About three years ago, I received a phone call from a dear friend of mine. She was very upset because she had just received a letter from Aetna stating she owed $364,000. Six months prior to receiving the letter, she was asked to submit the notes on six patient files for an audit review.
Apparently, the auditor felt the notes did not support the claims that had been submitted and paid on code 97140 (manual therapy). Based on this finding, Aetna requested that all the money paid on this code for the past six years be returned.
Aetna was "gracious" enough, however, to allow the repayment to occur over time. In fact, the insurer told my friend to continue treating Aetna patients; the payments would be applied to the owed amount until it was paid off. Since most of her patients were covered by Aetna, she was essentially working for free.
What Are Postpayment Audits?
The best way to describe postpayment audits is that they are a tactic utilized by government and commercial insurance carriers to extract money previously paid to providers. It involves a comprehensive investigation of previously paid claims to find overpayment or fraud. Most times, it results in the provider having to give back large sums of money to the insurance companies. On average, a major postpayment audit costs the chiropractor $250,000.
Why Have Insurance Companies Embraced This Revenue Generator?
The answer is simple: Insurance is business - big business. The motive in business is always profit. Insurance companies traditionally make a profit through premiums paid by their insured and investments they make with the premiums. As many of you are painfully aware, insurance premiums have skyrocketed in the past few years. In fact, between 2001 and 2006, workers' earnings only rose 18.2 percent while insurance premiums increased by an alarming 65.8 percent.
The bottom line is increasing the premium is no longer an option for insurance companies. At some point, increased rates result in fewer customers and less profit. In addition, laws recently implemented by the government are forcing insurance companies to pay claims in a "timely manner." Since profits from investments depend on a balance between collecting premiums and paying claims, the profits from investments also are drying up for insurance companies.
In the past, postpayment audits were expensive to conduct because they required "profiling" of the provider. This profiling meant collecting information about all the providers and identifying those who fell outside the accepted parameters. Before NPI and electronic claims processing, provider profiling was done by hand. This was expensive and required many work hours. However, with technology advances, profiling a provider is cheap and easy, so insurance companies are embracing this newfound revenue generator. The NPI program makes it easy for them to identify you, and electronic submission makes it easy to collect information and create a database on you.
How Are Audits Conducted?
The audit begins with a request for review of a certain number of patient files, usually between six and 20. The auditor then reviews the files and determines if your notes support the services that have already been paid to you. If not, the auditor uses a formula to calculate the "percent deficiency" and then applies this percentage to everything the insurance company paid to you for the past six years. (The length of time varies according to the provider contract and/or state law). For example, 25-percent deficiencies multiplied by $1 million in receipts for six years = $250,000 refund. If you can't afford to pay the insurer back, it will apply a "claim block" on all your future claims. All future reimbursements are withheld until the amount is paid in full. In a worst-case scenario, fraudulent criminal charges also may be filed. The worst part is the burden of proof falls squarely on your shoulders. If you undergo a postpayment audit, you bear the burden to exonerate yourself.
Who Can Be Audited?
Postpayment audits can be conducted on any provider who receives payment. This includes both in-network and out-of-network providers. Cash practices are not immune, either. If a patient submits your bill to their insurance company for reimbursement, you may become the target of an audit.
What Triggers an Audit?
The insurance company profiles all chiropractors by gathering information from claims submissions. It then uses that information to profile your billing patterns. If you fall outside accepted parameters, the insurer will begin an audit of your office. Some of the specific triggers include:
- long-term use of passive therapies without any integration of active functional improvement;
- billing for maintenance care;
- repeated use of level 4 and level 5 E/M codes;
- repeated use of CMT code 98942;
- billing code 97140 without an adjustment code on the same day of service;
- overutilization patterns;
- offering discounts and free services;
- frequent use of ICD-9 codes that are not related to nerve, muscle or skeleton; and
- submission of claims for care of family members and/or employees.
Common Audit Findings
Postpayment audits open the door for the insurance company to find other violations. For example:
- insufficient documentation of medical necessity;
- improper use of CPT codes;
- illegible patient notes;
- submitting claims for maintenance care;
- ignoring co-pays and deductibles;
- lack of a compliance manual; and
- improper delegation of services to unlicensed staff or independent contractor
What Can You Do to Protect Yourself?
- Purchase postpayment audit insurance.
- Change the focus of your documentation to more accurately reflect the medical necessity for care.
- Fix billing policies that place you outside the accepted profile.
- Implement active rehabilitation directed at improvement of function rather than symptomatic relief.
- Appeal all your denials.
- Create a comprehensive compliance manual.
- Put in place a compliance program with zero tolerance for fraud.
- Conduct internal audits.
- Receive monthly OIG updates.
