Reviewed by Paul E. Walker
Key Takeaways
- Do not assume the insurer’s number is right. Demand the auditor’s spreadsheet and methodology.
- Find the appeal deadline first, since missing it forfeits your best defenses.
- The extrapolation is usually the weakest part of the claim, and Medicare limits when it can be used.
When a medical professional finds out that they are being audited, it can be a burdensome time in their life. This may happen if they are accused of overbilling their patients. In these situations, it is important to retain the services of a New York medical defense attorney who can guide you through the process and defend you against an unwarranted audit.
What Is the Audit Process?
Medical professionals are usually audited regularly by the Health Maintenance Organization (HMO) as well as the government in order to recover any money that has been paid. In most cases, insurers hire a company to do this for them. This can be unfair, as auditors only glance at a small percentage of a physician’s billing in an attempt to find certain areas where they overbilled patients for their services. They may then assume that this applies to all of their billing over a period of time. When this happens, the insurer will most likely send a demand letter to the physician, stating that they owe a large sum of money. Unfair audits can place a medical professional’s entire character and career into question, which is why they should contact an attorney for assistance during this time.
Can I Settle a Claim?
When facing these situations, the best course of action is to settle for the lowest number possible. The process of settling a claim begins by speaking with the insurer and appointing your own auditors. The job of these individuals is to audit the insurance company’s auditors. In order to obtain a positive settlement, you generally need to show one of three things. This can include proving that either the audit was not done at random, was unreliable, or that the allegations against you were unfounded. If possible, it can be beneficial to be able to refer to specific examples of times when you underbilled patients that the auditors did not take notice of.
Can I Fight a Claim?
Medical professionals are not always able to fight a claim. However, this does not mean it is impossible. In order to do so, individuals must have an attorney thoroughly examine their contract with the insurer. Sometimes, these contracts contain an arbitration clause that states how any dispute must be determined by an arbitrator first.
It is important to note that, if this is done, the medical professional has very limited ability to challenge the decision, as, under CPLR 7511, a court can vacate an award only on narrow grounds including:
- Fraud
- Arbitrator partiality
- Arbitrator exceeding their power
In order for the court to vacate the decision, the application must be made within 90 days. In addition to this, it can result in an investigation and a possible hearing being opened up by the Office of Professional Medical Conduct. When this happens, it can jeopardize their medical license.
What to Do When You Receive an Overpayment Demand Letter
Demand letters may arrive months following a records request, and they rarely explain the whole story. However, before responding, you should take the following steps:
- Find the appeal deadline in the letter and calendar it. Missing it can forfeit your best defenses.
- Demand the auditor’s spreadsheet and sampling methodology, which show exactly how the figure was calculated, and obtain the insurer’s provider handbook in addition to your contract.
- Have a certified coding expert review the disputed claims. Coding may not be as cut and dry as you expect, and there are often arguments that the code used was correct.
- Look for documentation that never made it into the chart, such as patient sign-in sheets or correspondence from other providers.
- Have a physician expert answer any clinical questions, and review records should the matter proceed to a hearing.
Your Contract Status Changes the Playing Field
If you are an in-network provider, the arbitration clause can also require the losing side to pay the legal fees of the winner, which may turn a $50,000 claim into a $100,000 issue. If you are out of network, the insurance company must typically sue you in court, which is slow and expensive for them, and may result in smaller settlements.
Contract details matter too, as in one case we handled, the arbitration page in the client’s contract had never been signed, ultimately pushing the insurer towards court and helping us settle for less than 10% of the claim. In another, the insurance company dropped a $135,000 claim entirely once its errors were pointed out. Prior results do not guarantee a similar outcome.
For additional examples, please refer to our audit resolution case study.
Challenging the Extrapolation
The extrapolated figure explained above is often the weakest part of the claim. Beyond the random-sample and underbilling arguments explained above, showing that even a few sampled claims were billed correctly will reduce the rate the claims are based on, and a look-back period longer than what is allowed by the law or contract may further reduce the total.
For Medicare, federal law adds a threshold: a contractor may use extrapolation only if there is a sustained or high level of payment error, or if documented education failed to fix the issue in accordance with 42 U.S.C. § 1395ddd(f)(3).
Even then, an extrapolated figure is only presumed valid, and the provider is still eligible to challenge the statistical validity of the sample, or challenge the specific claims it rests on, as per explanations by the Fifth Circuit.
In negotiation, the aim is to separate the claims that can be defended from those that cannot. A corrective action plan showing how billing will be handled going forward can also help. Because an insurer may treat billing errors as fraud, or drop you from its panel and trigger a report to state regulators, it is worth taking these letters seriously from day one. For the fraud side of the issue, see our post on billing fraud accusations.
Contact Our Experienced New York Professional Defense Firm
If you are being unfairly audited in New York, understanding your legal options during these times is critical. That is why it is in your best interest to connect with an experienced attorney at Walker Medical Law. Our firm understands how overwhelming these matters can be to navigate, which is why we are committed to helping you fight for the best possible outcome for your unique situation. Contact us today to learn how we can represent you.
