Medicare contractors are scrutinizing advanced diagnostic imaging claims, particularly magnetic resonance imaging (MRI), computed tomography (CT), and positron emission tomography (PET) studies, at a volume that places both the ordering physician and the furnishing facility at risk. A single finding built on a missing signed order or undocumented medical necessity can be extrapolated across a full claims sample, and when the imaging is furnished by an entity in which the ordering physician holds a financial interest, the same file can raise self-referral exposure under the Stark Law. Both risks start with the same document: the order.
What Triggers a Diagnostic Imaging Audit
Medicare Administrative Contractors, Recovery Audit Contractors (RACs), and Unified Program Integrity Contractors each review advanced imaging claims at different stages of the audit lifecycle. Advanced imaging draws attention for its cost per claim and utilization growth. Contractors commonly flag physicians whose volume is a statistical outlier against specialty peers, or whose claims do not match the criteria in the applicable local coverage determination. A claim that fails those criteria, or cannot be matched to a signed order, is the most common basis for denial.
The Ordering Physician's Documentation Burden
The ordering physician, not the imaging facility, carries the greater documentation burden in a Medicare imaging audit. Medicare requires a signed order and medical record documentation, entered at or before the time the order is written, that supports the medical necessity of the specific study ordered. CERT program reviews have repeatedly found that missing or late-signed orders, and notes that never connect the patient's symptoms to the study, are leading causes of improper payment for advanced imaging. A note written after the audit notice arrives rarely survives review.
The Appropriate Use Criteria Program's Paused Enforcement
The Protecting Access to Medicare Act (PAMA) directed CMS to require ordering physicians to consult Appropriate Use Criteria before ordering advanced imaging, backed by a payment penalty for outlier ordering patterns. CMS paused implementation and rescinded the program's regulations at 42 CFR 414.94 in the CY 2024 Medicare Physician Fee Schedule final rule, effective January 1, 2024, citing the burden of the claims-based reporting mechanism. No payment penalty phase is in effect, and CMS has not announced a timeline for resuming one. The pause does not lower audit exposure: medical necessity documentation is required regardless of AUC consultation.
Self-Referral Exposure Under the Stark Law
When a physician refers a Medicare patient for imaging furnished by the physician's own practice, the arrangement must satisfy an exception to the Stark Law, most often the in-office ancillary services exception at 42 CFR 411.355(b). The exception requires the service to independently satisfy a supervision test, a location test, and a billing test for every claim. A physician who refers for MRI, CT, or PET under this exception must also give the patient written disclosure, at the time of referral, of at least five alternative imaging suppliers within a 25-mile radius, a requirement in place since January 1, 2011. A documentation failure paired with a failed exception requirement escalates a coverage denial into a Stark Law violation, and Stark violations render the underlying claims non-payable, adding False Claims Act exposure to the audit recoupment.
A missing signed order becomes a Stark Law problem the moment the imaging is furnished by an entity the ordering physician has a financial stake in.
When an Imaging Audit Escalates
An imaging audit finding rarely stays isolated to a single claim. Once a contractor identifies a pattern of missing orders or coverage mismatches, extrapolation applies the sample's error rate across every imaging claim billed during the audit period, converting a handful of flagged claims into a six or seven figure recoupment demand. Physicians facing that kind of finding should review our companion piece on when to engage a Medicare audit attorney, since the appeal window narrows quickly once the letter arrives.
Why Early Legal Counsel Is Critical
It is critical that physicians promptly retain experienced healthcare defense counsel upon receiving an audit notice, documentation request, or other government inquiry involving diagnostic imaging claims. Early legal intervention can protect the physician's rights, ensure the response addresses both the coverage documentation and any Stark Law exception at issue, avoid inadvertent admissions, and preserve defenses that may otherwise be lost. Delaying representation can significantly affect the outcome of the matter.
How Health Law Alliance Can Help
Health Law Alliance defends physicians against Medicare audits of diagnostic imaging claims, including the documentation disputes and Stark Law self-referral exposure that can follow an audit finding. Our bench includes a former federal prosecutor and a former senior healthcare compliance executive, background that shapes how we evaluate which flagged claims are defensible. If your practice has received an audit notice involving diagnostic imaging claims, contact us for a free, confidential consultation.
