45 days to address any compliance issues before facing the second round of review of another 20 to 40 claims. 

6. Providers Get Three Chances to Pass a TPE Audit

Providers can go through this process up to three times. If a provider passes the audit at any stage, then the provider is entitled to a one-year reprieve from facing another TPE audit. But, there are exceptions. During this one year, the provider can still potentially face a TPE audit targeting a different area of billing compliance, and CMS states that “MACs may conduct an additional review if significant changes in provider billing are detected.” 

With this in mind, when facing Medicare TPE audits, healthcare providers should take the time to conduct a comprehensive review of their billing processes and procedures. Even if a provider addresses the issue (or issues) uncovered during a TPE audit, this will not necessarily be enough to protect the provider from further scrutiny—or penalties. Medicare-participating providers need to take a comprehensive approach to billing compliance, and they cannot afford to leave the outcome of future audits (or investigations) to chance. 

7. Providers that Fail TPE Audits Will Be Referred to CMS

If a provider fails to pass a TPE audit after three rounds of claim reviews, education sessions, and process improvements, the MAC will refer the provider to CMS. As the agency explains, “any problems that fail to improve after 3 rounds of education sessions will be referred to CMS for next steps. These may include 100 percent prepay review, extrapolation, referral to a Recovery Auditor, or other action.” Depending on the issues identified during the TPE audit, this “other action” could range from an in-depth billing compliance audit to a criminal Medicare billing fraud investigation. 

8. Numerous Billing Issues Can Lead to Medicare TPE Audit Failures 

Generally speaking, Medicare TPE audits focus on a specific billing issue, such as missing physician signatures or insufficient documentation of medical necessity. However, TPE audits can target all types of Medicare billing violations; and, if a MAC identifies a billing issue during a TPE audit, it certainly isn’t going to let the issue go ignored. As a result, even if a Notice of Review indicates that a TPE audit will focus on a specific billing issue, it is not safe to assume that this is the only issue that has the potential to lead to problems. Some additional examples of common Medicare billing violations include: 

• Missing or incomplete certification or recertification documents 

• Billing for items or services Medicare does not cover

• Billing for items or services not actually provided to patients 

• Upcoding, unbundling, clustering, and other coding violations 

• Failure to use coding modifiers 

9. Failing a TPE Audit Can Have Significant Consequences 

As discussed above, while Medicare TPE audits are not necessarily intended as enforcement tools, providers that fail their TPE audits can face significant consequences. Targeted Probe and Education audits can lead to comprehensive Medicare billing compliance audits, and they can also lead to federal billing fraud investigations. The Centers for Medicare and Medicaid Services also have the option to directly impose certain administrative penalties, such as prepayment review, without additional inquiry. 

If a comprehensive Medicare billing compliance audit or a billing fraud investigation leads to civil allegations of Medicare fraud, the targeted provider can face recoupments, fines, Medicare exclusion, loss of Medicare billing privileges, and other penalties. If an audit or investigation leads to criminal prosecution by the U.S. Department of Justice (DOJ), the targeted provider (and potentially its owners, executives, physicians, and other personnel) can face these same penalties plus the possibility of federal imprisonment.

10. Providers Can (and Should) Prepare to Defend Against TPE Audits

Given the risks associated with facing a TPE audit, Medicare providers need to prepare for these audits effectively. Even though CMS describes the TPE audit process as a collaborative engagement between the auditing MAC and the targeted provider, providers should approach TPE audits with a defensive mindset. They should assume that any unfavorable findings will be used against them; and, with this in mind, they should focus their efforts on proactively resolving their TPE audits without referral to CMS. 

These are just some of the key considerations for healthcare providers that are facing TPE audits. To ensure that they are making informed decisions and protecting their practices to the fullest extent possible, providers should engage federal healthcare fraud defense counsel promptly upon receiving a Notice of Review.