Passive Cost Containment

Stopping Medical Audit Loss Before It Begins

By Christopher Baggott, CEO Medlinks Cost Containment, Inc.


“Passive Cost Containment” refers to the process of records request reviews.  In order to reduce audit loss, the provider must consider a number of factors:

What is my current audit error rate? Audit error rates drive audits. The lower the error rate, the lower the possibility of auditing because at a certain rate the payer ROI to audit just doesn’t make sense.

What is my records release process?Does anyone at your site CAREFULLY REVIEW the request for records? Or are request for records an automatic response where you go into retrieval and delivery mode?

What are my contractual obligations to release records? – Let’s assume, because it’s true, that payers have the right to request records. OK, and you, the provider have the RIGHT to determine HOW those records can be reviewed. This is where a comprehensive audit policy (Free Audit Policy) comes into play because spelling out audit process, audit fees, and so on can turn auditing into a fair and balanced process again. How about, “Yes, you may review the record, on site, after you pay an audit fee.” This works all day long at facilities we serve.

What will happen to this record or claim once it’s released? This record has been requested for a reason. That reason is very often associated with reimbursement even if the request involves coding and or quality of coding because a disagreement here equals a request for refund which equals an appeal from you.


In recent years hospitals, SNF’s, and providers of all types have seen a change in their records requests from payers. These requests have become more cryptic in defining “why” they need the record.  For example, many letters will mention HHS and CMS reporting as the reason for the letter when in fact the record will be used to do a variety of audits. 

While a review of the record is legitimate, the way it’s done is under the control of you, the provider.


We never refuse the release of records, BUT we define HOW a record may be released.

Instead of handing over a record on a silver platter, to then be audited one sided, our clients benefit from a more equal process of providing the payer with the record in the right circumstances.  As an example, payers all contractually have the “right” to review records. This is a contractual and fair norm in the healthcare industry.  When a request turns into a one-sided audit however under the guise of a government regulatory review the provider is likely left responding via audit appeal. The audit appeal decision, often left in the hands of the payer, can be an expensive, time consuming, and ultimately remain as lost revenue.

As a response to this process, we’ve developed the system of passive cost containment, whereby the record request is carefully reviewed to determine its true need from the payer or often their third-party audit firm. This process requires a deeper understanding of first the letter’s intent, and second, the contractual obligation to deliver claims and or records electronically.


Understanding CMS Guidelines and how to apply them.

A separate category for Passive Cost Containment is understanding the rules surrounding a commercial payer operating as a Medicare Provider. Except for the changes that may exist in your contract, outside of those changes the payer must operate by CMS rules of engagement. This means request limits, time frames, depth of reach, etc. all apply. As an example, CMS does not do line item takebacks which many third-party firms will try to apply such as revenue center sweeps of so-called “routine supplies.”  CMS does not do this type of takeback and their commercial representative is not allowed to either.

  • Prevents losses from a one-sided or veiled audit
  • Lowers number of appeals
  • Reduces staff workload and copying and mailing records fees
  • Identify audit trends
  • Decreases ERROR-RATES!
  • Increases understanding of contractual rights

Tighten your records request process.  Do you have an audit policy? Understand it and it should have annual edits.  Tighten your audit process and review your audit metrics regularly.

Here are examples of audit metrics you should see regularly:



Denial Management Survival Kit

with Denial Management Policy Template

You have Successfully Subscribed!