Understanding Prepayment Audit Reviews
By: Mathew J. Levy, Esq.    
Stacey Lipitz Marder, Esq.
Weiss Zarett Brofman Sonnenklar & Levy, PC 


The unfortunate reality is that the cost of running a chiropractic practice is increasing while reimbursement from third party payers is decreasing.  In order to survive, it is crucial that chiropractors get paid for the services rendered to their patients in a timely manner.  In today’s climate, insurance companies are engaging in several tactics in order to make it more difficult for chiropractors to receive proper reimbursement.  In addition to overpayment demands , insurance carriers are delaying and making it more difficult for chiropractors to get paid through prepayment audits.  Being placed on prepayment audit review is extremely frustrating for a chiropractor, and can ultimately have a devastating impact on the operation of a practice.  We have outlined a few key concepts that every chiropractor should understand in order to avoid and be removed from a prepayment audit if applicable.

What is prepayment audit review?
When a chiropractor has been placed on prepayment audit review, each time the chiropractor submits a claim, the claim is denied by the insurance carrier and there is a request that the chiropractor submit a copy of his/her medical records in order to support the claim .  Once the insurance carrier receives the medical records, the records are reviewed in order to determine whether the claim should ultimately be paid or not.  Even if the claim is eventually paid, payment would not be made until approximately 90-120 days after the claim is submitted, as opposed to 30 or 45 days in the event the chiropractor was not on prepayment review.  This process can be very costly for a chiropractor -  in addition to the chiropractor’s staff spending countless hours preparing the medical records to be submitted to the insurance carrier, the delay in payment can have a significant impact on cash flow as many chiropractors rely on reimbursement from insurance carriers in order to pay their employees and run their practices.  

How does this happen:
Insurance carriers, including Medicare, are investing heavily in billing software programs.  These sophisticated billing software programs are able to compare a chiropractor’s billing habits with those of his/her peers in the same geographic location.  To the extent that a chiropractor’s billing pattern differs from the insurance carrier’s predetermined norms, the insurance carrier may place the chiropractor on prepayment audit review so that the carrier can justify payment based upon a review of the medical records. 

How to be removed from prepayment audit review:
In order to ensure removal from prepayment audit review, it is imperative that the chiropractor have his/her medical records reviewed and analyzed so that it can be determined whether the chiropractor’s documentation supports the code submitted.  In the event that a chiropractor’s documentation does not justify the codes submitted, the chiropractor must rectify such billing deficiencies going forward.  Once the records have been reviewed, the chiropractor’s healthcare team, including attorneys and coding experts, will contact and negotiate with the insurance carrier.   In order to be removed form prepayment audit review, the chiropractor must be in compliance with the insurance carrier’s requirements regarding coding and documentation.  If a chiropractor is placed on prepayment audit review, it is recommended that the chiropractor begin the removal process immediately in order to avoid being placed on prepayment audit review by other carriers.  Since the insurance carriers often enter into arrangements with third party contractors (who have relationships with the other carriers) to review records, if a chiropractor is on one carrier’s radar, there is a good chance that the chiropractor will be hit with multiple audits from other carriers. 

How to avoid being placed on prepayment review:
Chiropractors must recognize that today’s billing and coding systems dictate the need for specialized assistance.  As such, chiropractors must ensure that their current billing practices are in compliance with the carrier’s policies, and that their documentation adequately supports their billing claims.  From simple pre-printed forms, through digital transcription to an electronic medical record, ample resources exist that can document the level of services rendered, confirm the medical necessity for those services and bar prepayment audit reviews. Furthermore, an annual review conducted by a certified coder can provide valuable insight into what areas are currently under scrutiny, what trends are developing with one’s peers and/or what can be done to keep the practice in the mainstream. Advice from any billing resource should be provided verbally (any written reports could be discoverable in any future proceedings) and should be provided directly to the chiropractors involved.  Chiropractors who are willing to recognize that billing and coding in today’s healthcare environment is very complex, and who obtain ongoing advice from specialists, will have taken an enormous first step in avoiding coming under review and the potentially devastating impact of a prepayment audit review.

Being placed on prepayment audit review can be very frustrating for a chiropractor since payments are delayed and there are additional administrative burdens placed on the chiropractor’s staff.  To that end, in the event that a chiropractor is placed on prepayment audit review, it is in the best interest of the chiropractor to retain a team of professionals specializing in health care – attorneys and coding experts– to ensure that the claims submitted to the insurance carriers are substantiated by the documentation in the medical records and that the chiropractor’s billing is in compliance with the insurance carrier’s guidelines.  Although it can be a trying process which may take several months to resolve, resolution does not have to be expensive for chiropractors.  Chiropractors must recognize that there is hope and that there is light at the end of the tunnel with respect to prepayment audit reviews.  

About the Authors:
Mathew J. Levy, Esq. is a Principal of Weiss Zarett Brofman Sonnenklar & Levy, PC. Mr. Levy is nationally recognized as having extensive experience representing healthcare clients in transactional and regulatory matters. Mr. Levy has particular expertise in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, criminal law, healthcare fraud & billing fraud, insurance carrier audits, litigation & arbitration, and asset protection-estate planning.  

You can reach Mathew Levy at 516-627-7000 or mlevy@weisszarett.com.

Stacey Lipitz Marder is an associate at Weiss Zarett Brofman Sonnenklar & Levy, PC with experience representing chiropractors in connection with transactional and regulatory matters including the formation and structure of business entities, negotiating and drafting contracts and commercial real estate leases, stock and asset acquisitions and general corporate counseling.  Ms. Marder also has experience advising healthcare clients on a wide range of regulatory issues including Stark, the Anti-Kickback Statute, fraud and abuse regulations, HIPAA, reimbursement and licensing matters. 

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