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Welcome to the MSL Blog!  A resource that offers guidance and thought leadership on issues to help your organization navigate the financial landscape in an ever-changing environment


Medicaid Audit Discussion

We recently had the opportunity to meet with the Agency for Health Care Administration (AHCA) reimbursement management to discuss the audit and appeals processes for cost reports under the Prospective Payment System (PPS) methodology. The goal was to initiate a dialogue with AHCA to gain a better understanding of the audit timeline, program changes, and outstanding issues related to audits and appeals.

Q: What is the status of the new auditor contracts and what is the anticipated start date?


A: Awards have been given to Cherry Bekaert and Myers & Stauffer for a three-year contract. The contracts are still going through internal checks at AHCA. Once the contracts are final and executed, AHCA will hold an entrance conference with the auditors to review the audit program, scope, timing, etc. and then the first round of audits will be issued.

Q: When do you anticipate releasing the first round of cost report audits under the new contracts?

A:  There is no set date at this time. However, the first round of audits should be issued right after the entrance conference with the new contractors. The goal for AHCA is to audit every provider at least once in the next three years. The first round will focus on cost reports already accepted by AHCA. There is no method for determining the FYE of which report will be audited or how they will select first round vs. second round vs third providers to be audited. AHCA indicated that providers that have not undergone recent audits, the more likely they’ll be picked in the 1st round. FYEs 2016, 2017, and 2018 reports are all in play for the first round.

Q: Approximately how many audits will be issued in the first round?

A: The first batch of audits is anticipated to be approximately 235 facility reports and 30-40 home office reports.

Q: How often will new audits be issued?

A: The frequency of new audits will depend on the workloads for the new contractors and how quickly the new contractors can complete the work. There is no set schedule for issuing new audits but this may change as the contractors get into a rhythm.

Q: What is the difference between a desk review and field audit? Other levels of review?

A: There has been no change made to the existing audit program on AHCA’s website. However, they will write instructions into the new contracts for limited scope and reviews that will be allowed to compliment the existing program. Once the contracts are final, we will be able to view them and know more.

Q: What is the cutoff date for audited CRs to be used for rebasing?

A: Audited cost reports as of April 30, 2021 will be used for rebasing effective October 1, 2021. Audits that do not have a final audit report issued or the provider has appealed any findings in the audit reports will not be used until the audit/appeal is complete.

Q: If a provider is not audited by the cutoff date, will the most recent audited cost report on file be used for rebasing?

A: Yes, but AHCA believes the chances of that occurring are very remote.

Q: How is the appeal process impacted by these changes for PPS?

A: The appeals process will not change. However, abeyances currently granted for missing or additional information gathering will be minimalized. The goal is to grant abeyances only on appeals based on information that has already been presented during the audit.

If your facility or home office has not undergone a cost report audit in recent years, you should anticipate being included in the first round of audits to be issued shortly by AHCA. If you have recently undergone a change of ownership or opened a new facility, remember that initial cost reports are always chosen for audit and that rule will not change in the PPS environment. We anticipate the new contractors to hit the ground running with the first round of issued audits. You will still have ample time to reply to the information requests from auditors to provide them with the information they need to perform the audit and you will still have 60 days after the exit conference and issuance of SOPAs (Schedule Of Proposed Adjustments) to provide additional information to reduce or eliminate proposed adjustments before the final audit report is issued. You will also have 10 days from the date of the final audit report issuance to file for an appeal.

We strongly suggest that you put your administrators and business office managers on alert to look for the initial audit correspondence from AHCA and notify your internal CPA or outside CPA firm that reviewed or prepared the cost report so the response to auditors’ requests for information is accurate and complete.