Episode #28: Audits, Appeals, and Staying Ahead of CMS with Wayne Van Halem

Former CMS insider Wayne Van Halem joins Claim to Fame to talk audits from the inside out.

What’s Covered?

We cover what auditors are really looking for, common mistakes that lead to denials, and how DME providers can prepare before an audit ever lands. Wayne also shares his take on AI, evolving audit strategies, and how providers can protect revenue without overcomplicating compliance.

Podcast Transcription

Podcast Episode: Smarter Supply Chain for DME
Guest: Wayne Van Halem, President of The Van Halem Group LLC
Hosts: Alex & Wayne (NikoHealth)

Introduction and Background

The Van Halem Group is a healthcare consultancy based in Atlanta, Georgia, focused on serving the post-acute care market, with a strong emphasis on audits and appeals. Their work falls into two main categories: proactive and reactive services.

Proactively, they help companies stay compliant through spot checks, audits, and compliance programs. Reactively, they assist organizations navigating complex regulatory issues or disputes with payers.

The firm was founded in 2006 and will celebrate its 20th anniversary next year. In 2014, it was acquired by VGM, a partnership that expanded its reach within the DME industry. The founder spent about a decade at CMS, primarily in program integrity, and many team members are former CMS colleagues.

Why Build a Career Around Audits

The career path began at CMS answering provider and beneficiary questions, followed by work in the anti-fraud and program integrity units. While trained in criminal justice and initially focused on fraud investigation, it quickly became clear that much of the work involved technical errors rather than true fraud.

Identifying missing documentation details and pursuing overpayments often resulted in severe consequences for providers, even when there was no intent to defraud. This led to a shift toward educating providers on CMS expectations so issues could be prevented rather than punished after the fact.

Fairness in the Audit Process

Fairness means that payers apply written policies clearly and consistently, regardless of personal opinions about those policies. Providers should understand what is required for coverage, submit claims responsibly, and receive consistent feedback when claims do not qualify.

While this ideal is not always met, fairness improves when both sides understand their roles. In many cases, policies are applied inconsistently or incorrectly, which is where advocacy and appeals become essential.

Do CMS Policies Prevent Fraud or Payment?

CMS policies are designed to prevent fraud while still paying legitimate claims within established guidelines. Medicare’s goal is generally to provide services appropriately, not to avoid payment.

Managed care and commercial plans, however, often operate differently and may prioritize cost containment over provider fairness. Providers frequently accept denials without challenge, even when laws and regulations exist to hold payers accountable.

Audit Hotspots in DME

Currently, supply categories (especially catheters) are receiving intense audit scrutiny. This trend is often triggered by large, highly publicized fraud cases. When CMS identifies fraud in one area, contractors across the country shift their focus to that category.

Unfortunately, this places a spotlight not only on bad actors but also on compliant providers who then face increased audit volume.

Saving Over $100 Million in Denials and Overpayments

Success in appeals comes from a combination of experience, relationships, and process. Deep familiarity with CMS contractors and appeals systems allows arguments to be presented in a way that aligns with payer expectations.

Clinical staff, including nurses, play a key role by reviewing records and identifying qualifying details that non-clinicians may overlook. It is not uncommon for audits resulting in 100% denials to be fully overturned on appeal, highlighting quality issues in contractor reviews.

Partnership With VGM

The partnership with VGM developed after years of working together as a vendor partner. During periods of heavy RAC audits, the DME industry needed specialized audit and appeal support.

VGM recognized the need and integrated these services to strengthen its member base. While the firm continues to work with non-VGM members, most clients come through this partnership.

Where Suppliers Struggle Most

Documentation remains the biggest challenge in DME, largely because suppliers rely on referral sources for clinical records. Policies are often written without reflecting real-world clinical workflows, creating friction between expectations and practice.

Despite these challenges, the industry has made significant improvements. Error rates have steadily declined over the past decade and are now at an all-time low.

Early Warning Signs of Audit Trouble

Providers who lack a strong, functioning compliance program are most likely to face audit issues. Having a compliance program on paper is not enough—regular internal audits, education, and proactive checks are critical.

Quarterly audits that identify and correct issues internally can prevent costly external audits, overpayments, revocations, and other enforcement actions.

The One Thing Providers Can Do to Prevent Audits

A comprehensive compliance program is the single most important safeguard. CMS understands that compliance issues can occur, but it evaluates whether a company took reasonable steps to prevent them.

Key elements include training, internal reporting mechanisms, routine audits, and documented corrective actions. Strong compliance efforts can significantly reduce penalties if an issue arises.

AI and the Future of Audits

Artificial intelligence is already being used by payers to review claims, and while it has potential to improve accuracy, it is currently creating new problems. AI can misapply rules, particularly around prior authorization and quantity thresholds.

Errors made at scale can have serious financial consequences for providers. While AI usage will continue to grow, human oversight remains essential.

Preparing for a First Audit

Providers who have never been audited should proactively review their processes—either internally or with a knowledgeable third party. Independent audits help validate whether internal controls are working as intended.

Some organizations believe they are auditing effectively but discover gaps when an external review is performed. Ensuring the audit process itself is sound is just as important as performing the audit.