Post-Payment Insurance Audits – Top 10 Areas of Risk

Health insurance payers monitor the billing, coding and documentation practices of health care providers in order to prevent fraud and abuse within the health payment system. A common process that insurers utilize is the post-payment audit or retroactive review of claims. Generally, the insurer will request medical records from the provider and then they will compare the documentation with the codes on the claim forms that were previously submitted and paid. If there is any deficiencies in the documentation or if the documentation does not satisfy the insurers’ policies for payment (e.g. medical necessity requirements), the insurer will calculate an overpayment demand. The insurer will request repayment of the overpayment from the provider. If the provider fails to re-pay the amount alleged to be due, then the insurer will often use the self-help remedy of offsetting the amounts due from the provider’s current claim submissions. This process for collecting overpayments is commonly referred to as recoupment.

Physicians and other licensed practitioners should invest time and financial resources in billing, coding and documentation compliance. Learning the appropriate use of codes, documentation requirements and other payer policy nuances may help to avoid the audit or lessen the risk of an overpayment determination if the provider undergoes an audit. The following is a list of the 10 common audit risk areas that providers should focus on as part of any compliance training and education:

  • Failure to comply with medical policies. All insurers create medical policies that require strict compliance. Medical policies set forth the insurers’ requirements for documentation to support the claims that are submitted for payment. Providers should download and review all insurance payer medical policies and implement office policies and procedures for training, educating and complying with those policies.
  • Medical Necessity v. Maintenance. Insurance payers often pay particular attention to prolonged care to the patient without documenting functional improvement or the need for the particular services. Failure to properly document the medically necessary services properly often leads to overpayment determinations.
  • Time Based Codes. Physical medicine codes require documentation of one-on-one time between the provider and the patient. Any circumvention by the provider of the rules for billing time based codes will cause an overpayment determination.
  • Individual Therapy v. Group Therapy. Providers must accurately report a one-on-one therapy session versus a session with two or more patients.
  • Using the wrong code. Providers are required to submit claims using codes that best describe the services being provided to the patient. Using the wrong code will cause an overpayment determination and in some cases it will lead to a fraud claim, when the payer believes it was intentionally done.
  • Up-coding. This occurs when an inappropriate code is used to gain a higher level of reimbursement, e.g. reporting CPT 99203 when CPT 99201 more aptly describes the services.
  • Overutilization of Evaluation and Management. An evaluation and management service must only be reported when the service is medically necessary. When providers routinely use the evaluation and management codes, payers will audit the practice to determine whether the exams are necessary.
  • Delegation of Services to Unlicensed Personnel. Payer policies and state law often prohibits unlicensed personnel from providing services to patients, even under the supervision of the licensed provider. If claims are submitted for services improperly provided by unlicensed personnel, the payers will recoup those payments.
  • Improper Supervision. In certain instances, procedures and diagnostic testing can be performed by individuals so long as they are properly supervised. Improper supervision will cause an overpayment determination.
  • Improper Use of Modifiers: Improper use of modifiers can easily trigger an audit or cause issues with reimbursement.

All health care providers are susceptible to an audit from an insurance payer. Providers are encouraged to proactively education and train staff and licensed personnel in order to avoid issues that commonly trigger audits. Taking proactive compliance steps can help providers protect their reimbursement.

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