By Stuart E. Hoffman, DC, FICA
Like the black plagues that menaced Europe in the Middle Ages, or Attila and the Huns who were a constant threat to the “civilized” world for so long in Roman times, a new scourge has visited itself on the modern health care professional; the third-party payment agency audit. After you have delivered care to a patient, often after having the services “pre-approved” or “qualified,” and after having received payment for what you felt was a closed file, you get a letter stating that an “audit” was conducted for the case in question, and more and more often for a group of cases, and that based on that audit, a refund is being demanded because the care was determined to be not “medically necessary” or in excess of the usual and customary frequency or duration for the condition in question.
This is a rapidly increasing trend in all forms of insurance, both public and private, and is being extended not just to providers but to beneficiaries to determine eligibility for benefits from the consumer end. As well, hundreds of private audit contracting firms aggressively push themselves on insurance companies, offering great recovery and even prosecution results. And, there appear to be big payoffs for the insurance industry so it is a reality that is clearly here to stay. Like most realities, you have only one choice and that is to understand the audit process and calibrate your clinic procedures and especially your record keeping, to put yourself and your practice on the firmest possible defensible ground.
Where does the authority to retrospectively review claims come from, even after payment is made? In private insurance, it is almost always expressly stipulated in the provider contract, which you signed. In some states, the insurance laws have been written to provide that, even though you never saw, read or signed a contract with a private insurance company, the act of endorsing their payment check is held to be the equivalent of agreeing to their contract terms. With Medicare and Medicaid, it is part of those programs’ formal rules. Thus, you do not have much choice but to comply with such audit requests and the successful practice should have procedures in place to log in all such requests and a policy of prompt provision of the materials requested.
What triggers an audit can vary from a complaint by a patient to your individual utilization pattern. With computers, even the largest third-party payment agency has the wherewithal to monitor claims patterns and flag a provider that, for example, submits the exact same clinical narrative of findings and the exact same care plan for 50 or 100 consecutive patients. Other frequently reported audit triggers are complaints from employees, competing professionals, advertising copy and/or claims, and the submission of claims for clinic employees or family members. Some carriers also conduct random audits of small samples of claims on a routine basis, and here, your selection for such an audit is simply a matter of your name being drawn from the provider pool.
Some audit methodologies get into what are called extrapolation formulas, where a carrier examines a sample of claims, identifies a percentage of error, and then seeks to project that error rate over all the claims you submitted over a specific period and demands that level or refund for all of those claims. Thus, if they identify a 30 percent error rate, they want 30 percent of all they paid you over the past period of months, or years. Medicare is famous for this though in recent months it appears the various regional carriers have stepped back from this very unpopular behavior.
This methodology has also attracted the attention of some state insurance regulatory bodies, sensitive to the potential for abuse it represents. Where a pattern of demonstrated abuse, fraud or false statements is demonstrated, most states allow for some latitude by the insurance industry in making refund requests based on an extrapolation formula. Where the issue is disputed clinical necessity, which as has already been noted is subject to widely differing opinions, the State of New York, for example, has ruled that: the use of extrapolations by an insurer where there is a dispute as to medical necessity under New York Insurance Law Article 49 and New York Public Health Law Article 49 is not allowed. In any instance where the extrapolation approach is applied to your practice, consult your statute and insurance regulations and do not hesitate to invoke any protections those official rules offer you.
The consequences of the audit process have also evolved from a mild dispute over payment and a possible request for a partial or even full refund, to formal charges of “over utilization,” unprofessional conduct or other accusations that insurance carriers are bringing to state boards in the form of complaints, or outright fraud. This dramatic and ugly sea change has taken place in part because third-party agencies have learned that the threat of such charges, even if there is no substance behind them, drives providers into quick settlements and refunds. It is a shameful and offensive tactic, but one proven to be successful.
The audit process can be as simple as a written request for copies of one or more patient files. No provider should be intimidated by such a request and you should be prepared to swiftly respond with complete records at the appropriate professional standard. The good faith third-party payment agency has a right and an obligation to be certain that payments are for legitimate claims on behalf of qualified beneficiaries. However, the more aggressive the audit investigation becomes, the more the provider must be on careful watch, since the motives of such processes are to find a reason, any reason, to deny payment or justify a call for a refund. Money, not quality or necessity of care is the motive.
There appear to be few limits to which insurance companies will go in the audit process, including meetings with patients about your care, about which you are not informed, interviews with employees and sending sham patients to your practice, trained in methods to trip you up in some way. When such aggressive means are applied, it is clear that the carrier is looking for more than a dispute over clinical necessity, which is subject to very wide and divergent opinions. The ultimate disaster for the practitioner is a charge of outright fraud.
Any provider engaged in outright fraud deserves the consequences they receive. The chiropractic profession must have a policy of zero tolerance for such behavior. What constitutes health insurance fraud is clearly codified in every state’s civil code. You should obtain a copy of that statute in your state, read it and become familiar with every detail. Most statutes are similar, and for purposes of illustration, Connecticut’s statutory definition of health insurance fraud is shown below.
A brief review of any health insurance fraud statute reveals an immediate list of things that you should never do:
- Never bill for any service not provided.
- Never falsify a patient record, for any reason.
- Never bill for a service that was provided by a non-professional staff member, as if provided by the doctor.
- Be absolutely accurate with the insurance codes you use, and never “upcode” any service for any reason.
- Never waive a co-payment or deductible that you are obligated to collect under contract or regulation.
- Never promise a cure or specific result.
Calculated fraud is an offense for which there can be no excuse. There are, however, gray areas where an oversight, a delay in doing the record keeping paper work, illegible case notes, notes recorded by someone else than the attending doctor, or a situation where a patient is billed, within the rules for a missed appointment is interpreted for a bill for services not delivered, can trip up even the most well-intentioned provider. It is here, where an insurance company is seeking to stretch an oversight into a fraud charge, that every practitioner should stand and fight. It is also here where a malpractice carrier should provide coverage and support, and where your professional organization should be mobilized to assist in your defense.
In every instance, regardless of the auditing agency, your best defense is a documentation and records keeping system that accurately, thoroughly documents all phases of evaluation and care, and does so on a timely basis for every patient. Good records are your best defense in all contested arenas, from claims processing to, heaven forbid, malpractice claims. On the other side of the equation, inadequate records are the major reason doctors have claims rejected or disputed, regardless of the necessity for the care given, the validity of the procedures applied or the wishes and needs of the patient.
You cannot avoid the audit process, but you can commit to doing the work and conducting your practice in a responsible, defensible manner, as every doctor of chiropractic should. Know the laws and rules and make sure you have every possible defensive asset in place, before trouble hits.
Here is where ChiroSecure can help like no other professional liability carrier in chiropractic. We offer the profession’s most comprehensive legal and audit expense coverage: including up to $50,000 defense and audit expense coverage for:
- Board investigation and hearings
- Insurance Audits
- Billing errors and omissions
ChiroSecure can be a sound, reliable partner in what is proving to be one of the most unnerving and time consuming dimensions to contemporary chiropractic practice. We are ready to help.