Insurance/Audit FAQ


1. If I've received a request from an insurance carrier that I submit some patient charts, does that necessarily mean that the carrier is going to be performing a post payment audit?

There are several possible "audits" that a carrier may intend to perform upon receipt of the records. Carriers still perform quality control audits, as well as data mining audits. In fact, there are federal statutes that require Medicare administrators of government programs to perform data mining audits. However, at this point in time the majority of audit letters that we see clients receiving are for post payment audits. It's often difficult to determine, from the records request itself, just what type of audit the carrier is performing. Indeed, we often see many post payment audit letters couched in terms suggesting that the audit is for quality control or data mining reasons to avoid scrutiny by the physician. While the reason for the audit may not change a physician's obligations with respect to the records request, it's important to ascertain the reason for the records request as it may alter the way you approach the process.

2. I've received a request from an insurance carrier that I submit some patient charts, do I have to comply?

The answer to this question can be complex, as there are contractual and professional responsibilities which are implicated when you receive the records request. Requests for copies of a patient's medical records often place physicians at odds between contractual obligations and patient privacy statutes, especially for practices that consistently treat patients with "sensitive" health issues such as HIV, mental health and alcohol/drug dependency status. Turning over the records should not be the knee jerk reaction. If you are a participating physician within the carrier's health plan, you should consult your participation agreement. The more recent agreements generally contain clauses requiring a physician to comply with the carrier's requests for medical records of its members, and the records request are often quick to point out that the members have given blanket authorization to the carrier to obtain the records. However, these same agreements often prevent the carrier from making such demands with a scope or frequency that is unduly burdensome to the practitioner. For non-participating physicians, even physicians that accept an assignment of benefits, frequently you cannot be compelled to turn over records absent direct authorization from the patient. In fact, you may be violating a patient's privacy rights if specific consent is not obtained. In light of the potential for significant professional ramifications in disclosing or not disclosing a patient's records, if you are not sure of your obligations and authority, you should seek legal advice.

3. I've received a demand from an insurance carrier that I refund fees for medical services rendered, what should I do and how do I protect myself?

The first thing is to take a breath. Remember, a refund demand is a claim made by the carrier, it is not a judgment or a final adjudication. That having been said, the best way to defend against a refund request is always specific to the practice and the nature of the audit itself. The first step in all cases it to do your homework. You should try to understand, to the best of your ability, the reason given by the carrier for the refund demand. Assess whether it has made any clearly erroneous conclusions or assumptions regarding the content of the records or the nature of your practice. Compile your own records to determine whether the amounts claimed to have been paid by the carrier are accurate. If the carrier has extrapolated the results of its audit through a universe of patients and dates of service, confirm that the universe is accurate. Whether you choose to attempt to resolve the matter on your own or with the assistance of legal counsel, performing the aforementioned will give you a preliminary assessment of your potential exposure to the audit demand.

4. I've received a repayment demand where the carrier reviewed a small sample of patient records and extrapolated its findings over a period of six years. Is extrapolation permissible and doesn't the law say the carrier can only go back two years?

The easier answer is on the extrapolation issue. Under current New York case law, extrapolation is permissible as long as it is based upon a statistically significant sample for the extrapolation. Much of the legal wrangling when a carrier has attempted to extrapolate is on the issue as to whether the sample is "statistically significant".

With regard to the time frame for which the carrier can seek repayment, under Insurance Law ยง3224(b)(2), a carrier is limited to seek repayment on a claim to a period of two years after payment has been made unless the physician/facility has engaged in fraud or an abusive billing practice. Prior to the 2010 amendment, there was generally no guidance or consensus as to what constituted an abusive billing practice. The 2010 amendment provided some guidance (but not much) on the question of what constitutes an abusive billing practice, adding the law the statement "'abusive billing' shall be defined as a billing practice which results in the submission of claims that are not consistent with sound fiscal, business or medical practices and at such frequency and for such a period of time as to reflect a consistent course of conduct." Of course, this leaves open for argument what would be considered a submission which is inconsistent with sound fiscal, business or medical practices, as well as what period of time is necessary to establish a consistent course of conduct. Unfortunately, most carriers take an expansive view of what exactly constitutes and abusive billing practice.

5. Is there any way that I can simply avoid being audited by the insurance carriers?

Generally speaking, the answer is no. Some physicians are targeted for an audit because they are considered "outliers", physicians that perform certain procedures and/or bill certain CPT codes at a much higher frequency than their peers. Not only does the nature of the practice dictate what codes are being billed, but physicians are often unaware as to what their peers are billing. Moreover, carriers often make business decisions for various reasons to conduct audits for certain CPT codes, randomly auditing physicians who bill those codes. In this scenario, many physicians are simply "caught in the cross-fire". Depending on the nature of your medical and billing practices you may be more or less likely to receive a demand for a post payment review, but you are unlikely to be able to avoid them altogether over the long run. In our opinion, the best practice for any physician is to periodically have their record keeping and billing practices reviewed by a certified professional coder to ensure billing accuracy and proper record keeping to support the CPT codes billed. We find these reviews to be extremely cost effective and one of the most useful tools physicians can employ to protect themselves from an adverse result in the event they receive a post payment audit.