The pre-payment review has emerged as a significant challenge for healthcare providers. What may appear to be a routine audit and mere delay in reimbursement can quickly lead to serious financial and legal implications. Understanding the true nature of a pre-payment review and its potential consequences is crucial for navigating this challenging process and safeguarding your practice.
The Basics of Pre-Payment Review
Pre-payment review is the process by which an insurance carrier requests to review all claims for a particular code, or multiple codes, prior to disbursing payment.
A pre-payment review typically begins with a vague letter from a payor singling out a code or set of codes that the practice is billing as an outliner. Often, the letter is devoid of specifics, citing generic reasons like “billing code outlier” or simply stating the pre-payment review’s commencement date with few other details. A generic email address for record submission is provided, often with no direct contact information for the reviewer, leaving the provider with little to no guidance.
Notably, providers are frequently unaware of why they have been selected for pre-payment review. Insurance companies are investing considerably in billing software, and their online tools are able to compare a physician’s billing practices to those of his or her peers in the same specialty and geographical area. If a provider’s billing pattern deviates from the payor’s expected norms, the payor may place the provider on a pre-payment audit review. Use of high reimbursement procedure codes could also trigger a red flag in a payor’s system, as insurers may suspect upcoding or unnecessary services.
The Impact on Healthcare Providers
The immediate consequence of a pre-payment review is delayed payments. This can range from days to weeks, or even months, depending on the complexity of the review. If a significant portion of a practice’s revenue comes from the payor at issue, this delay can quickly create a financial strain, putting the practice at risk of cash flow issues or even closure.
More concerning is the potential for pre-payment reviews to lead to more serious investigations. The Special Investigations Unit (“SIU”) may become involved if there are billing discrepancies revealed during the pre-payment review. This can lead to post-payment reviews or extrapolated overpayment demands. Even more alarming, depending on the severity of the perceived violations, referrals to external entities like the Medicaid Fraud Division (“MFD”) or the Office of the Insurance Fraud Prosecutor (“OIFP”) are a possibility. Such referrals carry the weight of potential criminal charges, further amplifying the stakes for providers placed on pre-payment review.
Concerning Trend in Horizon Blue Cross Blue Shield of New Jersey Pre-Payment Review Audits
Horizon Blue Cross Blue Shield of New Jersey (“Horizon”) has been consistently implementing what they call a “Claim Pattern Review Program,” which is essentially a synonym for a pre-payment review. This program is currently targeting high-value procedure codes and Evaluation and Management (E/M) codes, with pediatricians and psychologists increasingly being subjected to these targeted reviews.
Horizon’s approach is particularly problematic for several reasons.
First, Horizon often provides no feedback whatsoever for submitted claims and documentation until after 90 days from the claim submissions. As a result, providers’ cash flow suffers for all claims submitted under the relevant procedure codes. If these procedure codes represent a large percentage of the provider’s business, this could lead them to become non-operational.
Second, the feedback provided to the provider often lacks line-by-line denial reasons, which are necessary in order to strategically appeal and rebut unfavorable findings. Further, if line-by-line denial reasons are provided, they often state that the submitted notes do not support the claims due to various unspecified missing elements. As such, the provider is unable to pinpoint the documentation shortfalls alleged and cannot rectify any documentation deficiencies.
The lack of timely feedback and vague guidance often results in a majority of services going unpaid, creating a pattern of unpredictability that severely impacts providers’ financial stability.
This approach by Horizon is causing significant distress amongst healthcare providers, particularly pediatricians and psychologists, who find themselves caught in a cycle of submission, long waits, and often unexplained claims denials.
Making matters worse, Horizon has recently outsourced much of its auditing to Cotiviti, who issues the record requests and the 90 day results letter to providers. These letters also lack any contact information for providers, or their counsel, should they have any questions or concerns. Unsigned letters with no contact information are the norm for audits outsourced to Cotiviti, which makes it nearly impossible for providers to handle these audits on their own.
The Burden: A High Bar for Clearance
To be removed from pre-payment review, providers must achieve a high success rate, often around 75% to 80%, for three consecutive months. This means that a significant portion of the reviewed claims under the chosen codes must be approved by the auditors. Although this may sound relatively simple, errors in the review process itself can lead to erroneous denials, making it difficult to achieve the required success rate. Moreover, denials are often issued for “lack of documentation” when either the practice forgets to submit the record requested in a timely manner, or the payor loses/misplaces the records.
How to Protect Your Practice
To avoid denials and improve success rates, meticulous documentation review is crucial. Providers should consult with their healthcare team, including attorneys and coding experts, to review and analyze the documentation to ensure legal and coding compliance with the requirements for the code(s) at issue. Such a comprehensive approach equips the provider to effectively challenge any arbitrary denials, significantly increasing the likelihood of removal from pre-payment review.
The Crucial Role of Legal Guidance
Pre-payment review poses a significant threat to healthcare providers, with potential consequences ranging from financial strain to legal referrals. The practices of payors like Horizon highlight the need for providers to be vigilant and proactive in managing their billing practices and documentation. In the face of these challenges, it’s crucial for healthcare providers to seek legal guidance to navigate the complexities of pre-payment reviews, ensure compliance, and protect their practice’s interests.
Legal professionals, particularly those who specialize in handling payor audits, can play a critical role in defending these actions by facilitating effective communication with insurance carriers, ensuring that submitted claims are supported by appropriate documentation, and verifying that the physician’s billing practices align precisely with the payor’s coding requirements.
How Frier Levitt Can Help
At Frier Levitt, our experienced healthcare attorneys can be invaluable allies in navigating the complexities of pre-payment reviews. Should you receive a pre-payment review notification, our dedicated attorneys at Frier Levitt are prepared to assist you in safeguarding your practice. Our legal team brings a wealth of experience to support you through the challenges posed by pre-payment reviews, ensuring a comprehensive and strategic approach to protect your practice’s interests. If you receive a pre-payment review notification letter, do not hesitate to contact us today.
