The evidence is largely anecdotal, but it continues to mount. As a consultant, I field calls almost weekly from doctors who are confronted with an audit, worried they might have to undergo an audit or concerned about how to safeguard their practices against the possibility of one.
Disturbingly, the audit/payback trend is an upward one, to the point I am convinced virtually every chiropractic clinic in the country will experience an audit within the next five years. The Office of Inspector General's (OIG) 2008 work plan includes a 40 percent increase in chiropractic audits from its 2007 plan. Who can know who's next - or when? What's driving the phenomenon? And why is there so much emphasis on chiropractic?
Factors in Play
There is a combination of factors in play. The current situation stems from a regulatory oversight push by the OIG of the Medicaid program under the 2005 Deficit Reduction Act. That act not only provides for post-audit recovery sharing between the federal and state governments, but it even extends "whistle-blower" compensation to individuals who report suspected fraud that ultimately results in a recovery. However, there is a complication. Proof of fraud can carry criminal as well as civil liabilities.
What the Medicaid program administrators implement, private and institutional third-party payers are quick to emulate. As a result, third-party payers have become increasingly aggressive in monitoring claims and, when trigger factors are spotted, initiating an audit.
Audits are supposed to be about medical necessity. In reality, they carry a parallel economic component, especially for the nongovernmental payers who have fiduciary responsibilities to shareholders, union or association members and/or boards of directors. It is virtually a given that insurers would much rather deny claims than to pay them, since they usually are under pressure to maintain profitability and/or contain costs. So, where they find an opportunity to save money, they are only too happy to do so.
Chiropractors Don't Fight Back
Which brings us to the third question: Why is there so much emphasis on chiropractic? To be blunt, chiropractors are an easy target. I asked an insurance company representative that question. Here is what I was told: It costs $7 to recover $10 from a conventional medical provider; it only costs $3 to recover a like amount from a chiropractor. The dollars per audit are smaller, but the volume is higher because normally, chiropractors simply roll over.
Chiropractors don't fight back and this problem compounds itself. Once a chiropractor gives in, it's taken as an admission of guilt - not necessarily of fraud, but more often as evidence of sloppy office practices or inadequate understanding of billing codes and documentation. The doctor then has a target on their back and the auditor/examiner has a virtual license to return.
How It Happens
There are two basic audit situations. One is an audit for suspected fraud, most often triggered by billings outside the "norm" of frequency, evaluation and management coding, or in demonstration of medical necessity. They might be perfectly legitimate, but they must be coded properly and used discretely. Since they are outside the norm, they invariably call attention to themselves - something that is wise neither for a chiropractor trying to make an honest living nor a spy not yet in from the cold. The other is the routine investigative audit, which often is simply a fishing expedition that doesn't particularly require a trigger.
Usually, notification of an audit arrives by letter and it understandably can stimulate a sense of deep frustration. In cases of deliberate fraud, any ensuing problems are well-deserved but the decision to take the risk has been made, and contingencies for dealing with it probably are in place. For this article, however, we are concerned with the audit problems of the innocent/ignorant practitioner who has been implicated by their own lack of knowledge, lack of a commitment to learn or carelessness.
How It Turns Out
There are two usual responses. As mentioned above, the most common one - and the one most damaging to the practitioner and the profession - is to simply find out what the auditor wants and then give it to them. The second is to call a lawyer or, in some cases, a consultant experienced in dealing with audit situations.
Unfortunately, very few lawyers know anything about coding and/or health care documentation. The process then soon devolves into a pay-and-go-away solution: the lawyer is a negotiator and the chiropractor still ends up paying, but less. Such paybacks can run $100,000 and up.
Case in point: A few weeks ago I was contacted by a chiropractor in Pennsylvania subjected to an audit by Blue Cross/Blue Shield. It began innocently enough: The doctor was asked to provide a random sample of charges for 10 patients for a period of four months. ("Random" meaning they weren't looking for anything specific. This is happening with ever-increasing frequency in the industry.) The doctor was asked to provide exam notes, re-exam notes, daily notes, reports - anything related to the cases.
After a couple of weeks, the insurance company auditors came back with the judgment that 15 percent of the charges were for treatments not justified by medical necessity. Worse, they extrapolated the 15 percent backward for two years and demanded the doctor reimburse them in the amount of $255,000. Stunned, the doctor contacted a health care attorney who disputed some of the findings and was able to negotiate the settlement down to $80,000. The doctor is now paying it back on a five-year plan - a serious bite out of his practice income.
In a somewhat parallel case, a New Jersey doctor contested an audit result using a professional coder, rather than an attorney, challenging the insurance on the principle rather than on the numbers. The New Jersey doctor won his case. Many times chiropractors should stand up and make their case. If you're reading this after the fact, do the best you can. But if you haven't experienced an audit, get the training and knowledge you need to diminish the possibility. The truth really will set you free and save you a lot of money and headaches in the process.
The Winning Position
The key to avoiding audits in the first place is preparation - making sure you can support the claims you submit. That entails:
- a clear understanding of the codes;
- how the coding system works;
- how to use it to bill for maximum revenue;
- how to safely bill "outside the norm;"
- how to demonstrate medical necessity;
- how to present your documentation; and
- having a system in place that supports your billing.
One of my clients was recently visited by an insurance company auditor who challenged the need for a second set of X-rays and why certain visits were charged at $200, each involving multiple procedures and each performed for only a short time. My client first explained the need for weight-bearing vs. supine exposures, which was accepted. They responded to the billing queries by pointing out modifiers 52 and 59, which explained the reduced amount of time and justified the charges. Everything they said was backed up by information straight out of the code book.
Mollified, the auditor asked if the doctor would consider a further reduction. Generously, the doctor agreed and in the process, won the clinic a friend at the insurance company. Many chiropractors live in fear of audits and as a result, inhibit their revenue opportunities by billing not fully, but safely. With the proper knowledge, there is no conflict between the two, and a more substantial revenue stream is the direct result. The answer lies in being preventive, rather than reactive.
Bharon Hoag is senior consultant for the ACOM Healthcare Business Consulting Group. He is certified as a professional coder and teaches coding and case management strategies to DCs across the United States. Contact Mr. Hoag with questions or comments regarding this article at www.acomconsulting.com.