Billing Fraud

New York Billing Fraud Attorney

HMO’s and the government are routinely auditing physician billing records in an attempt to recover money paid to the physician. The concept is for the insurer to retain a company to do the auditing and pay that company a percentage of the money that is recovered.

The auditing company looks at a very small sample of the physician’s billing and tries to find where they can say the physician over-billed for services. The auditor then does a mathematical calculation and comes up with a percentage that was over-billed.

The next step is to assume that percentage applies to all of the physician billing over as much as a six year period of time. In other words the insurer assumes that the physician has routinely over-billed for services at the same percentage for all of the unaudited billing.

What follows is a “demand” letter from the insurer stating, for example, “We have audited 25 charts and have found that you over-billed us by 30%, that is, you billed us $5,000.00 when you should have billed us $3,500.00. Further, over the last six years you billed us $400,000.00. By applying the 30% figure we hereby demand that you return to us a total of $120,000.”

Clearly this is a very dangerous situation for the physician. Should this battle be fought? Where will the fight be held? What are the consequences of losing? The answer to the first question is that in the majority of the cases the best plan is to try to settle this claim at the lowest possible number.

To do that you need some help.

First, you need a lawyer to address the issue with the insurer and its lawyer. You also need to retain your own auditors who, in effect, audit the insurer’s auditors. You will want to be able to show that the audit was not random, that it is not reliable, that the over payments alleged are in fact not over-payments at all, that there were underpayments that were not brought to light, etc.

All of this will be done to drive down the percentage of over-payments that the insurer is using to substantiate its demand for reimbursement. Often a reasonable settlement can be accomplished at a figure far below the original demand.

Should you choose to fight the claim, please look at your contract with the insurer. You most likely are going to find an arbitration clause that you have agreed to. It will say that any dispute will be determined by an arbitrator, not by a judge or a jury.

The most important consequence of this is that there is almost no avenue that is available to you to appeal whatever decision is reached, no matter how unfavorable it might be. Also, an adverse decision might end up with the Office of Professional Medical Conduct (OPMC), where some questioning about billing fraud might arise. This is not a conversation you will want to have, as your medical license could be at risk.

The lesson to be learned is that audits by insurers are to be taken very seriously as they can result in a huge monetary loss. If you are audited, get a team on your side from the beginning to challenge the validity of the audit. This will put you in the best position to minimize the damage or avoid it altogether.