5 Types of Insurance Reviews

If you’ve ever gotten a letter from a health insurance company and felt your blood pressure spike while you open it, you’re not alone. The fear of being audited can cause as much anxiety as having a suicidal client.  But just like a range in client risk, there is more or less risk involved with each type of audit.  In fact, some of these demand letters are not audits at all and do not risk a loss of income. But these insurance reviews are still time consuming and can be anxiety provoking.

Insurance Audits, Overpayments, and Targeted Probes

In this blog post I will talk about the 5 different reasons insurance companies can demand our mental health records. Three of them involve a potential loss of income.  Two of them do not.  The type of demand letter you get dictates what you submit (and usually the amount of anxiety involved). They are the following:

1. Risk Assessment Review
2. Targeted Probe and Educate Review (TPE)
3. Overpayment recoupment
4. Prepayment review
5. Post-payment review

Let’s start with the least threatening first. 

RISK ADJUSTMENT REVIEW

Don’t panic.  It has nothing to do with compliance or quality of your notes. It does not involve a claw back of the money the insurance company paid you.

All the insurance companies are trying to do is estimate how “sick” their members are and how much they are going to access services. This way the insurance company can estimate their costs.

Risk Adjustment Requests started with the Affordable Care Act. The ACA ended the ability for insurance companies to cap or limit how much they would spend on covering medical claims.  The ACA recognized that without caps, marketplace plans (not employer sponsored plans) would have members who require more services and therefore some companies would incur more cost than others.  To offset a heavy burden on some companies more than others, the ACA decided to require cost sharing between insurance companies. To determine how to allocate the money, Health and Human Services requires a Risk Assessment to estimate their expenses.  This allows allocation of funds between companies.   There are critiques of how the Risk Adjustment Requests are made and used but they are an attempt to spread the “burden.”  So, completing a Risk Assessment, though annoying, is helpful. 

There are no negative consequences to a Risk Adjustment Review.

You don’t need to send your entire record. A written review of a few sentences will usually be enough. The information they want is the diagnosis, frequency of sessions, length of sessions (90834 / 90837), symptoms, goals, treatment used, response to treatment or progress, and prognosis. It’s similar to a treatment plan.

YOU CAN WRITE A SUMMARY OF TREATMENT.  If you want a form for more guidance on what to write, click here.  They will stop sending you letters when you send the information.

TARGETED PROBE AND EDUCATION REVIEW (TPE)

According to the Center for Medicare Medicaid Services (CMS) a TPE is “designed to help providers and suppliers reduce claim denials and appeals through one-on-one help. The goal: to help you quickly improve. Medicare Administrative Contractors (MACs) work with you (in person or by teleconference) to identify errors and help you correct them.”

What Triggers a TPE

• providers and suppliers who have high claim error rates or unusual billing practices, and
• items and services that have high national error rates and are a financial risk to Medicare.

Providers whose claims are compliant with Medicare policy won’t be chosen for TPE.

Common Claim Errors

1. Signature of provider is missing.
2. Documentation does not meet medical necessity.
3. The note did not support all elements of eligibility.
4. Missing or incomplete initial certifications or recertifications (treatment plans).

How a TPE Works

You get 3 rounds of reviews to pass a TPE. After the first two rounds, you’re given corrections to use to resubmit.

• If chosen for a TPE, you’ll receive a letter from your Medicare Administrative Contractor.
• The review involves a review of 20 – 40 claims and supporting medical records like the Diagnostic Assessment and Treatment Plan.
• If you pass the first time, you will not be reviewed again for at least 1 year. (Sorry I can’t say that the review will never happen again.)
• If some claims are denied, you’ll be sent a letter with the reasons why and invited to a one-on-one education session. (I’ve heard these sessions are actually helpful!)
• You will be given 45 days to make changes and resubmit your claims.
• If you do not pass this second time, you repeat the process.
• If you do not pass the third time, you may be put on a Prepayment Review, which is described below under Prepayment Review.
• Most providers find they improve and do not have to be placed on a Prepayment Review.

OVERPAYMENT RECOUPMENT

This is not an audit, but it involves a loss of income. So, if you get one of these letters, pay attention!  It means the insurance company learned that they paid you when they believe they shouldn’t have.  This usually happens when the client changes insurance companies but does not tell you.  So, you’re sending claims to the wrong company!  (This is why it’s important to check the client’s insurance every year.)  The insurance company will demand a full refund. If you don’t pay it, they will deduct payment from future claims.  An overpayment demand can happen for active clients and even ones you no longer see.  Pay attention to the dates of service in question.  Depending on the statute of limitations in your state, it may be possible to appeal and win an Overpayment Recoupment, like I did.

PREPAYMENT REVIEW

A Prepayment Review is an audit. The insurance company wants to check your notes for medical necessity before they pay the claim.  These types of audits are happening more and more often in general and are also a result of a failed Targeted Probe and Education Review.  The audit is usually for a few notes from one client but could involve notes from multiple clients.  If your notes do not show medical necessity, they can refuse to pay.  Some insurance companies give you the chance to amend your notes and submit them with corrections. You will get paid after your note passes the review. 

POST-PAYMENT REVIEW

This is the nastiest of audits and what can be described as giving psychotherapists the worst case of “documentation anxiety.”  

According to CMS, a post-payment insurance audit is a review of treatment that “is meant to root out fraud, abuse, and waste in the health care system.”

It is a review of claims that can result in a significant recoupment or claw back of payments.  It’s conducted without notice and often with a two- to six-week deadline. 

What to do when you receive an audit letter.

• Do not toss the letter in the trash even though you want to. Though you may ultimately decide that dealing with the audit is not worth your time, not responding will guarantee you owe the insurance company money.
• Do not be afraid to request an extension. Write a letter citing special circumstances. Given that you didn’t plan your life to respond to an audit, it’s likely you have at least one good reason as to why you need an extension: a vacation, the holidays, caring for an ill family member, illness, and surgery are some of them.

For a full description of a Post-payment Review, check out: How to Survive an Insurance Audit.

Unfortunately, it seems that when the new mental health parity laws kicked into effect February 10, 2021, it had an unexpected consequence. Insurance audits jumped. So, the new parity law is experienced as (and not without merit) a way to limit services to clients and deny payment to providers to keep healthcare costs down.

Prepayment and Post-payment Audits are happening more often.

• In Feb. 2021, the parity laws got reinforced by congress.
• Parity in mental health describes the equal treatment of mental health conditions and substance use disorders in insurance plans. Meaning – insurance plans must give equal treatment of mental health and substance abuse as they do for medical conditions. It cannot be more restrictive than for medical conditions.
• When the government reinforced parity laws, insurance plans started to do more audits.

Passing a Pre- or Post-Payment Review means fulfilling the same requirements described in passing the Targeted Probe and Education Review above. Even out-of-network providers can be audited if the insurance company is involved in paying your bill.

Being audited in any way may always raise your blood pressure but being prepared can help keep it from skyrocketing.  If you’re confident about your documentation, then submit and wait for a determination.  If you’d rather clean the bathroom than write your notes, read this blog.

 If you’re not confident about how to translate your clinical skill and intuition into an insurance friendly review of treatment, you may want to take Documentation Wizard’s online training or seek consultation with a documentation expert.