What happens when a health insurance provider questions your coding? For one rural doctor, it meant the worst possible outcome.
Posted in Case Studies on Monday, August 19, 2024
Whether it's taxes or insurance, no one likes to be audited—and that's especially true for chiropractors and other health care providers, who are susceptible to insurance audits by the government (such as for Medicaid or Medicare) or by private insurance companies.
The health care industry has seen an increasing trend in the number of audits conducted nationwide—and they're not optional. Broadly, these audits serve two purposes. First, they aim to root out fraud, abuse, and waste in the health care system. In so doing, they also seek to aid practitioners in fostering proper medical billing and charting practices in compliance with applicable laws.
There are two general forms of health insurance audits:
- Pre-payment review - the provider’s claims for payment by the insurer are reviewed before any payment is issued
- Post-payment review - the provider's claims are reviewed after issuance of payment
Often, a provider will be subject to a pre-payment review because of a prior unfavorable post-payment review decision.
Audits are often initiated through official correspondence notifying the practitioner of the insurer's intent to review a portion of the practitioner’s records concerning their insured. The most common risk areas insurers look for when auditing are the lack of medical necessity or documented corroboration for care, coding errors, and the failure to abide by the insurer’s specific policies and guidelines.
If the provider is found to have acted inconsistent with insurer guidelines, the insurer will seek to recoup the payment issued for the care. Government-led audits, such as for Medicare, provide a myriad of appeal processes which can result in federal judicial review. Private insurers also have an appeal process, but this review is likely conducted by an insurance-affiliated panel after an employee or team for the insurer conducted the audit. In either case, the at-fault provider is exposed to significant financial exposure and professional risk.
Case Study
Dr. Livia Worrel owns her own practice in a rural community with limited access to chiropractic care. She employs a part-time receptionist, but otherwise operates her practice completely independently. Because of her rural location, she is frequently sought out by patients and is approved by various regional and national insurers, who she bills for payment of the care she provided.
Even with this steady referral and approval, market factors prevent Dr. Worrel from having a strong clientele, and any significant disruption to her stream of patients, or the fees she recovers for her care, could have a disproportionate impact on her business.
Dr. Worrel Gets Audited
More than half of Dr. Worrel’s patients are insured by a regional insurer. The regional insurer has strict charting, coding, and reporting guidelines. Agreeing to treat patients insured by the regional insurer means Dr. Worrel has agreed to abide by these policies. As her practice continued to grow, the detail and clarity of her chart notes and patient records began to decline.
In August 2023, when she submitted claims for health insurance repayment, the insurer challenged her reporting and charting. Eventually, she received an audit notice from the insurer who then sent two investigators to her rural practice, seeking copies of select patient records. Specifically, auditors sought records of about 50 insured patients, which represented 2,000 claim lines for an 18-month period in 2022-2023. Dr. Worrel did not contact an attorney and did not organize her records as requested.
When the audit team arrived at her practice, Dr. Worrel was flustered and did not provide complete records. Those she did provide were inconsistent with the insurer's guidelines. For example:
- Failed to document a diagnosis in her chart notes
- Did not clearly indicate whether treatment rendered was “active” or “maintenance"
- Codes were inconsistently reported or applied
- Engaged in “chart cloning,” or reused the same entries for multiple appointments and patients
In sum, the insurer concluded Dr. Worrel inappropriately billed the insurer for the treatment rendered to these select patients.
Dr. Worrel Faces a $55,000 Penalty
Taking the data found from the select patient records, the insurer concluded the records contained violations significant enough that an overpayment clawback of $55,000 was necessary for payments made on all claims made to the insurer.
In other words, according to the insurer, the deficiencies and discrepancies in the charting of select patients led to questions about the authenticity and accuracy of claims for all patients resulting in a post-payment review and repayment penalty of nearly the entire amount paid to Dr. Worrel for her treatment.
A Pre-Payment Review Structure is Implemented
Additionally, issues with Dr. Worrel’s compliance with the recordkeeping requirements caused the insurer to conduct a weekly pre-payment review of all claims for the fourth quarter. The insurer continued to apply their guidelines, and Dr. Worrel continued to struggle with compliance, resulting in a nearly 53 percent reduction between Dr. Worrel's claims for payment to the insurer, and the amount paid by the insurer.
Ramifications
Dr. Worrel only contacted an attorney after the audit findings were shared, and only to aid in an appeal of their findings. While she was within her rights to appeal, the severity of the initial penalty was likely too significant to overcome; once auditors reach their conclusions, there is little incentive for the insurer to compromise any amount they feel is rightly owed to them.
Dr. Worrel’s attorneys were able to negotiate and successfully challenge some of the audit findings and reduce the overpayment amount by about $15,000. But even then, as a solo practitioner in a rural community, the overpayment was insurmountable. Coupling the $40,000 penalty with continued reductions to her billing submissions, Dr. Worrel was forced to close her practice and file for bankruptcy.
What Can We Learn
Contact your malpractice insurance carrier. Your malpractice policy may have coverage that can help with the burden of a health insurance audit. In NCMIC's case, it's called the Audit and Legal Defense Endorsement for Chiropractors and includes coverage for Wrongful Billing and Related Proceedings (including private health insurance company billing audits).
Responsiveness to audits. Frustrating as they are, health insurance audits against providers are a reality. More often than not, however, an insurance audit does not suggest or indicate you or your practice has engaged in improper behavior or are otherwise not following protocols. But how you respond is important and can have long-lasting effects. Accordingly, it is important to take the following from this real-life example:
- Pay attention to your audit notice. Make sure you understand its scope, its date range, your due date, and what records are to be reviewed.
- Use your resources. If you operate a multi-provider or high-volume clinic, make sure you immediately notify your records and compliance department. If you are a sole practitioner, it is recommended you retain a healthcare attorney to advise and represent your interests in the audit. This allows you to focus on the care you provided and aids your response to the auditors.
- Be responsive and in compliance with what the audit seeks. Partial records or answers will likely rouse suspicions and prolong your audit. If you cannot locate all the documents immediately, request an extension; partial answers are never recommended. Do not respond to your audit unless and until your production is complete and responsive.
Recordkeeping. Poor record-keeping and charting not only weaken your position, but can also have disastrous effects to your practice. Whether your practice is large or small, whether you are a solo practitioner or part of a clinic, as the practitioner you are responsible for your charting and recordkeeping. Make sure you are aware of all charting, coding, and reporting requirements for respective health insurers.
Take your time when writing and reviewing chart notes. Avoid duplication and sloppy charting and reporting. Learn, understand, and correctly apply the billing codes, and avoid disorganization. Taking a few extra minutes to ensure your records are accurate and complete can save you a lot of headaches. The more organized and prepared you are throughout your practice, the more likely you are to respond positively to an audit (and avoid audits in the future!).
Plan for the future and minimize your risk. Once the audit is complete, and after you receive your audit report, you should thoroughly review and correct the issues found during the audit. Use the results of the audit as an educational tool for understanding proper practices and training both for you and your staff. Not only does this make you a more responsive and diligent practitioner, but it also minimizes your future risk.
Consider an attorney or auditing contractor. You may want to invest resources in your documentation and billing compliance by retaining an attorney or auditing contractor to perform a periodic spot audit to ensure compliance with the obligations imposed by the insurer. This action may allow you to foresee future issues, plan ahead, fix mistakes before they compound, and reduce the risk of an overpayment and reimbursement determination.
Taking the time and investing in resources on the front end can help avoid exponentially more time, money, and resources on the back end trying to contain an audit and avoid a significant overpayment.
Additional Resources
Article: What to Do Immediately if Notified of an Insurance Audit
Joseph A. Pickels is an Attorney with Brisbee & Stockton, LLC in Hillsboro, Oregon. He focuses his practice on healthcare and professional liability defense and represents healthcare providers and employers before state and federal courts, administrative and licensing boards, and with OSHA and HIPAA compliance in Oregon and Washington.
Although this case study is based on a real case, names, dates and details have been changed to protect patient and doctor privacy.