Managed Care Contract Negotiations
Dec 09

Tips to ensure that payers’ audits are fair and equitable

Payers may insist upon the right to audit providers’ books and records in a number of contexts and for various reasons. Also, keep in mind that payers frequently retain contracted auditors who are paid on a contingency basis and thus have a strong economic incentive to find errors. To prevent them from doing so, make sure you do the following:

  • Address requests for medical records. Payers’ requests for medical records to support a pending claim are routine and difficult to protest. Remember however, that both the provider and the payer are covered entities under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and, as such, are bound by the HIPAA rule that any disclosure of protected health information be limited to the minimum necessary to accomplish the purposes of a proper request.
  • Spell out specifics in your contract. Your contract should specify to some degree precise situations in which they reasonably anticipate requiring record and data access. For example, if your compensation schedule is case-based and provides for outliers, or if you are allowed additional reimbursement based on stop-loss provisions, expect the payer to request to audit your invoices.
  • Address the auditor’s obligations to the provider. Pay careful attention to the auditor's obligation—or lack thereof—to report discrepancies in favor of the provider as well as the payer. Even though the payer selects the files it wishes to audit, there is no reason why the auditor, while engaging in an item-by-item review, cannot just as easily discern errors in favor of the provider. (This is especially important when the auditor is being paid based on a contingency of errors reported in favor of the payer.)
About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →