Defense Audit


Defense Audit Services


Payers and their recovery contractors send letters stating that a review of the claim indicates that coding does not meet the appropriate criteria for inclusion of a particular diagnosis; and because the criteria are not met the DRG (and the payment amount) are being reduced. While the payers would like facilities to believe that these reviews are a random event related to reviews conducted on all claims; these reviews are anything but random. They are the result of concerted efforts to mine claim data for diagnosis codes that will result in substantial decreases in DRG reimbursement.

The most common diagnosis codes reviewed are sepsis and septicemia, pneumonia, acute kidney injury, respiratory failure, encephalopathy, malnutrition, and electrolyte imbalances. Firm’s experts review your medical record and the associated coding to respond to these data mining efforts, preparing a professional response outlining any relevant ICD-9 / ICD-10 guidelines, specific medical documentation to support the reviewed conditions, and federal, state, and local law regulations to refute these revenue recovery attempts.


When charges for an inpatient stay meet the threshold for additional payment beyond the base DRG payment (an outlier), payers attempt to exclude many of the charges listed in the patient’s detail hospital billing from the calculation of outlier payments. The payers assert that the charges are routinely covered under the “room and board” umbrella and should not be charges separately.

Firm’s reimbursement audit team will review your medical record, the excluded charges, and respond to each line item of the payment reduction with supporting documentation from payer manuals, state and federal regulations and the medical record to assure that full payment for your services continues to be provided. Firm will also apprise you of any billing procedure errors that may have exposed your facility to these audits so that you may take the necessary remedial steps to correct these issues.


Recovery Audit Contractors (RACs) have been tasked with the responsibility of identifying over payments in a post-payment review. FIRM has worked to defend these cases from both a legal perspective and a coding/clinical perspective. Post-payment audits target not only Medicare and Medicare Advantage plans but also most Medicaid products.

These audits are creating financial unrest with our current providers. In some cases, auditors are requesting recoupment on accounts older than three years and are exceeding their statute of limitations to request the recoupment. FIRM will defend these audits and work closely with both the patient accounting department and the medical record department to develop a process so that timelines are met and unnecessary recoupments are avoided.


FIRM will review zero balance accounts for all payers based on facility specific transaction codes within 12 months from the date of final bill, or to the time limits established by the payer contracts and state/federal regulations (retrospectively).

FIRM will review claims for all payers (concurrently) at the time of denial, underpayment, or upon the facilities’ request. FIRM will do a root cause analysis of the identified underpayment or denial. FIRM will determine if the underpayment/denial is due to a technical issue or a medical necessity issue. Based on the root cause analysis, FIRM’s integrated team of attorneys, clinical staff and appeal specialists will work to resolve the underpayment/denial through the allocated appeals process.

FIRM’s clinical team is made up of nurses and physicians specialized in providing defense audits of medical care. FIRM’s appeal specialists work closely with the payers to resolve technical denial issues and coordinate the medical necessity appeals. The process is client driven based on the client’s needs.