How to Prepare for a Health Insurer's Audit

Commercial carriers increasingly are auditing practices to recoup money paid as a result of inappropriate billing.
Commercial carriers increasingly are auditing practices to recoup money paid as a result of inappropriate billing.

Shannon DeConda, a partner with DoctorsManagement, headquartered in Knoxville, Tenn., had a pediatric practice call her for help after finding out United Healthcare was auditing the practice. A physician assistant at the practice had helped a doctor take a patient's history and initialed the paperwork to speed things up. When United Healthcare found the physician assistant's initials rather than the physician's, the company audited the practice to recoup money it had paid for those services. 

DeConda said her firm is seeing as many, if not more, audits performed by commercial carriers as by the federal government. As insurers focus on reducing costs, they have learned that taking money on the back end is as good as saving it upfront. Because audits are an increasing part of the new insurance frontier, physicians would be wise to be proactive and prepare for the possibility.

Understanding risk 

The most important thing providers need to understand in regard to audits is their own risk, DeConda said. Every office should have an internal compliance plan and should be doing proactive audits either through an outside firm or internally.

A baseline annual audit should include 10 to 20 records per provider, DeConda said. She recommends pulling a random sample to get the best understanding of where a practice is at risk for audits. Any aspect of patient care in which a practice is an outlier relative to what is expected is a risk area. Say, for instance, the national average of the proportion of patients in a nephrology practice that receive infusions is 20%, but a practice's audit reveals that its proportion is closer to 40%. Knowing this allows the practice to begin looking through records to determine why the rate is so high relative to the national average. An audit can reveal areas of waste or abuse and if treatments were medically necessary and supported by documentation.

DeConda recommends that practices identify the 5 greatest areas of risk and ensure that audit findings can be validated through proper documentation and coding. “Make sure you tried other options before putting a patient on a more expensive treatment,” she said. “Look to see if it was documented in enough time and you have all of documentation elements needed.”

Big data

Data are not always easy to produce or capture, however. Luria said they work with electronic medical record (EMR) vendors to supply regular reports for their clients.

Most EMRs that are certified under meaningful use 2014 standards can access information needed for insurers, but Luria said it is best to go through an in-depth review of any reports created before giving them to payers.

“They need to review the quality of the reports to make sure they match with the belief of their patient population,” he said.

It may require a few rounds of conversations with insurers and multiple reports run to get data that captures a true picture of the practice. 

Be generous

Laura Palmer, a senior fellow with the Medical Group Management Association, recommends giving insurers any information they ask for during an audit—and then some. It is best to provide the full set of records on a patient as well as anything else relating to his or her visit. Practices need to prove the patient really did receive the care and that the billing was appropriate, she said.

“If you don't meet their request in the first round, you will get asked again and get put on a watch list as well,” Palmer said.

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