Don’t Let the Insurance Company Take Your Last Dollar – How Physicians and Health Care Providers Can Better Protect and Handle the Insurance Company Audit Minefield

Don't Let the Insurance Company Take Your Last DollarThese days with the state of the economy as it is, it should come as no surprise that insurance companies and HMOs are being even more aggressive at auditing than they have traditionally been in the past and attempting to take back payments for services rendered from physicians and health care entities.

While the health care industry as a whole might be growing, the providers reimbursement that the provider gets to keep is shrinking. There are some tactics and approaches that can be used by a health care provider that can not only protect them from improper allegations of fraud and abuse made by an insurance company during an audit, but even help the provider increase revenues in their practice if there is no audit, since it can serve as a means to supervise their own practice policies and find any shortfalls in billing and coding that could be costing them money.

Insurance Company Fraud Allegations

Insurance companies typically use an allegation of fraud in any audit procedure and very often are willing to negotiate, however the improper allegations of fraud and abuse against a provider often give an insurance company an advantage in any such negotiation and create fear of further action against a physician’s or other provider’s license.  If a provider engages in regular practices of self-auditing by a third party company, any potential intent of fraud and abuse is negated and puts the provider on solid ground to simply discuss whether or not the claims by the insurance companies are proper billings less any inadvertent errors in those bills.  In that case there is no responsibility beyond acknowledgement of the error and returning a percentage of the actual amount owed to the insurance company, if there was an overpayment due to billing errors.

Insurance Companies’ Request for a Meeting

Typically insurance companies gain a large percentage of their revenue from audits due to the fact that many providers are simply unprepared and do not enter the procedure properly.  One of the tactics that they use is to set up a meeting with the provider at which insurance company representatives (including their physician reviewer and attorney), are simply going to levy allegations in an attempt to threaten and frighten the provider by putting them on the spot.  Attendance at the meeting is not mandatory since the same information and allegations that insurance company representatives raise could be made in writing giving the physician time to go and review the claims or have a third party review their records specifically for that audit.  A physician who decides to attend a meeting of this nature, should be accompanied by counsel.

Status of Medical Records

The more meticulous a provider’s records, the more difficult it will be for an insurance company to find any error and/or make any allegation of fraud. Additionally, keeping such meticulous charts often creates a situation where you can “paper the insurance company to death” since more detailed charts provide that much more information for the insurance company to weed through, requiring them to devote more man hours just to review the same charts.

Sampling Methods Used by Insurance Companies

Insurance companies often apply what is called the “sampling method” where they will ask for a relatively low number of charts, maybe 10 or 20. If they find 5 charts out of the 20 that are bad, they then apply the percentage to the total amount of charts and patients that a physician has. While this is technically improper, it must be challenged early on or the insurance company has a significant advantage by using this assessment. Often an insurance company will play around with what charts they pull in order to get a higher percentage of suspect claims.

The best defense a provider has against an insurance company is to have knowledge of the process and how it plays out, and have proper representation. As long as there is no potential for other claims, such as OPMC or OPD, or anything else that could affect their license or livelihood then the burden shifts to the insurance company instead of the provider and it becomes an obligation for the insurance company to attempt to collect any moneys that they claim are owed. If the provider goes in unaware and unprepared, they will likely find themselves with a bigger headache where they are not simply talking about a civil matter where the only discussion is money. This could have further ramifications down the road for their practice and their license.

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