ALM Properties, Inc.
Page printed from: The Legal Intelligencer
Select 'Print' in your browser menu to print this document.
Considerations for Providers Facing Audits From PayorsThe relationship between providers and payors has evolved greatly over the past couple of decades, from one of distrust to "partnerships," and now back to an era of distrust and antagonism.
2013-07-11 12:00:00 AM
The relationship between providers and payors has evolved greatly over the past couple of decades, from one of distrust, to "partnerships," and now back to an era of distrust and antagonism. Payors have become very active in performing audits, and the inevitable set-offs, take-backs or general recoupment processes have followed. Although hospitals have at least some of the structure in place to address these issues on the facility side, there are large inadequacies on the professional side.
To understand the issues that may arise on the professional side, it is instructive to look at an area that is currently receiving a lot of attention: emergency department services. Consider this hypothetical: A patient, a 62-year-old male, is involved in a minor car accident, and comes into an emergency room complaining of chest pains, nausea and minor cuts. The attending doctor orders X-rays, does an EKG to monitor the patient's heart rate, has blood work done, and sutures up the cuts. Notes of the care provided to the patient are documented in the patient's chart, and long after the patient is discharged, the information is sent to the billing department. The ultimate bill is then submitted to the payor, and payment is subsequently sent to the provider. This happens several months after treatment.
Fast forward to two or three years later. Imagine the provider's response when it receives an audit from the patient's insurance company questioning whether the patient's chart correctly identified all of the symptoms the patient complained about when seen, suggesting that the code assigned may have been inappropriate, the payment made by the payor too great, and that money needs to be repaid. The audit does not call into question whether the services were rendered, nor whether the patient benefited from the treatment, but merely represents an inquiry into whether all of the "i's" have been dotted. Moreover, the audit then extrapolates the findings from this and other patients seen years ago, to arrive at a total amount claimed to have been overpaid to the provider (likely in the tens of thousands of dollars). The audit informs the provider that it has 30 days to respond and repay the amount purportedly owed or the money will be unilaterally taken back by the payor by offsetting against future payments.
All too frequently, providers simply repay the amount requested out of fear of retaliation or because they lack any meaningful way to respond within the arbitrary and short deadlines set forth in the audit letter. Providers that do, however, respond to the demand have frequently been successful in either reducing or completely eliminating the purported "overpayment."
It is common for providers to become aware that an audit has been conducted through an "audit letter." Occasionally, providers are contacted by the audit company prior to completion of an audit because the company is requesting additional information (e.g., patient charts, original claim submissions). In those instances, providers should carefully evaluate their obligations to provide the requested information. For providers that have existing contracts with payors, the analysis is fairly simple: What does the parties' underlying contract require? Providing information not required, unless done strategically, inevitably comes back to hurt the provider — sometimes fatally.
Discerning what information must be produced by a non-contracted provider is a far more intellectually challenging exercise. It may seem counterintuitive, but providers that have no contractual agreement with a payor (frequently referred to as "non-par") are often subjected to audits. In the non-par setting, providers should consider whether to engage in the payor audit process at all, or merely take the position that they have not contractually committed to participating in the payor's audit process, and therefore no such audit should be conducted. Such a position may be somewhat more tenuous if the underlying claims being audited are for a governmental plan (e.g., Medicare, Medicaid). Nevertheless, providers must evaluate to what extent they wish to consent to involvement at the earliest stage possible. Once the decision is made to participate, it is virtually impossible to extract oneself from the labyrinthine audit process.
Providers receiving an audit letter should consider the following in determining how, when and through whom to respond:
Providers are rarely made aware that an audit is being considered, let alone invited to discuss their concerns with the payor beforehand. The fact that this simple dialogue does not occur is perhaps the single greatest problem associated with audits today. When carried out appropriately, audits can serve as a very valuable tool to ensure the services paid for are directly related to the services being performed. To reduce the likelihood of payment errors, payors should proactively and contemporaneously engage in discussions with providers regarding perceived errors. These discussions allow the parties to identify inconsistencies in payment methodologies, coding issues, or contractual interpretations. Historically, these discussions occurred and were very productive. Recently, however, such dialogue has been foregone, with payors relying upon third-party auditors to "correct" perceived payment errors.
Relying upon audits that are only made known to providers after the fact is a flawed approach on several levels. First, if payors informed providers of perceived issues prior to an audit's commencement, the underlying concerns could be at least minimized, thereby reducing the associated burden and costs. Second, having undertaken an audit and presented the findings to a payor, the auditors have taken a position that becomes far more entrenched than necessary. Third, the costs associated with provider/payor audits have increased substantially during the last several years and that trend will only continue. These costs, if avoided or minimized, could be used to provide patient care — a far preferable outcome. Fourth, the litigious nature of audits has further stressed the relationship between providers and payors. Although it is naive to assume that relationship can become the "partnership" dreamed of in the early 1990s, it can become much more cordial and productive.
The Tide is Turning
Given the decrease in fully insured business (thereby eroding payor revenue), coupled with the downward pressure on provider reimbursement (thereby further reducing provider revenue), it is likely that payors will increase their use of audits in order to secure additional revenue. Although providers have historically responded with trepidation to payor audits, the tide is turning, and more providers are now aggressively challenging them. The desire to aggressively defend against an audit needs to be balanced, however, with the reality that providers must continue to work with payors for the foreseeable future. To this end, providers need to evaluate the practices being challenged by payors and pick and choose their battles.
In that regard, providers have become more selective in whom they are retaining to assist them in responding to payor audits. Providers should look to counsel who focuses a substantial amount of his or her practice on provider/payor issues, and audit issues specifically. Moreover, taking a "scorched earth" approach on dealings with payor counsel, although perhaps cathartic, is shortsighted. Maintaining civility and professionalism throughout the audit process greatly reduces the length of time and expense getting to an endpoint. Open and candid discussions will lead to earlier identification and resolution of disputes and allow the health care dollars to be directed where they should be — to patient care.
Gregory A. Brodek is a partner in the health law practice group of Duane Morris in Bangor, Maine. He can be reached at GABrodek@duanemorris.com.
This article originally appeared in The Legal Intelligencer.