Academy of Chiropractic Personal Injury & Primary Spine Care Program

Quickie Consult 1514
Compliance and Insurance - Licensure Audits 40 CA

From the Desk of Dr. Mark Studin
Academy of Chiropractic
Preamble: Many of the issues I bring to you are very small, yet each issue is just that, an issue. If you take care of the small issues, then you will be able to build and more importantly, focus on the bigger issues...a larger practice and more family time.

“Anatomy of Triggering an Audit”

Why having procedures in place matters greatly

I have been working with a doctor who has been in practice for about 10 years in response to an inquiry from the carriers. They simply asked for verification of office visits for 1 entire case. The doctor did what most doctors do, give it to their trusted staff to compile the records. That is standard and acceptable.
The staff uncovered that for a date range of one month, visits were billed and paid when the patient missed their appointments and the doctor immediately called me and asked what he should do. As I have chronicled in these consultations previously, I have been in a situation where inflated invoices were sent out for support without my knowledge and my first action was to refund the fees ASAP without being asked. I recommended the doctor do the same claiming “database error.” In my instance, with refund checks totaling $23,000 I never heard from the carriers again. This situation is different.
In this instance, it appears that the doctor, who uses an outside billing company has a procedure in place that prepares all of the charts the morning of the visits and keys them in for the billing company. If the patient does not show up for their appointment, in theory they are supposed to be removed from the billing sheet. In this case, one of three things happened.
1.  The doctor is running a scam and got caught. I do not believe for one second with this doctor this happened. However, I have consulted many doctors who did and at the end of the day the old adage “crime doesn’t pay” is applicable.
2.  The doctor has no clue about the procedures or systems in place and allows his staff to run his office.
3.  There is no system in place for checks and balances
I believe that #2 and #3 are applicable in this case.
The doctor’s knee jerk reaction was to hire a compliance officer to oversee the operations to find these system breakdowns and await the carrier’s response and it only took 1 day. The doctor received a certified letter requesting that over 300 charts were requested in 5 business days as this triggered a full audit.
In spite of the compliance officer I directed the doctor to pull all 300+ charts to ensure that no other “mistakes” occurred and then call a health care lawyer to manage the audit. I instructed the doctor NOT to tell me if there were any other billing defects, however the doctor reported there were no other problems. Although I have no way of confirming that, again, I choose to believe everyone.
Currently, the doctor is working with his compliance officer, a health care lawyer and has his staff re-arranging all of the charts so they are completely transparent to the carriers to survive this audit. The doctor admitted that this will cost him $10,000 for the audit and I didn’t have the heart to tell him that number will be closer to $25,000 after the lawyer gets involved in an in-depth level assuming that he is innocent.
Here is the real issue. IF…the doctor had a procedure in place that HE created with checks and balances that verified the claims before they were billed, none of this would have occurred. Instead of ABDICATING the responsibility of creating the system to the staff, who almost always will seek the least difficult pathway with the least amount of work, the doctor should have set up his system initially. In this instance, I verified the staff created the system because the doctor took a few hours to get back to me because when I asked what normally happens, he could not answer.
Secondly, another issue surfaced. The doctor did not have any goals listed on any of the 300+ cases. This is hugely problematic as that is a Federal requirement and all carriers now utilize that standard. Is this a huge issue, in a vacuum probably overcomable, however combined with other billing issues it becomes the “tell” to the carriers that the doctor has other issues and to dig more. AND…the carrier usually outsources auditors who only make money for finding fault in the records and demand retrospective payments. Therefore in order to make money, they need to find defects in either the records or the billing. In this instance, 300+ cases have a clear defect that gives the carriers the right to demand full repayment for not following the documentation standards.
Does this sound fair…HELLO…this is the carriers who are in business to make money and do not care about how they make money as long as they can get away with it, even at your expense. In this instance, the carrier can turn this over to their lawyers who are on (probably) retainer or are paying their lawyers hourly. This means now the lawyer will do whatever is necessary to make more money and bill more hours by doing more work. They have the legal standing to file a RICO charge against the doctor because he used a paper instrument (HCFA) to defraud a financial institution (insurance company) and now the doctor is in Federal court facing treble damages for a minor, but universal defect in his records.
The carriers understand this and use the courts as leverage to “blackmail” (the best word I can think of) the doctor in order to instill fear and force a huge settlement out of the doctor. In this instance, the doctor will be exposed to close to $2.5 million in repayments and legal fees should he lose. The carriers will happily settle for 1/3 giving the doctor time to pay it out. This is a typical scenario and has been played out many times and in one case I represented another doctor in trying to overcome his defects. In the end, I recommended settling because the defects were too consistent in all his charting.
Time will tell the final disposition of this case, but if that doctor got his records audited by me initially we could have mitigated any leverage the carriers could use. IF...the doctor set up his own systems, then this too could have been avoided.
Remember in 2014 I said 100% of you are getting audited in 2015… I didn’t exaggerate. If you have not had a compliance audit and follow the recommendations, you are leaving yourself more exposed to making the carriers richer.


Adjunct Assistant Professor of Chiropractic, University of Bridgeport, College of Chiropractic
Adjunct Professor, Division of Clinical Sciences, Texas Chiropractic College
Educational Presenter, Accreditation Council for Continuing Medical Education Joint Partnership with the State University of New York at Buffalo, School of Medicine and Biomedical Sciences

Academy of Chiropractic
US Chiropractic Directory
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