What Is a TPE Audit? The Process and Outcomes Explained

Targeted Probe and Educate (TPE) audits are a specific review process used by the Centers for Medicare & Medicaid Services (CMS) to identify and address healthcare billing discrepancies. These audits help providers ensure compliance and maintain financial stability. TPE audits emphasize error identification and provider education, aiming to improve billing accuracy across the Medicare program.

What Targeted Probe and Educate Audits Are

TPE audits are a program administered by Medicare Administrative Contractors (MACs) under the direction of CMS. They aim to identify and reduce improper Medicare payments while simultaneously educating healthcare providers on correct billing practices. The program focuses on specific services, billing codes, or providers that exhibit higher-than-average error rates or unusual billing patterns, often identified through data analysis. MACs are responsible for conducting these reviews, working with providers to address identified issues.

The scope of a TPE audit can vary, targeting specific types of claims that have high national error rates or pose a financial risk to the Medicare program. This means a provider might be selected for an audit regardless of their individual billing history if they bill for services commonly associated with errors. Common triggers for selection include a history of questionable billing practices, previously audited claims with high error rates, or billing for services that are frequently misbilled. While the stated goal is educational, TPE audits can lead to significant consequences if issues are not resolved.

The Targeted Probe and Educate Audit Cycles

The TPE audit process begins when a healthcare provider receives a “Notice of Review” letter from their Medicare Administrative Contractor (MAC), detailing the reason for selection and the services under review. This initial notification typically requests a sample of 20 to 40 medical records and claims for review. The MAC then conducts a “probe” review, examining these records meticulously for compliance with Medicare billing rules. If the claims are found to be fully compliant, the provider is generally released from the audit for that specific topic for at least one year.

If errors are identified during the initial probe review, the MAC will schedule a one-on-one “education” session with the provider. During this session, the MAC’s staff explains the identified errors, discusses the specific deficiencies in documentation or coding, and provides guidance on how to correct them. Following this education, providers are given a period, typically at least 45 days, to implement corrective actions and improve their billing and documentation practices.

After the designated improvement period, a “re-probe” review commences, where the MAC requests another sample of 20 to 40 claims for the same topic. The process of review and education is repeated if errors persist. Providers typically undergo up to three rounds of review and education. If a provider’s error rate remains high or does not show sufficient improvement after the third round, the MAC will refer the case to CMS for potential further action, which can include 100% prepayment review, extrapolation of overpayments, or referral to other integrity contractors.

Preparing and Submitting Documentation

Upon receiving a TPE audit request, healthcare providers must promptly gather specific types of documentation to support the requested claims. This typically includes medical records, physician orders, progress notes, test results, and any other relevant billing records that substantiate the services rendered and their medical necessity. Ensuring that all documentation is complete, legible, and directly supports the billed services is important, as incomplete or missing information is a common reason for denials. For instance, missing or illegible physician signatures or inadequate medical necessity documentation are frequently flagged errors.

Organizing the requested records clearly and logically can help expedite the review process for the MAC. Providers should include a cover letter with their submission, and for paper submissions, adding page numbers can be beneficial. The notification letter will specify the method for submitting documentation, which often includes secure online portals, fax, or mail. It is important to adhere strictly to the submission deadline, usually within 45 days of the request, as failure to do so can result in an automatic denial of claims for that round. Providers should also keep a complete copy of all submitted documentation for their records.

Understanding Audit Outcomes

Following the completion of the TPE audit cycles, various outcomes are possible for healthcare providers. If a provider demonstrates significant improvement and meets the compliance targets, they are typically released from the audit for that specific topic and will not be re-audited on it for at least one year. However, if errors persist or improvement is not demonstrated after three rounds of review and education, the consequences become more severe.

These escalated actions can include a 100% prepayment review, where all claims submitted by the provider for a specific service or topic are reviewed before payment is issued. Another potential outcome is extrapolation, where an error rate identified in a sample of claims is applied to a larger universe of claims, leading to substantial recoupments of previously paid funds. In some instances, the MAC may refer the provider to other auditing entities, such as Recovery Auditors or Zone Program Integrity Contractors, for more intensive scrutiny or even potential fraud investigations.

Providers have the right to appeal unfavorable audit findings, including payment adjustments or denials. The Medicare appeals process involves multiple levels, beginning with a Redetermination by the MAC that conducted the audit. If the redetermination is unfavorable, the provider can request a Reconsideration by a Qualified Independent Contractor (QIC). Should the QIC’s decision also be unfavorable, the next step is a hearing before an Administrative Law Judge (ALJ). Further appeal levels include review by the Medicare Appeals Council and, as a final resort, judicial review in federal court.