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For healthcare providers enrolled in Medicare, a claims audit can present significant operational and financial challenges. When an audit results in denied claims, the appeals process often becomes lengthy, with cases taking months—or even years—to reach a final resolution. Successfully navigating each stage requires careful planning, strategic decision-making, and close attention to procedural deadlines.

Most Medicare audits begin with a request for medical records from a Medicare contractor. From the outset, providers should determine the purpose and scope of the review. Identifying the contractor conducting the audit—whether a Medicare Administrative Contractor (MAC), Unified Program Integrity Contractor (UPIC), Recovery Audit Contractor (RAC), or Supplemental Medical Review Contractor (SMRC)—can offer valuable insight into the government’s objectives. It is equally important to understand the type of audit involved. Is the review occurring before or after payment? Is it part of a Targeted Probe and Educate (TPE) initiative, a Comprehensive Error Rate Testing (CERT) review, or a Provisional Period of Enhanced Oversight (PPEO) audit? Providers should also evaluate whether statistical sampling or extrapolation may be part of the review.

The provider’s own circumstances should also factor into a response strategy. Previous audit activity, recent ownership changes, or situations where records are maintained by another organization may all influence how the audit should be handled. Depending on the issues presented and the potential exposure, providers may choose to supplement the record with additional documentation, obtain an independent clinical review, communicate directly with the auditing contractor, or prepare a comprehensive legal response. In lower-risk situations, however, submitting the requested records and waiting for the contractor’s determination may be the most appropriate approach.

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The HHS Office of Inspector General (OIG) recently updated its work plan to announce two new initiatives directed towards clinical laboratories billing Medicare for laboratory tests. The OIG work plan includes the various projects, audits, evaluations, and reviews that OIG is planning or that are currently underway. Medicare providers often experience the downstream effects of OIG projects or are directly the subject of OIG projects, and should therefore be aware of OIG’s enforcement priorities.

First, OIG intends to review trends and vulnerabilities in genetic tests covered under Medicare Part B. OIG noted the steady increase in Medicare expenditures on genetic tests, as well as the higher average per-test payment amount of these tests when compared to other laboratory tests under Part B. OIG asserted that it had identified genetic testing fraud schemes involving deceptive telemarketing campaigns and kickbacks. Pursuant to this project, OIG will examine avenues for strengthening oversight of genetic tests covered under Part B, including identifying tests that may be vulnerable to fraud, waste, and abuse; assessing trends among laboratory test providers; and examining whether geographic variations exist, particularly between jurisdictions that do and do not participate in the Molecular Diagnostic Services Program.

Second, OIG intends to review Medicare payments to providers for some expanded laboratory panels. OIG noted that expanded panels (those that can detect six or more pathogens) result in higher Medicare payments than targeted panels (those that can detect up to five pathogens). OIG stated it has concerns that providers have been administering expanded laboratory panels when targeted laboratory panels would be sufficient, resulting in significantly higher Medicare payments to those providers. OIG intends to determine whether Medicare has paid providers for some selected expanded panels that are not medically necessary, do not meet Local Coverage Determination (LCD) requirements, or otherwise do not meet Medicare requirements.

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On December 31, 2025, the Drug Enforcement Administration (DEA) released a fourth temporary rule extending certain controlled substance prescribing flexibilities through December 31, 2026. The Rule creates an exception to the 2008 Ryan Haight Act, which requires providers to conduct an in-person examination before prescribing Schedule II–V controlled substances. This temporary rule immediately follows a November 2024 extension that expired on December 31, 2025. The extension of telehealth flexibilities, which policymakers originally invoked in response to the COVID-19 public health emergency, prevents an abrupt end to telehealth services for providers and patients. The Rule allows patients in rural and underserved communities, the elderly, and patients with mobility challenges to maintain continuous, uninterrupted access to care and necessary controlled medications without an in-person visit.

Regulators have taken several steps to make portions of the telehealth flexibilities permanent. In March 2023, the DEA and the Substance Abuse and Mental Health Services Administration (SAMHSA) issued two notices of proposed rulemaking: “Telemedicine Prescribing of Controlled Substances When the Practitioner and the Patient Have Not Had a Prior In-Person Medical Evaluation” and “Expansion of Induction of Buprenorphine via Telemedicine Encounter.” Together, these notices generated more than 38,000 comments, many of which recommended varying degrees of change.

On January 17, 2025, the DEA published the “Special Registrations for Telemedicine and Limited State Telemedicine Registrations” Notice of Proposed Rulemaking, which proposed a framework for a Special Registration for Telemedicine. Under this proposal, providers who continue to prescribe controlled medications without an initial in-person evaluation would need to comply with additional registration, reporting, and recordkeeping requirements. The DEA received an additional 6,000 comments in response.

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Medicare participation offers essential opportunities for providers and suppliers, but it also comes with a framework of regulatory responsibilities and administrative risks. One area that continues to generate questions, as well as significant operational impacts, is Medicare enrollment revocation. While most organizations are familiar with the concept in broad terms, the underlying causes, processes, and potential consequences remain complex. A clearer understanding of the general landscape can help healthcare providers and suppliers maintain compliance and reduce unexpected disruptions.

At its core, a Medicare revocation occurs when the Centers for Medicare & Medicaid Services (CMS) removes a provider or supplier’s enrollment and billing privileges. This action typically arises from situations indicating noncompliance with program requirements or the appearance thereof. In some cases, these may relate to issues such as improper reporting, operational concerns, or other regulatory or medical review findings that signal a need for CMS to reassess a provider’s or supplier’s continued participation. In other cases, a provider’s failure to respond to medical records requests or errors by a contractor can give rise to the appearance that the provider had engaged in conduct that would warrant a revocation.

The revocation process generally begins when CMS or a Medicare Administrative Contractor (MAC) identifies a potential issue. Providers and suppliers are notified in writing and given information about the basis for the action. Although the communication outlines key details, the language can often feel broad or vague, particularly because revocation authorities cover a wide range of scenarios. Regardless of the particular circumstances, receiving a revocation notice should prompt immediate attention and internal review.

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In a move aimed at addressing the persistent challenge of high healthcare spending, the Centers for Medicare & Medicaid Services (CMS) recently launched a new payment and oversight model called WISeR, short for “Wasteful and Inappropriate Service Reduction.” Set to begin in January 2026 and run through 2031, WISeR is designed to use artificial intelligence (AI) to identify and reduce the provision of services that Medicare deems unnecessary, duplicative, or low value. While its goals are familiar, the model marks a shift in how CMS is approaching prior authorization, technology use, and provider oversight.

For healthcare providers, WISeR represents both a policy change and a shift in operational workflow, especially for those practicing in the six participating states: Arizona, New Jersey, Ohio, Oklahoma, Texas, and Washington. Although the model is technically focused on a limited number of outpatient services, including certain spinal procedures, wound care treatments, and pain management interventions, its implications could be far-reaching.

WISeR does not alter Medicare’s coverage or payment rules. Instead, it changes the process through which specific services are reviewed before payment is made. Providers in participating states will face two main options: they can submit prior authorization requests through CMS-approved technology vendors or have claims for selected services reviewed through a more rigorous prepayment review process.

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For healthcare providers participating in the Medicare program, facing a claims audit can be both challenging and time-consuming. Denials are common during these audits, and when they occur, the appeals process can stretch over months or even years. Each step requires careful strategy and timely action.

Typically, a Medicare audit is initiated when a Medicare contractor requests medical records from a provider. At this early stage, it’s crucial to understand the context of the request. Identifying the type of contractor involved, whether it’s a Medicare Administrative Contractor (MAC), Unified Program Integrity Contractor (UPIC), Recovery Audit Contractor (RAC), or Supplemental Medical Review Contractor (SMRC), can provide important insight into what kind of review is being conducted. The nature of the review itself also matters: is it a pre-payment or post-payment audit? Is it part of a Targeted Probe and Educate (TPE) program, a Comprehensive Error Rate Testing (CERT) audit, or a Potential Payment Error Opportunity (PPEO) initiative? Is there a likelihood that the audit includes statistical extrapolation?

The provider’s own history and operational context can also affect the review. For instance, has the provider faced similar audits recently? Was there a recent ownership transfer? Are any necessary records held by another entity? These details may guide the provider’s next steps. Depending on the scope and risk level of the audit, providers might take proactive measures to support their claims. This could include submitting additional documentation, hiring a clinical reviewer to evaluate the claims, engaging directly with the contractor, or preparing a detailed legal response. In other situations, simply submitting the requested records and awaiting a decision may be the most prudent course.

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The HHS Office of Inspector General (OIG) recently issued several new work plan items outlining audits it intends to perform and initiative it intends to undertake. OIG investigations and initiatives can concern activities by federal healthcare programs like Medicare and Medicaid, their contractors, and participating providers. However, it is often providers who experience the downstream impacts of OIG initiatives. Healthcare providers should be aware of OIG’s enforcement priorities.

First, OIG intends to review Medicaid nonemergency medical transportation services. OIG noted that such services can pose a significant risk of fraud, waste, and abuse in Medicaid and that past OIG work has identified significant vulnerabilities in State and Federal efforts to reduce fraud, waste, and abuse involving nonemergency medical transportation in Medicaid. It appears that OIG intends to conduct targeted reviews of certain nonemergency medical transportation providers. Such providers should be prepared for increased levels of scrutiny from OIG and their local Medicaid programs.

Second, OIG intends to produce a white paper regarding fraud, waste, and abuse related to durable medical equipment (DME) in Medicare. DME has long been an area of concern for the Medicare program and federal law enforcement and OIG noted that that recent cases demonstrate that fraudsters continue to target DMEPOS billing and have developed new schemes. OIG intends to build on its extensive experience with DME fraud and provide further information about the nature of DMEPOS fraud in Medicare, key program integrity vulnerabilities, and potential actions to reduce fraud, waste, and abuse.

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Entities operating in the healthcare industry, especially those that submit claims to government-funded programs like Medicare or Medicaid, must navigate a complex landscape of laws designed to prevent fraud, waste, and abuse. The most critical federal statutes in this area include the Physician Self-Referral Law (commonly known as the “Stark Law”), the Anti-Kickback Statute (AKS), and the Eliminating Kickbacks in Recovery Act (EKRA). Even seemingly straightforward business relationships can demand intricate legal analysis when these laws are involved.

The Stark Law (42 U.S.C. § 1395nn) restricts physicians from referring patients for certain healthcare services, referred to as “designated health services,” to entities with which they or their immediate family members have a financial relationship, unless a specific exception applies. These financial ties can take various forms, including employment arrangements, compensation agreements, or investment interests. Notably, the Stark Law doesn’t cover all services under Medicare or Medicaid, only those specifically listed as designated health services. Although the law includes a number of exceptions, such as those for in-office ancillary services or arrangements based on fair market value, each exception has detailed criteria that must be satisfied fully for it to be valid.

Similarly, the Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) prohibits the offer, payment, solicitation, or receipt of anything of value in exchange for referrals or to induce business for services reimbursable by federal healthcare programs. The AKS has a broader scope than the Stark Law, covering any service billed to these federal programs, and defines “remuneration” broadly to include cash, gifts, discounts, or anything else of value. The statute is accompanied by a set of “safe harbors,” regulatory provisions that protect certain arrangements from enforcement actions if all specified conditions are met.

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Physicians and other healthcare professionals who labor under the decreasing reimbursement and increasing administrative burden of insurance companies and government healthcare programs, especially Medicare, may wonder if there is a way to accept payment directly from patients and avoid the obstacles presented by billing third-party payors.

While a strictly cash-pay or “concierge” practice is not a viable business model for many providers, for certain providers responding to the needs of certain patient populations, it can be a highly successful model that avoids many of the costs, delays, and administrative issues created by the need to bill third-party payors and comply with payors’ endlessly complex and shifting rules. Practice structures and pricing models can be highly variable and customizable to the needs of the practice and its patients. State law and licensing rules may in some cases limit certain structures or activities, but these would apply to a provider regardless and are generally far less burdensome than the restrictions imposed by payors.

Some practices may choose a more limited route and choose to accept commercial insurance plans, while not accepting Medicare or Medicaid plans. This approach can often limit many of the worst downsides of accepting third-party payment, while still leaving the practice open to a large patient population.

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Generally, in the Medicare claims appeal process, a determination that is favorable to the provider ends the appeal process. Only under very limited circumstances can the Centers for Medicare & Medicare Services (“CMS”) or its contractors directly appeal a favorable appeal determination. However, there are certain mechanisms that can be used to reopen, review, and change favorable determinations with which CMS disagrees.

The Medicare claims appeal process is a lengthy, complex, and administratively burdensome process for providers. It includes five levels of appeal, the first four of which are directly controlled by CMS or The Department of Health and Human Services (“HHS”) itself. First is Redetermination by a Medicare Administrative Contractor (“MAC”). Second is Reconsideration by a Qualified Independent Contractor (“QIC”). Third is review by an Administrative Law Judge (“ALJ”) employed by the Office of Medicare Hearings and Appeals (“OMHA”), a division of HHS. Fourth is review by the Medicare Appeals Council, another division of HHS. Fifth is review by a federal court.

Where a provider prevails at the ALJ review, a distinct CMS contractor, the Administrative QIC (“AdQIC”) is tasked with reviewing an ALJ decision. Where CMS, through the AdQIC, disagrees with the ALJ, in some limited circumstances, the AdQIC can directly file an appeal of the ALJ decision to the Appeals Council. However, more often the AdQIC will simply “refer” a provider’s victory to the Appeals Council for the Appeals Council to considering review of its “own” accord. The Appeals Council nearly always takes such cases and often overturns the provider’s favorable determination. CMS and/or HHS may also simply direct the ALJ, who is employed by HHS, to change the decision.

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