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Why Physicians Need to Challenge Audit Findings and Overpayment Demands: Lessons Learned from 2018

In 2018, many physicians’ fears and suspicions were confirmed as discovery from lawsuits against insurers and reports from the Office of Inspection General (OIG) shed light on the glaring flaws, and the sometimes unscrupulous nature of, payor audits.

The year began with a bang when in February 2018 it was revealed that Aetna’s former Medical Director, Dr. Jay Ken Iinuma, admitted under oath that he “never looked at patients’ records when deciding whether to approve or deny care.” His deposition further revealed that he relied upon recommendations made to him by the reviewing nurses and that, in the case of the plaintiff, he neither treated her condition or even know much about it. This shocking revelation confirmed many healthcare providers’ fears that their records, particularly in the case of specialists, were not being reviewed by peers with a comparable knowledge base. Yet another admission confirmed that records may not be reviewed at all by a medical director. 

Later in the year, the OIG published a report noting that New York may have improperly claimed reimbursement for 7,650 dental services totaling $1.3 million. This confirmed the commonly held suspicion that auditors aggressively pursue overpayment demands rather than perform what should be an independent audit.

Frier Levitt’s experience handling in excess of 100 such cases last year alone confirmed many of the concerns outlined above. Most troubling, we have noticed that when there is a review performed by a physician that it is not uncommon to have a physician from another and unrelated specialty doing the review. This undercuts the validity of the review, particularly when medical necessity is at issue.

Frier Levitt’s Regulatory Department experienced one of its busiest and most successful years in 2018 – reducing overpayment demands by more than $1MM for our clients. Most recently, Frier Levitt successfully reduced the overpayment demand of one practice by 90% by challenging the audit’s coding findings and statistical analysis. 

While payor audits, which increase each year, will continue to be a cost of doing business in healthcare, there are two key takeaways from what transpired in 2018. The first is that payors, both private and public, will continue to audit and seek recoupment for alleged overpayments since many practices continue to simply “pay up” rather than fight. The second takeaway is that regardless of the codes being audited, the allegations in the demand letter or the amount at issue being recouped, healthcare providers must challenge all audit findings as the audit process is, at best, flawed and, at worst, corrupt.

If your practice receives notice of an audit or an overpayment demand, contact Frier Levitt immediately to protect your interests.