Five Types of Psychotherapy Audits
Avoid Practice Nightmares
There are 5 types of psychotherapy audits.
Targeted probe and education (TPE)
Risk adjustment audits
Abuse & waste audits
Record keeping
Recovery audit
Medically Necessary and Reasonable Psychotherapy Services
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Audit Proof Ethical Charting
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Targeted Probe and Education Audit (TPE)
Medicare Administrative Contractors (MACs) conduct Medicare TPE audits of psychotherapists billing practices, utilization rates, or potential claim error rates that vary from their peers. TPE audits are also used to intervene and influence psychotherapist billing for services that have high national rates. In psychotherapy, there is a growing practice by Healthplans to use what is sometimes referred to as 90837 Utilization Audit Letters.
90837 audits come as form letters. They are specific to a face-to-face CPT code for a psychotherapy session lasting 53 minutes or more. The letters are based on electronic utilization review. These letters are not informative or educational. They are intimidating, if not coercive, advising psychotherapists they are using 90837’s more than a reference group.
Documentation to justify a 90837 should include:
Appropriate diagnosis.
Appropriate problems and symptoms list.
A documented reason for the extended session code during those appointments.
A treatment plan which documents the medical necessity of services.
Additional information as required by payer policies regarding use of 90837’s.
Start and stop times. Or, the start time and the amount of time.
Risk Adjustment Audits
Risk Adjustment Audit
Risk Adjustment Audits are conducted annually and are required of commercial health plans by the Federal Department of Health and Human Services (HHS). Risk Adjustment Audits come in a letter usually from a Healthplan or a contractor acting on behalf of a Healthplan under the authority of HHS. The audits are required by HHS to assess a risk pool of insurers. You will receive a request for records and may have up to 60 to 180 days to respond. Your records will be thoroughly audited, usually by a contracted auditor who works for the Healthplan. The audit will compare you to peers. And Healthplans will be compared to each other. It is not clear what penalty or retribution is possible if a psychotherapist does not comply. Risk Adjustment audits are required by Federal Law.
For more information see:
Healthplan and Medicare Advantage Risk Scores and “Clawbacks”
https://www.mentorresearch.org/medicare-advantage-risk-adjustments-and-clawbacks
Abuse & Waste Audits
Abuse and waste audits are investigations conducted to identify improper practices and expenditures within the Medicare program. These audits aim to ensure the efficient and effective use of Healthplan funds by identifying, preventing, and addressing misuse. Here's a brief overview of each type:
Abuse Audits
Abuse refers to practices that result in unnecessary costs to the Healthplan program, improper payments, or payments for services that fail to meet professionally recognized standards. Abuse can involve:
Overcharging: Billing for services at a higher rate than is justified.
Unnecessary Services: Providing services that are not medically necessary.
Misrepresentation: Misrepresenting services or conditions to obtain payment.
Audits focused on abuse examine billing patterns, claims, and medical records to identify and address such practices. The goal is to recover improperly paid funds and deter future abuse.
Medicare Waste Audits
Medicare waste involves the overuse of services or other practices that result in unnecessary costs to the Healthplan program. Unlike fraud, waste is generally not intentional but results from inefficiencies. Examples include:
Inefficient Service Delivery: Providing services in a manner that leads to unnecessary expenses.
Excessive Testing: Ordering more diagnostic tests than medically necessary.
Duplicate Services: Providing services that have already been performed.
Waste audits analyze spending patterns, utilization data, and provider practices to identify and reduce unnecessary costs. These audits aim to promote more efficient use of Medicare resources.
A reviewer, during an abuse audit, is examining a patient’s medical records and comparing those to the associated billing. The purpose is to look for waste, overcharging, or fraud. These audits are usually initiated based on information provided by 3rd party auditors, employees or patients. They focus on intentional, wrongful or improper use or destruction of state resources, or seriously improper practice that does not involve prosecutable fraud. Abuse can include excessive or improper use of an employee's or official's position in a manner other than its rightful, legal use.
Record Review Audits (record keeping)
An auditor, during a record review audit, examines patients’ medical records for completeness. The focus is on identifying records that are incomplete rather than on their quality. The auditor is not trained or tasked to audit for waste or abuse. At most, they are looking for patterns that may constitute negligent behavior. While negligent (incomplete record keeping) is technically fraud, the intentions of the record keeper define whether or not any identified negligence is a matter for civil or criminal prosecution. The review auditor sends their findings to a more senior auditor authorized to manage the findings.
While mental health care record-keeping audits aim to improve the quality of care and ensure compliance, there can be several negative consequences associated with these audits:
Mental health care record-keeping audits, while essential for ensuring compliance, can have several negative consequences. One major issue is the increased administrative burden placed on mental health professionals. The audits require significant time and effort, potentially reducing the time available for patient care. This meticulous documentation can lead to overwhelming paperwork, contributing to stress and anxiety among staff. Financially, audits can be costly due to direct expenses, such as hiring external auditors, and indirect costs, like lost revenue from diverted staff time.
The process can also impact staff morale, causing stress and anxiety, and reducing job satisfaction, which may contribute to burnout. Furthermore, findings of non-compliance can result in financial penalties, legal actions, and damage to the practice’s reputation, affecting patient trust and referrals. The audit process can disrupt normal operations, leading to service interruptions and limited access to care. Continuous audits can lead to compliance fatigue, shifting the focus away from patient-centered care to meeting regulatory standards.
Additionally, the pressure to maintain extensive documentation may result in ethical dilemmas, such as compromising patient confidentiality, and defensive practices where clinicians over-document or over-treat to avoid potential issues. To mitigate these negative impacts, organizations can streamline documentation processes, provide training and support, allocate resources wisely, foster a positive culture, and strive to balance compliance with the goal of providing high-quality, patient-centered care. By addressing these challenges, mental health practices can minimize the adverse effects of record-keeping audits and use the process to enhance service quality and compliance.
Recovery Audit
A recovery audit, often referred to as a recovery audit contractor (RAC) audit, is a meticulous review of past financial transactions designed to identify and rectify overpayments, underpayments, and other inaccuracies. Commonly utilized by government programs such as Medicare and Medicaid, as well as private sector Healthplans, these audits play a crucial role in ensuring financial integrity and compliance. The primary goals of a recovery audit are to detect payment discrepancies, recover overpaid funds, ensure accurate reimbursement, verify compliance with laws and regulations, and prevent future errors by implementing corrective measures.
Large group practices
The process begins with sophisticated data analysis, where large volumes of claims and financial transactions are reviewed for anomalies. Specific claims are then examined in detail to verify their accuracy and adherence to billing rules. Engaging with healthcare providers or suppliers is a critical step to resolve discrepancies and facilitate the recovery of overpayments. Throughout the audit, detailed documentation and comprehensive reporting of findings are maintained, culminating in recommendations for process improvements to prevent future payment errors.
Financial Recovery
The benefits of a recovery audit are significant. Financial recovery of overpaid funds leads to substantial savings and better resource allocation. Ensuring compliance with regulatory and contractual requirements helps avoid legal penalties and enhances financial transaction accuracy. Additionally, audits provide valuable operational insights that enable organizations to refine their processes and prevent recurring mistakes.
Impact on Practice Resources
However, recovery audits also present challenges. They are resource-intensive, requiring considerable time, effort, and expertise, which can strain organizational capacities. Frequent or aggressive audits may strain relationships with providers and operational support services, potentially leading to resistance or disputes. Handling sensitive financial and patient data necessitates stringent security measures to protect against breaches. Moreover, conducting audits fairly and ethically is essential to maintaining trust and avoiding legal complications.
The recovery audit process involves several steps:
planning the audit's scope and objectives,
collecting relevant financial data,
analyzing the data to identify discrepancies,
validating these discrepancies through detailed reviews,
recovering overpayments, and
correcting underpayments.
The final steps include documenting findings, reporting on recovered funds, and implementing recommendations for process improvements. Follow-up actions are crucial to ensure the effectiveness of corrective measures and prevent future errors.
Overall, recovery audits help ensure financial accuracy, regulatory compliance, and the efficient use of resources, thereby contributing to the integrity and sustainability of financial systems.
Commercial Healthplan (Private Payor) Audits
Psychotherapists may find themselves subject to third-party payer audits by commercial insurers. These audits are similar to those conducted by the Center for Medicare and Medicaid (CMS). The audit process will vary depending on the third-party payer. As is the case with most Medicare and Medicaid audits, providers likely will receive an initial notice from the payor, which may or may not be the Healthplan itself, requesting copies of certain medical records. Or there may be notification from the payer of its intention to come onsite. In many cases where an onsite audit is conducted, the auditors will hold entrance and exit interviews with provider staff. Onsite reviews may also be conducted by obtaining access to the providers electronic health record system if that is within the scope of the Healthplan’s contract with the psychotherapist.
Healthplan Justification for Audits
Commercial health plan (private payor) audits are meticulous reviews conducted by private insurance companies to evaluate the accuracy and appropriateness of claims submitted by healthcare providers. These audits ensure that claims comply with insurer policies, contractual agreements, and regulatory requirements. The primary goals are to verify claim accuracy, detect fraud and abuse, ensure compliance, control costs, and improve the quality of care provided.
Type and Form of Audits
These audits come in various forms, including prepayment audits conducted before claims are paid, post-payment audits reviewing claims retrospectively, routine audits monitoring ongoing compliance, and targeted audits focusing on specific providers or claims exhibiting unusual patterns. However, while these audits are essential for maintaining financial integrity, they come with several negative effects.
Administrative Impact on Provider Practices
One significant consequence is the increased administrative burden on healthcare providers. The documentation requirements can lead to overwhelming paperwork, and the need to allocate significant time and resources for audit preparation can divert attention from patient care. Financially, providers may experience revenue loss due to recovery of overpayments and denial of claims. The costs associated with preparing for audits, including legal fees and administrative expenses, can also be substantial.
Impact of Practice Work-flow and Operations
Audits can disrupt normal operations, causing delays in claim processing and payment, and diverting staff from their primary duties. This strain extends to the relationship between healthcare providers and insurers, potentially leading to mistrust and conflict, and complicating future contract negotiations. The impact on patient care is another concern, as resources diverted to handle audits may limit service availability or delay care, and providers might practice defensive medicine, ordering unnecessary tests to avoid audit issues, which can affect both the quality and cost of care.
Legal and Ethical Consequences
Moreover, legal and ethical issues can arise from disputes over audit findings, leading to litigation and further straining resources and relationships. Handling sensitive patient data during audits also raises confidentiality and data security concerns, necessitating strict compliance with privacy regulations.
To mitigate these negative effects, healthcare providers can streamline documentation practices, prepare proactively for audits, foster positive relationships with insurers, educate staff on compliance procedures, and leverage technology to automate and streamline efforts. By addressing these challenges, providers can better navigate the complexities of commercial health plan audits, minimize their negative impacts, and maintain a focus on delivering high-quality patient care.
DISCLAIMER and PURPOSE: This discussion document is intended for training, educational, and or research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.
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