Palmetto GBA Undertakes Massive Service-Specific Audit of Physician Practices

Palmetto GBA has issued letters to many physician practices as part of a Service-Specific Probe that every Medicare Administrative Contractor is required to conduct. The letters, sent from the Medical Review (MR) Department, explain that Palmetto has identified the physician as an outlier for a specific procedure and will be performing a prospective audit on a limited number – typically around 40 – of your claims.  This does not automatically mean you have done anything wrong or that you will have to pay money back.  The purpose of the review is to validate claims that were submitted, and if necessary, prevent inappropriate Medicare payments.

Note that Palmetto GBA’s first letter does not request any records. 

The Service-Specific Review Process

Palmetto’s system will randomly select for review claims containing the CPT code of the targeted service. (Additional services billed on the same claim that are not being monitored will continue to be processed.) Palmetto will then issue Additional Documentation Request (ADR) Letters to the practice, asking for medical information to substantiate each selected claim.  Records should be submitted within 30 days of receiving the ADR Letter.

The MR Department will use the reviewed claims and medical records to calculate a charge denial rate (CDR), which determines the percentage of charges, if any, that have been billed in error. If they find an issue with your submitted claims, you may receive a Letter of Finds, which will ask you to participate in a corrective action plan. Once that plan in submitted, a second analysis will be completed at a later date.

Where to Go for Help

For additional information from Palmetto GBA, please refer to their Medical Review Progressive Corrective Action (PCA) Process website.

You should also review the new NCMS/PAI white paper, Medical Audits: What Physicians Need to Know, located on the NCMS Fraud & Abuse webpage.  (Scroll to page 12 of the document for information on Service-Specific Probes.)

Finally, additional questions and developments can be directed to Kristin Freeman in the NCMS Member Resource Center at 919-833-3836 or [email protected].


NCMS will continue monitoring this audit and will provide updates as we receive them.


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  • W James Stackhouse, MD

    Agree with Dr. Wolff, and would note that I know that Conor Brockett of the NCMS has been monitoring and active on this issue. With reasonable estimates that more than $10,000 of my claims from December (few would apply to deductibles) are more than 45 days old now, times the number of primary care physicians in NC alone, there would be more than $60 million tied up now, “loaned” to the government, not stimulating the economy and threatening job loss in medical offices.
    Maybe they were right when the Feds considered us as “lenders” to be regulated in the past. We just need to get the government’s identity information!
    Surely there is an oversight organization or method to report administrative failure by Palmetto to the OIG at CMS.

  • The NCMS should be auditing and suing Palmetto for delaying Medicare payments.
    It is ridiculous that I have rely on a loan to pay my overhead due to this delay(minimal payments sinc December 2011).