Audit and Compliance



A&C Jan

On January 9th, the Centers for Medicare & Medicaid (CMS) began piloting new electronic communication features to support the audit claims review process. This is the first step in Phase 2 of this project—known as the Electronic Submission of Medical Documentation (esMD).

The goal of esMD is to create efficiencies and improve accuracy in the audit claims review process by enabling providers, Health Information Handlers (HIHs) and review contractors to electronically send, receive and respond to requests for medical documentation. This process was formerly handled only through physical correspondence that often lengthened the claims review timeline.

This second phase of esMD focuses on implementing new functionality that will allow review contractors to send electronic documentation requests to providers. Phase 1 of esMD gave providers the ability to fulfill medical documentation requests by electronically sending documents to review contractors. Many providers were eager to use the system to simplify this cumbersome process, as evidenced by the more than 1.7 million records submitted through the esMD system at the close of FY2015.

Features launching in Phase 2 include review contractors' ability to send electronic communications for the following:

  • Documentation Requests - This letter is the starting point for the majority of audit encounters providers face, with request limits of up to 450 claims every 45 days.
  • Review Results Letters - Once supporting documentation is submitted by the provider their hands are tied until they receive a response for each claim indicating the outcome of the review and with any potential next steps for the provider.
  • Demand Letters - This is the final piece of documentation from the auditing agency prior to any appeal. The Demand Letter acts as final notification of a payment adjustment. This letter will reference the rationale for any adjustments to be made, citing specific reasoning, while also providing information for any potential appeal rights the provider may have to challenge this decision.

These new features are currently being piloted with test data to ensure seamless end-to-end connectivity of the esMD system with HIHs. One Medicare Administrative Contractor (MAC), Palmetto GBA, is participating in this portion of the pilot. It's expected the esMD system will soon move out of the testing phase, opening the door for review contractors to transmit live data. Upon the initial launch of these features, review contractors will still be required to send providers paper copies of all correspondence to ensure a smooth transition.

Not all HIHs are participating in the pilot program, but those that are participating also receive the added benefit of being the in the first group to fully utilize the functionality when the pilot is over and the program is expanded nationally.

The launch of these new features means almost all correspondence between providers and review contractors can now be completed electronically—creating the opportunity for providers to realize even further efficiencies in the claims review process. Eliminating the need for reliance on traditional methods of document submission dramatically shortens the time it takes to receive requests and submit documentation, which in turn can lead to faster decisions by auditors, faster appeals and faster payment adjustments.

With support from the right HIH, audit management activities including tracking requests, submitting records and receiving/documenting responses could become almost completely automated.