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8 Essential Steps to Ensure a Clean CMS Audit for Health Plans

06 Mar, 2024

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8 Essential Steps to Ensure a Clean CMS Audit for Health Plans

Non-compliance in the business of healthcare comes with its own sets of challenges. It can lead to lawsuits, fines, and, most importantly, bad patient care. Imagine having to explain to your members why their benefits are delayed or compromised. Not a good scenario, right?

For this reason, staying compliant with CMS audits is a must for health plans. These audits aren't just paperwork; they're the backbone of how Health Plans operate. A clean audit has multiple benefits for health plans, including, but not limited to:

  •  Complete Compliance
  •  Reputation Management
  •  Financial Stability
  •  Member Trust
  •  Competitive Advantage
  •  Improved Internal Processes
  •  Member Satisfaction
  •  Reduced Legal and Regulatory Risks
  • Expanded Services
  •  Prospects of Continued Government Funding
  •  Operational Efficiency

This blog post will discuss why CMS audits matter and what you risk without them when it comes to Medicare Advantage appeals and grievances. It will also discuss the steps health plans should follow to prepare for CMS audits. Let's get started.

Read more: Audits: Explore 4 Reasons Why They Are A Necessity

Understanding CMS Audits

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CMS (Centers for Medicare & Medicaid Services) audits are critical for Health Plans. CMS auditors assess your Plan's viability. Not meeting these standards is a severe setback, impacting your reputation, finances, and member care.

Think of it like a pilot's pre-flight checklist. You wouldn't want them to skip critical steps, right? Similarly, a thorough CMS audit ensures your Plan is ready to deliver safe, reliable service. It's your opportunity to prove your commitment to top-notch patient care and operational excellence.

Different Types of CMS Audits

Program Audit: This type of audit primarily assesses the management of the Health Plan. Auditors scrutinize the Plan's policies, contracts, and operations. They aim to ensure that the Plan is serving its members efficiently, managing its finances responsibly, and adhering to CMS regulations. It's like a comprehensive checkup for your Health Plan.

Part C & D Audit: Focused on Medicare Advantage and Prescription Drug Plans, this audit evaluates compliance with CMS guidelines, accuracy in reporting data, adherence to formulary requirements, and the quality of patient care provided.

Audit Objectives: What are CMS Auditors Looking For?

  • Compliance: At its core, CMS audits are all about ensuring that Health Plans are in line with CMS regulations. From benefits delivery to contract adherence, they aim to guarantee that every 'i' is dotted and every 't' is crossed.

  • Quality of Care: CMS auditors want to ensure that the quality of patient care remains top-notch. They evaluate the Health Plan's clinical and non-clinical performance to ensure members are receiving high-quality care.

  • Operational Efficiency: Health Plans are expected to operate efficiently. Auditors examine operations to confirm that resources are being used effectively and that the Plan is providing its members with excellent service.

  • Financial Integrity: CMS auditors dive deep into a Health Plan's finances to guarantee that funds are being handled responsibly and that all financial practices comply with CMS standards.

  • Risk Adjustment Data Validation (RADV): This aspect is particularly relevant to Medicare Advantage Plans. CMS auditors review diagnosis data to make sure that Health Plans are reporting accurate data.

Read more: Florida based health plan improves risk adjustment score and recaptures lost revenue

Steps to Prepare for a Clean Audit

Steps to Prepare for a Clean Audit

If you want to prepare for a clean CMS audit, you need to follow these steps:

STEP 1: Designating a Compliance Officer

The first step in preparing for a CMS audit is to appoint a well-qualified compliance officer.

Why This Role Matters

 A Compliance Officer is essential in navigating the complexities of CMS audits. They provide the expertise and leadership needed to ensure your health plan adheres to CMS regulations.

Key Competencies

The following are the core competencies to look for in a compliance officer:

  • CMS Regulations Expertise: Your Compliance Officer should have in-depth knowledge of CMS regulations and a proven track record in healthcare compliance.

  • Attention to Detail: They need to meticulously review all aspects of your operations for compliance.

  • Proactive Problem-Solving: Your Compliance Officer should address issues before they become audit pitfalls.

  • Strong Communication Skills: They should be able to translate complex CMS regulations into understandable language for your staff and communicate effectively with CMS auditors.

  • Project Management: This role involves coordinating the audit process, ensuring every detail is accounted for.

STEP 2: Gathering Essential Documentation

The next crucial step is to ensure you have all the necessary documentation in order.

What to Include

  • Encounter Data: Accurate and complete encounter data forms the basis of a CMS audit. This data forms the basis for CMS audits, ensuring that medical services rendered to beneficiaries are correctly recorded.

  • Member Records: Maintain accurate & detailed records for each member, including enrollment data, health records, and history of provided services.

  • Claims Data: Your claims data should be accurate & comprehensive, including the details of services rendered, payments made, and any denied claims.

  • Compliance Plans: These plans outline how your health plan adheres to CMS regulations. Make sure they're up-to-date and reflect your current practices.

  • Contracts: Keep copies of all your contracts, especially those with providers, as auditors may want to review them.

  • Marketing Materials: Auditors may examine your marketing materials, so, ensure that they're compliant with CMS rules.

  • Financial Records: These are essential for the financial audit component. Make sure they are well-organized and up to date.

Example: To illustrate, consider a health plan that faced a CMS audit. They were able to swiftly provide the required documents, leading to a smoother audit process and no compliance issues. This emphasizes the importance of thorough documentation in ensuring a clean audit.

STEP 3: Data Validation and Accuracy

In CMS audits, accuracy is the bedrock of success. The auditors will scrutinize your data with a fine-tooth comb, and even a minor discrepancy can have significant consequences. To ensure a seamless audit, follow these steps:

  • Automated Validation: Implement automated systems that regularly validate your data. These systems can promptly identify errors and inconsistencies, allowing you to correct them swiftly. For example, you can set up automated checks for data completeness and accuracy with reliable tech solutions from a trusted third-party administrator like Mirra Health Care.

  • Staff Training: Properly train your staff on data entry procedures. The people handling data should be meticulous and understand the impact of even minor errors. Provide ongoing training to keep them updated with CMS data requirements.

  • Data Governance: Establish strong data governance. This includes having clear ownership of data within your organization. Assign responsibility for data accuracy and completeness to specific individuals or teams.

  • Auditing Tools: Utilize auditing tools that can highlight discrepancies or outliers in your data. These tools can be invaluable in catching issues before auditors do.

Example: During a recent CMS audit, a healthcare provider's data inaccuracies posed compliance issues, and the company was at risk for potential financial penalties. This underscores the importance of meticulous data validation in audit preparation, where Mirra Health Care offers expert support.

CMS audits rely heavily on the accuracy of your data. By implementing robust validation processes and ensuring all staff understand their importance, you're not only preparing for audits but also improving the overall quality of your services.

Read more about A Flourishing Collaboration: Ultimate Health Plans and Mirra Health Care Enhancing Medicare Advantage Operations

STEP 4: Policies and Procedures Review

Your organization's policies must be in line with CMS regulations. Here's how you can ensure this:

  • Policy Review: Initiate a thorough policy review covering operational procedures, documentation methods, and quality assurance practices. Identify deviations from CMS guidelines.

  • Regulatory Updates: Stay current with changing CMS regulations. Regularly check for updates to ensure your policies comply with the latest requirements.

  • Documentation Standards: Define precise data collection and storage procedures within your policies. Ensure these standards align with CMS data submission criteria, covering member records, claims data, and other critical information.

  • Quality Assurance: Implement a robust quality assurance process to enforce policy compliance. This ensures your staff comprehends and adheres to the policies. Regular audits help spot and rectify non-compliance issues proactively, keeping CMS auditors at bay.

Example: Outdated policies at a health plan provider, not aligned with recent CMS changes, resulted in compliance problems, possible fines, and substantial resource wastage, including time and money.

STEP 5: Conducting Internal Audits

Internal audits enable you to ensure that your health plan is always in compliance with CMS regulations.

By taking a thorough and consistent approach to internal audits, you ensure CMS compliance is an ongoing practice within your organization.

Here are the steps you can consider to make this happen:

  • Audit Preparation: Start by preparing a detailed internal audit plan. Identify the specific areas and processes you want to audit. For example, focus on your claims data management, member records, or marketing materials.

  • Compliance Check: Within your audit plan, ensure you are checking for compliance with CMS regulations. Using CMS audit protocols as a guide, check your material for compliance with CMS regulations. This will serve as a parallel run to what CMS auditors will be looking for.

  • Data Accuracy: Ensure that all your records and reports align with the actual services provided. It's essential that data, like encounter data, is both complete and correct.

  • Identify Deficiencies: Your internal audit is designed to unearth any compliance issues. This way, you can identify them before the CMS auditor points them out.

Example: During an internal audit, a health plan provider found that some members' data was incomplete. These audits enabled them to fix these issues, ensuring complete and accurate member records.

STEP 6: Staff Training and Preparedness

A well-trained staff not only makes CMS audits easier but also contributes to your organization's overall efficiency. Start staff training now to ensure your organization is audit ready.

Here's how to prepare your staff effectively:

  • Compliance Training: Initiate regular and rigorous training programs focused on CMS compliance. Educate your staff on the latest CMS regulations, documentation requirements, and audit protocols.

  • Role-Specific Training: Tailor training to specific roles. Your claims department needs different training as compared to your legal department.

  • Realistic Simulations: Simulate CMS audits to familiarize your staff with the audit process. These mock audits can help your team understand what to expect and be better prepared when a real audit occurs.

Example: A health plan provider offered training for each department. The claims team focused on coding, while the legal department learned about CMS audits. When a CMS audit happened, their trained staff made it smoother and more accurate.

  • Clear Documentation Processes: Establish well-defined documentation processes. Your staff should know how to document their work, the services provided, and any interactions with members, healthcare providers, or CMS.

  • Communication Skills: Ensure your staff can effectively interact with CMS auditors. They should understand what can and cannot be shared during the audit process.

  • Ongoing Updates: CMS regulations evolve. Your staff needs to stay informed and updated with the latest regulations. Provide them with the resources to stay informed.

STEP 7: Legal Counsel Engagement

CMS audits are critical and can significantly impact your healthcare business. Having legal expertise in healthcare compliance assures you of a smoother and more successful audit process.

Why Legal Counsel Matters

  • Interpretation of Regulations: Legal experts master healthcare regulations, decoding intricate CMS requirements to guide your compliance.

  • Risk Mitigation: Legal counsel can assess potential compliance risks within your organization. They will help you identify areas where you might be vulnerable during a CMS audit and take steps to mitigate these risks.

Role of Legal Counsel During CMS Audits

  • Strategic Guidance: Your legal counsel will provide strategic guidance, ensuring that your responses to auditors are aligned with legal requirements and regulations.

  • Auditor Interaction: They can act as intermediaries between your organization and CMS auditors, facilitating the audit process and ensuring that your organization's rights are protected.

Example: During a CMS audit, the legal counsel identified an issue related to claims documentation. With their expertise, they not only resolved the immediate problem but also developed a system to prevent similar issues in the future.

  • Documentation Compliance: Your legal team will ensure that all documentation is prepared correctly and in compliance with CMS standards. This meticulous attention to detail can make or break your audit results.

Legal Engagement Checklist

  • Prior Consultation: Engage legal counsel before an audit begins, ensuring they are familiar with your organization's practices.

  • Regular Updates: Maintain open communication with your legal counsel throughout the audit process. They should be informed about any developments or queries from CMS.

  • Compliance Training: Legal experts should train your staff in compliance requirements and guide how to interact with CMS auditors.

  • Preparation for Appeals: In case of unfavorable audit outcomes, your legal counsel should be prepared to initiate appeals or legal action if necessary.

STEP 8: Timely Responses to CMS

One of the crucial aspects of preparing for a CMS audit is ensuring timely responses to CMS requests. The speed and accuracy of your responses can greatly influence the audit process's efficiency and your health plan's outcomes.

Why Timely Responses Matter

  • Demonstrate Cooperation: Prompt responses exhibit your willingness to cooperate with CMS auditors, setting a positive tone for the audit.

  • Mitigate Delays: Timely responses help prevent unnecessary delays in the audit process, ensuring that your health plan stays on schedule.

  • Reduce Stress: When your organization responds promptly, it reduces stress and pressure on your team members, who won't need to rush to meet deadlines.

How to Ensure Timely Responses

key benefits

  • Create an Internal Response Team: Designate a team responsible for CMS audit responses. This team should include individuals who can promptly gather and review the necessary documents.

  • Use Automation: Utilize document management and retrieval systems to quickly locate and provide requested information. Automation can significantly speed up the response process.

Example: Consider the scenario where CMS requests specific patient records. With an efficient document retrieval system, you can swiftly compile and submit the required documents.

  • Track Deadlines: Keep a close eye on response deadlines. Missing them can have adverse consequences. Maintain a detailed calendar to monitor when responses are due.

  • Internal Review: Before sending responses, conduct an internal review to ensure accuracy and completeness. Incomplete or inaccurate submissions can lead to further requests from CMS.

  • Consolidate Responses: Rather than sending multiple partial responses, consolidate all required documents into a comprehensive submission. This approach simplifies the process for CMS auditors.

Mirra's has a robust and user-friendly Appeals, Grievances, and Complaint Tracking Module. Health plans can significantly enhance their audit readiness, maintain accuracy, and ensure timely responses to CMS requests with our help. This solution helps reduce operational costs, improve overall efficiency, and enhance the audit preparation process, ensuring a successful CMS audit.

The Bottom Line

The importance of CMS audits for Health Plans can't be overstated. Non-compliance has serious financial and reputational consequences. It's not a matter of if but when an audit will occur, so preparation is crucial.

By appointing a Compliance Officer, gathering necessary documents, ensuring data accuracy, aligning policies, conducting internal audits, training staff, engaging legal counsel, and responding promptly to CMS, you lay the groundwork for success.

Starting your audit preparations today is the best decision for your patients and your reputation. For comprehensive support, explore Mirra Health Care's Appeals, Grievances, and Complaints Tracking Module. Get in touch with our experts now to book a demo and learn more about our Medicare Advantage in a Box for more Medicare Advantage solutions.

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Reviews & Testimonials


NANCY GAREAUCEO of Ultimate Health Plans

"In 2021, Ultimate Health Plans (UHP) partnered with Mirra Health Care (Mirra) to develop a software platform to support processing Claims, Customer Service, Eligibility, Enrollment, Premium Billing, Encounter Processing and a Provider Portal for our Medicare Advantage Plans. Mirra collaborated well with our operations and compliance teams to successfully design and implement a system that was innovative, efficient, and compliant with all Medicare and Florida Medicaid guidelines and requirements all within the scope of our required timeline. We greatly benefitted from the Mirra Project Management Team’s regular communication with Stakeholders through monthly meetings and recurring weekly breakout-focused calls, which were geared towards troubleshooting and goal alignment. Mirra was able to quickly maneuver and adapt their systems to our needs, resulting in successful implementation and go-live. Mirra continues to support our compliant operation and growth in the ever-changing healthcare industry rapidly and effectively updating their systems with new Medicare and Florida Medicaid rates and guidelines to ensure seamless compliance and efficiency. I have absolutely no reservation in recommending their systems to any Payer searching for improvement in their operational efficiency."

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