Private payers often send notices to physician practices claiming that they have made an overpayment, and that physicians should remit the amount due to them within a certain deadline. Payers may carry out audits and send repayment requests when they think they have identified patterns indicating potential overpayment. There is no need to panic even if you receive a letter such as the above, but take steps to handle the situation efficiently.
Types of Audits
Payers may decide to conduct an audit when they suspect fraud, abuse or waste. The Claims Recovery Department may perform audits as part of proper claims management. Let us look at the types of payer audits.
- Pre-pay audit: This type of audit is usually automated, and providers may not even be aware of them.
- Post-pay audit: This is after the payment has been made and the payer requests documentation to support the coding on the medical claim.
- Comprehensive review: Here, a certified medical record reviewer will review the medical records to determine medical necessity or to validate that the service was indeed provided.
- Automated review: The focus here is on the claim itself. These constitute computer reviews that are made to find out violations in standard rules/edits.
- Claim-recovery/administrative review audit: These reviews focus on erratic billing and coding, but no fraud/suspicion is involved.
- Claim-focused audit: Here the payer is focused on a certain type of service/claim, not on your practice necessarily.
- Provider-focused audit: The focus is on the provider/practice. The concern is with specific coding and billing patterns.
- Fraud and abuse audit: The focus is on fraud and abuse involving intentional violation of billing and coding rules and standards.
Facing a Payer Audit
Firstly, ensure that your medical coding and billing is accurate and there are no compliance issues. In case you receive an audit notice, you must be able to respond appropriately and if required, contest repayment demands that are not appropriate. Notify your attorney and/or your auditing consultant. Determine the type and scope of the audit to decide on a suitable response. Make sure that you write to your insurance carriers stating that you are willing to work with them. Request them to identify each claim that is disputed and also clarify the particular criteria/standards they are applying to the audit. It is important to review your payer contract on audits and dispute resolution and applicable state laws regarding audits and repayments.
When facing an audit, you need to understand its scope and type. Find out whether the audit is for recovery or fraud; or whether it is an education/network-wide audit. Does the payer suspect fraudulent billing or coding? Are they asking for medical records? You must necessarily submit the relevant medical records within the deadline to stay compliant.
Suppose the payer determines that you have received improper payment. You must request time to review the demand. When reviewing, consider whether you received the demand letter within the right time following the audit. The payer must provide appropriate justification for the review and also clearly explain how they arrived at the specific recovery amount. There should be an appropriate explanation for each erratic claim. It is the responsibility of the payer to explain how to appeal the findings and also how to submit an informal appeal/rebuttal before the formal one.
Want to Contest Payer Findings?
Your billing and auditing professionals should be able to help identify aspects that you disagree with in the payer report. You will have to bring these facts to the attention of the payer. To win your case, you must identify each error the payer may have made when auditing your claims.
Best Practices to Prevent Payer Audits
You can follow some strategies to safeguard your practice against payer audits.
- Have an external agency audit your practice to identify vulnerable areas.
- Ensure that your medical coding is accurate and that your coders are using the latest codes and modifiers. If necessary, improve your medical coding process.
- Do not use codes that are under review by the OIG (Office of the Inspector General). If at all you use these, document why you are using them.
- Be alert against erratic billing patterns and abusing codes.
- Do not cut and paste information from one patient visit to another.
- Medical record documentation is of utmost importance. Accurately document the time spent with each patient.
- The services provided and the level of complexity billed should be substantiated by the patient’s condition.
- Determine if you are an outlier (you bill more than average number of high level claims). If so, document the reason for this.
- Are you billing a high dollar amount for the payer? This could be the case if you have a number of physicians in your practice or if you use physician extenders. Document the reason for your billing pattern.
Providers should acquaint themselves with the rules for private payers, which may be different from that of government payers. It is important that providers review their own processes objectively to identify the problem areas. This will help correct any weakness/shortcoming and be prepared for any payer audit.
Julie Clements, OSI’s Vice President of Operations, brings a diverse background in healthcare staffing and a robust six-year tenure as the Director of Sales and Marketing at a prestigious 4-star resort.