How To Prepare For An Insurance Audit

A colleague who has five office locations in a mainly rural area recently had to contend with an audit from a large insurance company. The audit was random and not created by any outliers in terms of billing practices or complaints from patients. The owner of the practice is a highly ethical physician who has set up practice protocols for all the affiliated physicians to follow that are rooted in evidence-based medicine. It is one of the most systematized practices I know and makes sure to provide quality medical care.

Predictably, the audit turned into a nightmare for the doctor. It started out with an audit questionnaire (see below). The practice had seven days to respond. Fortunately, this doctor is incredibly organized and had nearly all of the following information readily available. Do you?

What’s In The Audit Questionnaire?

1. How long have providers been in practice?

2. How long have providers been at each office?

3. Provide credentials of each provider.

4. Provide name and title of person designated as the representative of the group to act in behalf of the group with respect to the services being reviewed. In accordance with our contract, the representative must be a physician.

5. How many patients per day and per week are seen?

6. What are office hours and what hours are the patients seen?

7. What types of patients are seen?

8. What are age groups of patients seen?

9. Which hospitals are the providers affiliated with?

10. Does the provider use an outside billing company? If so, provide address and phone number.

11. Who assigns the procedure codes and diagnosis?

12. Does the provider utilize contracted services? 

13. Have the providers experienced any change in practice recently (past 6 months or year)?

14. List of commonly used abbreviations.

15. List of employees and their titles.

16. List of employees job descriptions.

17. Liability insurance information.

18. Copies of diplomas and certifications.

19. List of all equipment.

After sending all of the required information to the insurance company with a secure memory stick, the practice eventually received information that it had many denials and was required to return in excess of $50,000 within three weeks. The doctors retained an attorney who told them they were lucky the penalties were not more substantial as he usually sees much higher.

A Closer Look At The Reasons For Denial

My doctor friend told me, “Many of these reasons for denial I wanted to appeal because they were absurd and unfair.”

It is vitally important to be aware of exactly the way you word the subjective complaint. In our practice, the medical assistant types in the subjective complaint and we often have to change, add or reword it, especially now after the audit.

Here is his list of denials and some of the reasons.

1. If there was no documentation of patients coming in, having the orthotic fitted to their feet and then fitted in their shoes and observation while walking, the insurance company denied payment for the orthotic and the office visit that went with that date.

2. The insurance company denied orthotics because under the subjective complaint: “Patients states not having any pain but needs new orthotics.”

3. There was no documentation indicating conservative treatments happened before prescribing custom orthotics.

4. Any time an immobilizer or brace was dispensed, it must say it was “fitted.”

5. The doctor had a missing second page of two operative reports so the practice had to refund the entire surgeries. These op reports were from the hospital and the fax hadn’t fully gone through, but the insurer took back money anyway.

6. One must update the history and physical from visit to visit. It cannot be the same one cut and pasted.

7. The insurer denied an original visit when a patient came in stating, “I’m here for new orthotics.”

8. Patients were minors. Documentation states “patient was given post-op instructions” instead of “Patient’s guardian was given post-op instructions.”

9. With an autistic patient, the documentation states that the patient received instructions (same issue as the minor).

10. The progress note did not state magnetic resonance imaging (MRI), biopsy and electromyography results even though the report was in the chart and the progress note said “MRI results reviewed with the patient.”

11. There are several instances in which the insurer denied vascular studies on patients with “warm feet” even though pulses were diminished.

12. One must document the exact number of warts and their exact location. The doctor’s note read, “Six warts were present on the plantar aspect of the right foot.”

13. The insurance company denied bilateral X-rays when there was no pathology mentioned on the contralateral foot, even when the doctor documented taking a comparison view. In addition, there was no X-ray report for the contralateral foot so the carrier denied it as well. There were instances in which the insurer denied bilateral X-rays because the chief complaint only mentioned a problem with one foot, even though the exam revealed pathology with both.

14. If you’ve taken one postoperative X-ray, there needs to be a reason to take further X-rays documented in the chart, especially if the subjective states the patient is doing well and having minimal pain. For example, if you want to check the status of an osteotomy during the post-op time you have to state that in the progress note.

15. There are several instances in which there was not an X-ray report in the chart.

16. The insurer denied neuroma injection during the global period for neuroma surgery.

17. When performing a therapeutic ultrasound, diagnostic ultrasound and ultrasound-guided injection, you must have the make and model of the unit, and the type of probe you’re using in the report.

18. You must have the exact location of an injection. The record needs to say “medial aspect of right heel,” not just “right heel.”

19. The patient came in stating she wanted her calluses trimmed on her tailor’s bunions. The exam revealed she did have tailor’s bunions. The treatment discussed all the treatment options, both conservative and surgical, for tailor’s bunions but because it did not mention the trimming of her calluses, the insurer denied coverage for the original visit. There was no decision making on the doctor’s part since the patient came in stating she had tailor’s bunions and only wanted the calluses trimmed.

20. In our templates, we will have counseling that states: “Patient understands the conservative and surgical options.” Since it stated that the “Patient understands” in the note, the company denied the original visit on the date the practice had the patient come in to discuss surgery and sign the surgical paperwork. So now the doctor writes, “Discussed conservative and surgical options, and the patient is interested in surgery but states that he or she may have more questions.”

21. If one uses a diagnostic ultrasound, there must be a strong reason. Insurance states it’s not necessary to diagnose “run of the mill” plantar fasciitis.

22. If the patient has multiple ingrown toenails, make sure to note why you are not doing all the toes on the same day. The doctor had a patient with bilateral ingrown nails who only wanted to do one at a time but that was not in the chart. The practice received a reduced fee for a second toe.

23. The note didn’t explain why the doctor did an 11730 instead of an 11750 when the 11750 occurred on a subsequent date.

24. When booking surgery on both feet on separate dates, make sure to have the rationale in your note. “Patient prefers to not do both feet at the same time.” We did a second surgery fee months apart that the company reduced by 50 percent.

25. There were several instances in which the practice billed an original visit along with an injection for plantar fasciitis. The company denied the original visit.

26. The practice also received a warning because it didn’t digitally sign some of its progress notes within three days from the date of service.

I found this questionnaire and audit startling. Much of this flies in the face of good medicine and normal business practices. It certainly has opened my eyes as to the susceptibility of our organization, which now operates in six states across the country. We have always been focused on evidence-based practice guidelines and diligent medical records, but I found myself wondering how anyone could have been prepared for this list. Much of it is capricious and unfair. How could a small practice afford to prove its innocence?

The lessons learned through this example are to be aware of all guidelines and be sure you are following them. Be sure to have excellent medical records that you complete in a timely fashion. Be prepared for an audit and utilize this checklist to prevent this painful process from becoming worse than it needs to be.