Regulation of Medicine


Understanding and Complying with a TPE Audit

By: Raj Shah, Esq., Baker Swain
Executive Summary

As CMS is resuming the Medicare Targeted Probe & Educate (TPE) program after suspending it during the COVID-19 public health emergency, it’s necessary for healthcare practices to understand how the TPE program works, especially since the process involves an unannounced audit. It’s also important for providers to know what is required of them to achieve compliance and reduce regulatory risks. 

Recommended Actions
  • Stay up to date on the most current coding requirements and communicate with clinicians, administrators and billers about any changes.
  • Look out for any CMS Notices of Review in the mail and ensure that your practice has a procedure for flagging any such notices. 
  • Create a policy for how your practice will respond to an audit request and ensure that all staff are trained appropriately. 

The Centers for Medicare & Medicaid Services (CMS) created the Medicare Targeted Probe and Educate (TPE) program in 2017 to increase accuracy in specific areas and reduce claim denials and appeals through provider education. Medicare administrative contractors (MACs) identify healthcare organizations with high claim error rates or unusual billing practices. Healthcare organizations are selected for a TPE audit based on data analysis identifying irregularities that suggest questionable billing practices, high claim error rates or potential financial risk to Medicare. The most common requests for TPE audits arise from missing or illegible signatures, lack of documentation for medical necessity, upcoding and missing initial certification or recertification.

Even though CMS indicates that TPE audits are for egregious billing practices, it’s a question of when, not if, healthcare organizations will be faced with a TPE audit. This article describes the TPE audit process and best practices for participating in an audit.

Brief Walkthrough of the TPE Audit Process

  1. Notice of Review - The Notice of Review is sent via mail and will indicate why the healthcare organization has been targeted for a TPE audit. For each claim selected for a TPE audit, the organization will receive an Additional Documentation Request (ADR). An ADR identifies medical records required for review and instructs the healthcare organization on how to send the documents to the MAC. The TPE audit is usually conducted by certified coding auditors or clinical auditors with a practical nurse license.
  2. At Least One Round of TPE Audit Review - A TPE audit involves a maximum of three rounds of review. In each round, the MAC will review between 20-40 billing claims and medical records supporting each claim. The MAC has the discretion to determine whether the healthcare organization is compliant with CMS regulations. If the healthcare organization is deemed compliant, it is released from the TPE audit. The MAC does not audit the healthcare organization on the same type of item or service for at least one year (12 months). However, the MAC may conduct an additional review if they detect significant changes in an organization’s Medicare billing practices.
  3. Second Round of TPE Audit Review - If the healthcare organization is found out of compliance during the first round of review, a second round will be conducted. After the first round of review, the MAC will provide a results letter analyzing the first-round submission and detailing the reasons for the claim denials. The letter will offer a one-on-one education session with the MAC’s outreach and education staff. The session involves reviewing TPE audit results and discussing errors related to the audited services. The MAC will then wait at least 45 days to allow the healthcare organization to make changes and improve practices. After this waiting period, non-compliant organizations will then move to the second round of review, which is similar to the first round. The MAC will review another set of 20-40 claims and the medical records supporting each claim.
  4. Third and Final Round of Review - Healthcare organizations that continue to demonstrate high error rates or a lack of improvement in the second round of review will then undergo a third and final round of review. If the MAC determines that the healthcare organization has failed to improve after the third review, the MAC will refer the organization to CMS for additional disciplinary review. The additional disciplinary review includes, but is not limited to, prepayment review, extrapolation of overpayment, referral to a Recovery Auditor Contractor (RAC), suspension of Medicare payments, revocation of Medicare billing privileges and exclusion from Medicare.

Best Practices for Effectively Participating in a TPE Audit

When subjected to a TPE audit, healthcare organizations should attempt to prove compliance during the first round of review and avoid another audit for that particular item or service for at least another 12 months.

The key to avoiding continuous TPE review is improving from round to round. Healthcare organizations should strive to increase the accuracy of claims in each round and set goals for improving after each round to avoid review. Improving from round to round requires internal review between submissions. Healthcare organizations should consider engaging outside counsel or a billing consultant to help conduct the internal review so the organization and counsel or consultant can form a defense strategy if they decide to challenge the TPE audit.

As part of the internal review, healthcare organizations should document when audits occur and what steps the organization has taken to address the issues that were part of the TPE audit. Healthcare organizations should also document if they’ve done training since the audits.

The internal review also requires ensuring that documentation has the appropriate information for services and items. This information includes the correct code for the diagnosis or treatment, legible signatures, reasons for the diagnosis or treatment and certification – the most common errors that trigger a TPE audit. This review may require looking at prior CMS audit requests to identify risk patterns and areas for improvement. When performing an internal review, healthcare organizations should document their findings to prove compliance with CMS regulations or challenge TPE audit findings.

Following are six additional best practices for TPE audits.

Respond in a Timely Manner to TPE Audit Requests

One of the top reasons for denial in the later stages of the TPE review is untimely responses. Responding in a timely manner also involves complying with every step of the ADR. It’s important to refer to policies and procedures for the MACs responsible for your region. Although MACs have a lot of discretion in the TPE audit process, the standard audit policies and procedures that MACs follow can be found here. Additionally, each MAC has different policies and procedures for how healthcare organizations can submit their TPE audit responses, and the Notice of Review should provide instructions for submitting responses. A sample Notice of Review can be found here. 

Healthcare organizations should establish policies for receiving an audit request in the mail. Examples of these policies include, but are not limited to, the following:

  • Establish a TPE audit response team
  • Establish the main point of contact to receive audit requests (e.g., a practice administrator)
  • Create training and education modules on policies and procedures for clinicians and billing staff
  • Require providers and key billing staff in the healthcare organization to participate in training sessions
  • Require written acknowledgment that the training was completed

A common issue for healthcare organizations during a TPE audit is missing response deadlines. Therefore, healthcare organizations should create or add TPE audit deadlines to calendars to ensure timely responses. 

Consider Engaging an Outside Attorney or Consultant 

Attorneys can guide healthcare organizations through the audit process and help respond to audits. They also can assist healthcare organizations in conducting self-audits and ensuring compliance to prevent future TPE audits.

Billing and coding consultants can identify and prioritize areas for compliance auditing and monitoring to prevent future audit requests. They can also provide solutions tailored to the healthcare organization’s situation and practices.

If hiring an outside attorney or consultant is not feasible, healthcare organizations should consider purchasing a healthcare audit software program that identifies risk areas, denial patterns and solutions to compliance issues.

Perform Routine Internal or External Independent Audits

Healthcare organizations should be prepared for a TPE audit before they receive a Notice of Review from a MAC. One way to prepare for a TPE audit is to conduct your own independent audits.
Routine audits can detect potential issues before a TPE audit, help update processes and eliminate ongoing issues. If healthcare organizations wish to perform audits, they should conduct random samplings of claims throughout the year, similar to what a MAC does for a TPE audit.
Alternatively, if an internal or external audit would be too expensive or not feasible, healthcare organizations should consider creating or subcontracting an automated audit platform to handle internal reviews.

Create Checklists for Clinicians, Billers and Administrators

Checklists are helpful when writing reports and claims. Checklists may include the following questions:    •  

  •  Is the form signed? And is that signature valid and legible?
  • Are the items or services documented in writing?
  • Is a medical opinion given in writing for why the item or service is prescribed?
  • Is a correct, updated code used in the claim?
  • Does that code correspond to the diagnosis or treatment in the claim?

Healthcare organizations should communicate with clinicians, administrators and billers on changes to coding. Organizations also should continuously monitor coding systems to see if codes have changed for particular diagnoses. Diagnosis codes change periodically and implementing the incorrect code can result in frequent billing errors and upcoding.

Review and Improve Documentation and Signature Practices

One of the most common reasons for a TPE audit is that claims lack documentation of the medical necessity of treatment. Improving documentation and signature practices can help healthcare organizations capture medical necessity in their claims.

Healthcare organizations should ensure that documentation is in place that defines the patient’s problems, comorbidities, differential diagnosis, treatment and risk factors. Those items contribute to defining medical necessity. Healthcare organizations should review their electronic health record (EHR) workflow to ensure that they are capturing all necessary components of documentation and signature requirements.

Know Your Rights

Healthcare organizations can challenge TPE claim denials and TPE overpayments through the regular Medicare appeals process. There are five rounds of appeals in the process and the TPE audit does not change that process. A brief overview of the Medicare appeals process can be found here. Claim denials overturned on appeal will be taken into consideration in subsequent rounds of the TPE review process.
Your MagMutual medical professional liability policy’s Regulatory Benefit potentially covers both responding to and defending TPE audits. To confirm coverage, please submit an incident report form.

Additional Resources
  • Centers for Medicare & Medicaid Services – TPE audit process flowchart
  • Centers for Medicare & Medicaid Services – TPE Q & A’s
  • Palmetto GBA, LLC – Results from TPE audits in 2019 and 2020
  • Wachler & Associates, P.C. – Overview of TPE audits and appeals
  • LW Consulting, Inc. – Six Steps to Surviving a TPE Audit
  • Doctors Management – Impact of Medical Necessity

Lessons Learned: 
  • If your practice is subject to a TPE audit, consider consulting with regulatory counsel at the outset to help you through the audit process and to start preparing for an appeal if needed.
  • Strive to improve after the first TPE review round by increasing the accuracy of claims in that audit round.
  • Create a checklist for each healthcare professional involved in writing reports and submitting claims to ensure that every necessary part of a claim is included before submitting it.

Potential Damages

Healthcare organizations that fail to improve after the third and final round of the TPE audit will be referred to CMS for disciplinary review. Disciplinary action from CMS can include suspension of Medicare payments, revocation of Medicare billing privileges and even exclusion from Medicare altogether. 


1. My healthcare organization should be prepared for a TPE audit even before receiving a Notice of Review from a MAC.
2. A common issue for healthcare organizations during a TPE audit is missing response deadlines.
3. Missing or illegible signatures and lack of documentation for medical necessity are two of the most common reasons for a TPE audit.


Want to learn more?

Interested in how MagMutual can help?

View our products


The information provided in this resource does not constitute legal, medical or any other professional advice, nor does it establish a standard of care. This resource has been created as an aid to you in your practice. The ultimate decision on how to use the information provided rests solely with you, the PolicyOwner.