ACA Blog

Apr 10, 2013

Surviving an Insurance Company Audit: 4 Tips for Counseling Practices

Last November, my company received a letter from a major third party payer--an insurance company we will refer to as COMPANY. The letter read as follows:

“[COMPANY is] conducting a review to verify services billed by you were rendered and described appropriately on submitted claims. In order to conduct this review, COMPANY requires certain information from you. COMPANY requests that you provide us with complete documentation of services rendered, including but not limited to, documentation evidencing diagnosis and treatment.”

They requested the following bulleted list of items:

  • “Your daily office appointment schedules, books, and calendars for the dates of service in which you treated the patients at your office site.
  • Treatment plan or excerpts of the patient file that document diagnosis, dates of services, type of therapy session and length of each therapy session.
  • Initial psychological and/or medical evaluation notes.
  • Daily patient receipts.
  • Financial records used to bill insurance companies.
  • Financial statements sent to patients.

Please submit all documentation to me within 10 business days from the receipt date of this letter. “

Attached to the letter was a roster of 20 patients that were seen by one of 10 clinicians who work, or had worked, at our Boston office. COMPANY requested 1-7 months of treatment notes (varying by patient), dating back over the previous four years.

The samples requested were random but comprehensive. If just one clinician was being sloppy with his/her notes, or if the practice was keeping poor records at anytime between 2009-2012, COMPANY was going to find out. My first thought was, “excuse me while I go vomit in the toilet.” What I actually said was, “Really, we’re supposed to do this in 10 days?”

“Actually…8 days” my office manager explained. Apparently, the mailperson had decided to deliver that particular envelope to a neighbor, so by the time it reached our office the clock was ticking.  

Thankfully, two of our senior medical billers had already started on the project. Better yet, being on the heels of Thanksgiving we were able to convince the auditor to give us a few additional days. We got the impression that the 10-day deadline was a bit arbitrary; COMPANY wanted us to take the audit seriously, but they didn’t want us missing Turkey Day over it.

Horror Stories

Over the past four years, my practice has moved from paper records, to one, and then another, and then a third EHR program (see previous article “Electronic Health Records in Today’s Private Counseling Practice”). I knew we would need to access four databases to get everything COMPANY required. Also, we were surprised to see the items “appointment schedules, books, and calendars” and “financial statements sent to patients” on the list of items required. These were items that we didn’t think we needed to keep. We did have them, but only by chance—not by design.

As an aside, let me say that I am paranoid about clinical notes. They are a huge liability. I can get in trouble for losing them, and for keeping them too long. I can get in trouble if they are too brief, or if they contain too much. They need to be organized, and legible, and double locked. They are requested by patients, healthcare providers, and subpoenaed by courts years after treatment ends. They take up office space. Bugs like to hide in them. I loathe them.

As I read the audit letter, I was comforted by the knowledge that my clinicians keep good notes. Still, there was a lingering worry. I’ve heard horror stories; “The insurance company said that 10% of our records were deficient. So, they demanded 10% of their money back. Over 5 years, that was over a billion dollars!” I never knew what to make of these stories. Were insurance companies out to rob healthcare practices of their hard-earned wages, or were some healthcare practices keeping really shoddy records? Both scenarios seemed plausible. All I knew was that I was going to find out first hand. 

Insurance Audit = Jury Duty

When I visit a healthcare practice (as consultant, or for potential purchase), I’ll always ask the owner if he/she reviews clinicians’ notes. The response is usually some derivative of “I don’t check clinicians’ notes, but their contracts say they need to keep accurate and complete records.” I’ll then ask,

“Would you be comfortable if an insurance company audited your practice’s records?” And he/she will answer,

“Ha! I’m not worried about that—we’ve been in business for 10 years and we’ve never been audited.”

Being audited by an insurance company is like being called for jury duty. It’s not a matter of if it will happen—it’s simply a matter of when. Healthcare providers need to (1) be ready to produce accurate and complete records, or (2) be ready to pay a lot of money back to the third party payer.

Four Tips for Surviving an Audit

Nobody wants to be audited, but with good preparation the process doesn’t need to be difficult. Here are four tips for surviving an insurance audit.

1)     Get organized.

It’s never too early to begin organizing patient files, as even small practices produce a lot of records. Without good organization, finding a specific case file can be tough. Some practices organize files by provider, others by type of client (child v. adult, testing v. therapy). Others organize all files in alphabetical order, and then color-code them based on the file’s age. After a couple years of inactivity, old files and put into storage (still in ABC order).

It doesn’t matter what system you use, as long as you’re consistent. Ask yourself, “If a client from 5 years ago requests her notes, how long will it take me to find them?” And “If one of my clinicians disappears tomorrow, will I be able to step in as custodian and respond to requests for his/her files?”

2)     Conduct your own audit.

If you’re reading this after you’ve received an audit letter, you’re reading this too late. Consider being audited “standard operating procedure,” just like generating a receipt for services rendered. To make sure you’re prepared, run some drills and check staff records for thorough “documentation evidencing diagnosis and treatment.” Some community mental health centers—to keep their certifications—are required to perform a clinical review of every active client file every 90 days. Does this take time? Yes. Does this cost money? Yes. Does this prepare a practice in the event of an insurance audit (and perhaps even improve clinical care)? Definitely.

3)     Recruit your support team as quality assurance.

It’s good to have checks and balances, as no one is 100% up to par with their notes 100% of the time. Have your admin or billing team review notes when filing insurance claims. They can check for the presence of treatment plans, completeness of SOAP or DAP content, accurate dates of service, etc. If a note looks questionable, make sure that the claim isn’t filed until the note is reviewed.

4)     Support your clinicians.

Clinicians want to keep good notes. After all, most of the time it’s their reputation on the line! Help young clinicians understand what constitutes a good client record. Equip experienced clinicians for success as well. For example, counselors need time to complete good notes, and—if your practice is using EHR—they need a system that is reliable and won’t crash on them when they’re completing their documentation.

When it comes to paper notes, clinicians need the infrastructure to keep their files organized. Your practice should have more filing cabinet space than you think it needs, because cabinets fill fast (some practice owners are extremely reticent to buying more filing cabinets. Get over it!). At my practice, we use EHR, and we still have a records room full of filing cabinets for releases, depression inventories, intake forms, and more.

No News is Good News

Are you wondering about the outcome of our audit? Well, it’s been 3 months since we tendered copies of our records. The auditor said that we’d hear from her if there was anything additional she needed. Asking around, we’ve heard that when there is a problem, insurance companies are quick to let a practice know. So far, we’ve heard nothing. It’s business as usual. We survived our first audit (knock on wood). Life is good.
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Anthony Centore is a Counselor, is Private Practice Consultant for the ACA, and helps counseling practices across the US thrive. For more information on private practice and insurance panels go to http://thriveworks.com

 

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