Insurance Audits and Overpayment
Norman Spencer Law Group healthcare attorneys provide aggressive and effective representation to providers dealing with commercial payers audits and overpayment demands issues. We follow the approach that the best defense is an offense when defending against insurance audits and overpayment demands.
Commercial insurance payers have been following the federal government in relentless pursuit of collecting alleged overpayments, whether they operate as privately managed care entities or in any other capacity. Insurers can act on their own or through third-party contractors. Virtually every commercial insurance company has a Special Investigation Unit (SIU) tasked with investigating potential fraud cases and pursuing restitution efforts.
In order to be able to claim overpayments, an insurance company must build sufficient evidence. To that end, payers rely on audits, which allows them to identify fraud and other billing irregularities. One of the easiest and most common ways to accomplish that is to identify providers whose billing and treatment practices significantly differ from their similarly demographically and geographically situated peers.
In other words, if provider X is using a certain CPT code to treat a certain patient population in a certain area at a significantly higher rate compared to their peers in the same area, that pattern will be identified for additional inquiry, resulting in audits. Some of the common billing patterns which are often targeted are overutilization of certain procedures or modifiers, upcoding, and unbundling.
When attempting to recoup overpayments, insurance companies may use various methods including immediate overpayment demands, reducing payments which they already owe, withholding new payments, or offsetting future payments.
Insurance Audits and Document Requests
Before an insurance company is able to demand any alleged overpayments, it must build evidence of any such overpayment, which is done by the following process. The provider will generally receive a document request from the insurance company. The request can be pre or post-payment. The provider will be asked to submit to the insurance company certain documents, usually some patient charts. These records will then be examined by the auditors, using certain statistical models, the data will be then extrapolated across the entire provider’s practice, resulting in overpayment demands. Unlike most providers’ beliefs, they do not always have to submit any records to the insurance companies, and an experienced legal counsel will be able either to prevent such document production or significantly narrow the scope of the audit.
In some cases involving potential fraud, submitting any records to the insurance company may result in a further review and ultimately in referral to the legal department for further legal action. It is, therefore, very important for healthcare providers who are under insurance audits to consult with an experienced attorney as soon as possible before submitting anything to the auditors.
Notices of Overpayment
If you receive a Notice of Overpayment from the insurance provider, you will see that demands are based on one of the following reasons:
- The service was not medically necessary
- The documentation provided did not provide the adequate necessity of why the service was provided
- The provider either upcoded or miscoded the service
- The service was less than adequate
- The service was not provided
- The provider has breached the contract with the carrier
There can be more reasons, but these are the most commonly used by insurance companies.
The Notice of overpayment usually provides sufficient details regarding the allegations so that the provider is able to respond, although the requirements of the details of the notices of overpayment differ from state to state. The notice should always have a well-defined, rational, and documented explanation as to why the insurance company thinks that it has overpaid the provider.
Some states will also prohibit the insurance companies from using extrapolation of errors on overpayment claims. At the minimum, the notice must identify the specific claims, the patients’ names, and ID numbers, and dates of service, as well as list the CPT codes, used together with other billing information.
The insurer is not allowed to proceed with overpayment recoupment efforts until the provider was able to follow the appeal process. In many situations, it is possible for an attorney to negotiate the final overpayment amount with the insurer informally as a more cost-effective method of dealing with the demand compared to following the formal appellate process.
Was the Service Medically Necessary?
Most overpayment demands are based on the argument that services rendered were not medically necessary. Of course, the best defense approach here is to argue the opposite. At our firm, we have a team of medical and billing experts who will evaluate the services in question, including the patient’s medical condition and medical history and the treatment decision made by the provider.
Eventually, medical necessity disagreements boil down to two opposing expert opinions. The insurer’s expert will always insist that the service was not medically necessary, and therefore, the insurer did not have to pay for it. To effectively counter this, you need a team of medical experts in your corner if you hope to prevail.
How Norman Spencer Law Group Can Help with Insurance Audits
Insurance companies post-payment audits may not seem as harmless as it sounds. Using the pretext of reducing fraud and abuse, insurance companies have adopted a very successful and aggressive business model of targeting smaller providers groups and practices. In other words, they are in the business of making more money by accusing providers of billing errors and recouping large amounts of funds.
With the legal resources at their disposal, it is a relatively easy task. Non-suspecting providers make it even easier for them. Our firm holds insurance companies to their obligations. We make sure that our clients are not taken advantage of by money-hungry commercial payers. We can save you not only hundreds of thousands and even millions of dollars but also prevent more serious legal consequences.
We have assembled a team of medical and billing experts, some of whom had spent their careers as insurance auditors – to provide our clients with the best high-powered defense available. We offer personalized client service and client-friendly fee arrangements.
Over the years, Norman Spencer Law Group has helped numerous healthcare providers in all sorts of overpayment demands and disputes. If you are in need of an experienced and dedicated healthcare attorney to protect your rights and your business, contact our office today to set up an immediate consultation.