The first question in any Medicare audit is not what was billed. It is who is asking. CMS runs its program integrity work through a set of contractors with different mandates, and the letterhead on the records request tells you whether you are facing routine claim review or a fraud-oriented investigation. Mapping the contractor, the stage, and the deadlines on day one is the foundation of the defense.
The Contractor Landscape
Medicare Administrative Contractors (MACs) process claims and run prepayment and postpayment reviews in their jurisdictions. Recovery Audit Contractors (RACs) are paid contingency fees to identify overpayments. The Supplemental Medical Review Contractor (SMRC) runs nationwide, project-based reviews on CMS-selected topics, and CERT audits measure the program's own error rate. Unified Program Integrity Contractors (UPICs) are the fraud-focused tier: a UPIC letter can mean interviews, site visits, payment suspensions, and referrals to law enforcement. A RAC finding usually costs money. A UPIC finding can cost the practice.
The Stages of a Postpayment Audit
Most audits open with an Additional Documentation Request identifying the claims under review. The contractor reviews the records against coverage rules, issues review results, and the MAC follows with a demand letter stating the overpayment. Where the contractor sampled claims, the demand is typically extrapolated across the full period. Interest begins accruing on the 31st day after the demand, and absent an appeal, recoupment from current payments begins on day 41.
The appeal deadlines are shorter than the recoupment deadlines. A provider who calendars only the demand loses money before the case is ever heard.
The Appeal Clock
The first appeal level, redetermination, must be filed within 120 days of the demand, but filing within 30 days stops recoupment from starting. The second level, reconsideration by a Qualified Independent Contractor, carries a 180-day deadline, and a timely filing again holds recoupment under the Section 935 limitation. After reconsideration, recoupment resumes even while the case proceeds to the Administrative Law Judge, the Appeals Council, and federal court. The strongest documentation record is built at the first two levels, where most demands are won or substantially reduced.
Why Early Legal Counsel Is Critical
Contractor identity changes strategy. A SMRC production is a documentation exercise; a UPIC review is conducted with one eye on a potential fraud referral, which means statements, productions, and certifications carry consequences beyond the overpayment. Counsel engaged at the records-request stage scopes the production, protects privileged material, and preserves the sampling challenges that decide extrapolated demands.
How Health Law Alliance Can Help
Health Law Alliance defends physicians, pharmacies, and healthcare companies in Medicare audits nationwide, from ADR responses through extrapolation challenges and appeals. The firm was founded by a former federal prosecutor and staffs matters with attorneys who have run these reviews from the government and payor side. If a Medicare contractor has requested your records or issued a demand, contact us today for a free consultation.
