Private insurance audits used to be rare, but over the last few years, they seem to be on the increase. The initial contact from a private insurer may ask you to submit written records or it may include a request for a site visit.

The first thing you want to do is review any contract you have with the payer and determine whether it allows the audit. You will also want to review state law, since some states have laws that limit an insurer’s ability to audit. For example, many states recently passed laws limiting the time period for which insurers may audit pharmacy records. 

If you don’t have a contract with the insurer, it is not clear that the insurer has a right to compel you to produce documents. The bottom line is that before producing documents, you will want to consider whether you are required to produce the records. You may opt to submit records even if there is not a clear legal right for the insurer to get them, but you should carefully consider your options. 

It is a bit easier to respond to a mail request. There are three points to stress. First, make sure you keep a copy of exactly what you send in. You might think that since you have a copy of the electronic record, it is wasteful to make a complete copy. But you want to know EXACTLY what was submitted. In an audit, it is quite common to have questions about whether some lab or diagnostic test was sent. The only way you will know is if you have a complete copy of what you submitted. Second, number the pages. Referring to excerpts in a record can be very difficult without page numbers.  Finally, you need to decide to send only exactly what is requested or to send other info that might be helpful. For example, if the request mentions a particular procedure, do you want to send the record from the visit at which the physician decided the procedure was necessary? Reasonable people could differ, but I generally err on the side of being more inclusive.

Care and Feeding of Auditors

When auditors are on site, you want to find a nice location that is out of the way. I would recommend going to considerable lengths to avoid having your staff interacting with the auditors. Be friendly. Offer food and coffee, but keep the hospitality limited to physical comfort, not social interaction. 

I worked on an audit in New Mexico where the auditors left with original medical records. That was a shock to me, and it should go without saying that auditors should not be permitted to leave with any original records. You will, however, want to have a good sense of exactly what they take. If the auditors make copies, you may wish to make a second copy for yourself. 

Saying Goodbye

When the auditors arrive, ask if it is possible to have an exit interview when they complete their work. If one is allowed, include your legal counsel. Use the exit interview as a chance to determine whether the auditor had any concerns. The exit interview also can be a good opportunity to learn about options for improving the quality of your records. 

Some basic preparation can make it easier for you to handle private payer audits.

About the Author

David M. Glaser, a shareholder in Fredrikson & Byron’s Health Law Group. David assists clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board.

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