For Medical Providers: What To Do When You Receive an Audit Letter From a Health Insurance Company

“Audits”, or “post-payment audits” as many people call them, are increasingly being used by health insurance companies like UnitedHealth, the Blue Cross Blue Shield companies, Cigna, and Aetna. These tactics are also being employed by pharmacy benefits managers, like CVS Caremark and Express Scripts. These companies are paying claims in an automated fashion and then, long after payment is rendered, going back to target certain groups of claims for reversal.  By reversal we mean a deliberate attempt to change the decision from a paid claim to a denied claim.

What should a medical provider or pharmacy do when faced with a letter seeking medical records and and other information on claims that were previously paid? There are a few initial screening steps that are required before you can analyze what the legal landscape might be and what kind of help you may need in handling the audit.

First, you must determine: are the claims that are being audited relating to patients who are covered under the Medicaid or Medicare systems? If the answer is yes, then you should seek legal counsel that concentrate heavily in this area and are familiar with the laws and regulations that govern the payments made under those two government funded health payment systems.

If, however, the claims being audited relate to patients covered under a group plan where the group is a private or public employer or a group, such as a union, then an entirely different legal world comes into play.  And that world is the world of ERISA, the Employee Retirement Income Security Act of 1974. But why ERISA?  The answer is that this powerful law, and its regulations issued by the U.S. Department of Labor, cover all group health plans and group health insurance plans (self-insured or insured) in the entire country.

When the claims are governed by ERISA, there are a set of tools that an ERISA lawyer can use to resist the audit as an unlawful intrusion into the practice of a medical provider or pharmacy.  But before those tools are used, the next screening step needs to take place:  are you an in-network provider who signed a contract and agreed to abide by a health administrators’ manual, or are you out of network?  If you are in-network, then there are an entire set of ERISA legal arguments that should be considered as a defense to the audit.  These legal principles can make certain portions of the provider contract you signed or the large provider manual entirely void and deemed to be stricken, as unlawful under ERISA.

Once you know what type of claims are being subjected to an audit; i.e., what type of health plan covered the patient on whose behalf you were paid, then you can evaluate who is in the best position to advise you as to the audit.  If it is Medicaid or Medicare governed, then seek counsel from an expert attorney in that area of law.  If it is ERISA governed, then you need seasoned counsel who know how to use the ERISA law and its regulations to make the case that the audit is illegal and that paid claims cannot be reversed and denied more than 30 days after the claim was filed.

For more information on the ERISA health insurance practice of Quadrino Law Group, please read the What We Do section on our Home page and the other pages of this site, such as the Results page, showing success stories for our clients, all over the country.