Expect Harsh, Intensive Scrutiny If Your Medicare Claims Are Audited

By Paula E. Hartman-Stein, Ph.D.
November 1, 1999 - Last updated: May 31, 2011

Operation Restore Trust, the anti-fraud and abuse program operated by the Office of the Inspector General, has placed psychologists are under harsh scrutiny, contending it is warranted by a history of Medicare claims that contained billing errors.

The information emanates from James Georgoulakis, Ph.D., who is APA representative to the Health Care Finance Administration’s (HCFA) Relative Update Committee.

“Psychologists and psychiatrists will not only continue to be audited but will be subjected to even greater scrutiny,” according to Georgoulakis. The type and focus of the audits vary from region to region because the Medicare carriers have discretion in mental health reimbursement policy. HCFA is mandating that all carriers insure that the Medicare system not be exposed to fraud and abuse by providers.

Beginning Oct. 1, HCFA reports it will intensify its review of partial hospitalization claim forms. Georgoulakis said that the Office of Inspector General reviewed a sample of programs in five states (Florida, Texas, Colorado, Pennsylvania, and Alabama) and found that over 90% of Community Mental Health Center partial hospitalization claims contained billing errors which violated Medicare rules. HCFA described the findings as an “emergency situation” and stated that providers in these five states posed a significant risk to the integrity of the Medicare program.

The types of mental health audits currently under way across the country range from pre-payment denials pending documentation that demonstrates medical necessity to post-payment audits in which the provider must often return large sums based on estimates of overpayment. One audit process, known as Focused Medical Review, analyzes statistical data compiled from processed claims and compares the utilization patterns of individual practitioners with regional trends.

In recipient-centered audits, frequently conducted on patients in nursing homes, an individual client’s entire chart may be reviewed for the necessity of all services provided under Part B, Medicare. In such cases the mental health provider’s records are only one piece of the entire review.

Alice Randolph, Ph.D., chair of the Ohio Psychology Association’s State and Federal Committee said that sweeping audits’ of psychology services are currently underway in Ohio. The clinical areas targeted appear to be psychotherapy services administered to patients with dementia diagnoses, psychotherapy services billed to hospital in-patients, and neuropsychology services provided to patients in any setting.

Randolph said she has chaired meetings with the representatives from the local carrier for three years, and the outcomes of these meetings have been productive. “However, in the current milieu the provider is seen as such a scapegoat,” she said. Her committee has asked for specific reasons for every service that has been denied. Randolph believes that the carriers “need to be accountable to a decision-making process that is congruent with stated public policy.” Randolph says that even though there is an appeals process open to psychologists who are denied payment or who are mandated to return money, she fears that the process will discourage conscientious, competent psychologists from providing care to frail older adults. Randolph explained: “Very few psychologists will risk this exposure in the future, with an extremely widespread negative consequence to the consumer.”

Robert Rome, Ph.D. the California Psychology Association representative for Medicare, has similar concerns. Practitioners who attempt to provide services to patients with developmental disabilities or chronic mental illness may be denied payment without providing extensive documentation as to the need for treatment, he said, with the net result that “appropriate care is not always provided.” He criticized the carriers for not providing clearcut guidelines for what is deemed appropriate treatment, noting that this may be an opportunity for psychologists to determine what are “best practices” in older adult care. Georgoulakis believes that HCFA will not dictate the scope of clinical practice. He said that practice standards are internal professional issues that will be left to each individual carrier to enforce.

Joe Casciani, Ph.D. a LaJolla California psychologist who operates a large multi-state nursing home practice, acknowledges that psychologists must demonstrate how their services benefit the dementing patient. “The onus is on us to prove that the patient is still capable of participating and benefiting from treatment,” said Casciani. “I think our profession has a long way to go to show how and why these services will help dementing patients, since the presumption from the medical community and consumers is that we can’t.

Results of past Medicare audits point to the fact that psychologists are much be better informed about how to properly document their work. Question: are much better informed than who? Georgoulakis says that most clinicians do a reasonably good job of communicating diagnosis and procedures to other professionals, but documenting for billing purposes is different since most billing reviews are not done by mental health professionals.

Randolph urges psychologists to read HCFA’s policies that are sent to practitioners in newsletters from the carriers. One example she cited is the need to demonstrate treatment goals and progress of individual clients when conducting group therapy, so that the clinical service can be distinguished from socialization groups, a service not covered under Medicare.

Why audits are conducted?

According to Georgoulakis, common triggers for audits include the following: use of a code that provides a higher reimbursement rate when documentation supports a lower level of code; use of the same time for testing across all patients, showing a high percentage of the same code (e.g., only billing for initial evaluations); excessive visits to nursing home patients; outpatient billing within 72 hours of hospital discharge; and excessive testing hours on a single day.

Another red flag is when the procedure code and the diagnosis do not match. For example, if psychological testing is conducted and the resulting diagnosis is a neurological one, the clinician should list a diagnosis from the International Classification of Diseases, Ninth edition, Clinical Modification (ICD-9-CM). Similarly the procedure code in this case should reflect neuropsychological testing (either CPT codes 96115 or 96117) rather than the testing code 96100, that should be used with psychiatric diagnoses.

In documenting clinical services the record must be complete and legible with a reason for the services clearly listed. The assessment, impression, and diagnosis as well as plan of care must be stated clearly along with progress made as a result of treatment.

Audits are arduous, time-consuming

According to a reliable, anonymous source whose practice has been subjected to several audits, the review process can be arduous and time-consuming, but the auditors were reasonable and cooperative. Treating the auditors respectfully and giving full cooperation was essential for a good outcome. Randolph said that some psychologists have not kept separate charts on their nursing home patients, relying on the facilities to keep the records available. This has been problematic when audits can request information on patient services delivered up to five years ago.

The worst case scenario is that an audit demonstrates fraudulent practice. A provider in any healthcare benefit program is subject under the federal sentencing guidelines to both civil and criminal prosecution. The psychologist can then receive not only a civil fine but also jail time, according to Georgoulakis.

Paula Hartman-Stein, Ph.D. is a clinical psychologist and consultant at the Center for Healthy Aging in Akron, Ohio. She edited Innovative Behavioral Healthcare for Older Adults: A Guidebook for Changing Times (1998). She can be reached through the Internet at www.centerforhealthyaging.com.

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