National Psychologist May/June 2011

Medicare audits and reviews on the rise

The National Psychologist (May/June 2011), Vol. 20, No. 3, P. 5

By Paula E. Hartman-Stein, Ph.D.

          While state and federal legislators debate ways to trim budgets, the Obama administration has already put into effect probes that screen for billing and coding errors for clinical services, presumably for the purpose of reducing healthcare costs for unnecessary services.

          James Georgoulakis, Ph.D., health care attorney, psychologist and APA’s representative to the American Medical Association’s (AMA) Relative Update Committee (RUC), recently spoke to The National Psychologist.

   Q: Is the likelihood of an audit of a psychologist’s records greater in 2011 than in previous years?

   A:  “Yes, state, federal and commercial payers are conducting greater numbers of audits than in prior years.”

  Q: Is it less likely to be audited if a psychologist does not participate in the Medicare or Medicaid programs?

  A: “No, today almost all the commercial payers have either contracted with an organization to conduct audits or have their own internal audit departments.”

   Q: What is the major reason that a psychologist would be subject to an audit?

   A: “All payers produce ‘profiles’ on healthcare providers that track a number of factors such as type of patient seen, e.g. gender, diagnosis, number of sessions etc.  These profiles are then compared to a composite profile. If a psychologist’s profile is different from most of the providers in a given region, then that clinician will most likely receive some type of notification from the payer. An example is whether the psychologist’s patients require more sessions of treatment than most in that region. Also, new fraud detection software used by the Centers for Medicare and Medicaid (CMS) can compare providers from all sections of the country.”

  Q: When there is a change in Medicare intermediaries for a region of the country, is it likely that the new company will increase the number of audits of patient claims?

   A: “While it is not a written requirement, you can be assured that a new intermediary will begin more reviews. Many do this to obtain baseline data.”

   Q: Does the length of time a clinician has been practicing impact the likelihood of being audited?

   A:  “No, the length of time that someone has been practicing does not provide a safeguard from audits. In fact, most of my experience with audits has involved psychologists with more than 20 years of practice. I think the principal reason is that while the psychologists have kept up with clinical practice guidelines, they may have not done the same with documentation regulations.”

   Q: Should a clinician comply with a request for records before hiring an attorney?

  A: “This is a great question because so many psychologists believe they are protected by HIPAA regulations. In the Medicare statutes there is a provision indicating a contractual relationship between Medicare and the clinician. Therefore, an audit is viewed as a sharing of records. Attorneys may be helpful as long as they are experienced in health law.”

  Q: Do you recommend the clinician document start and stop times in psychotherapy and psychological testing?

   A: “Yes, there are a number of reasons why it is in the provider’s best interest to document start and stop times even for psychological testing. It provides support for billing. I have never seen as many audits for psychological testing as I am seeing recently.”

   Q: Do you also recommend documenting start and stop times for the diagnostic interview examination?

   A: “While it is true that there are no time requirements for diagnostic interviews, CMS does have times for the codes based on survey data from the mental health specialties, so it would be in the psychologist’s best interest to document start and stop times.”

   Q: How can psychologists determine what should be included in therapy notes?

   A: “All Medicare carriers (payers) have the authority to develop policies regarding the payment for services. Although Medicare is a federal program and the benefits must be the same across the country, the payment policies for those payments can be different. So local carriers through their Local Coverage Determination (LCDs) policies and Local Medical Review Policies (LMRPs) can have different rules regarding what is required for payment. Also, be careful not to mix different agencies. For example, the Veterans Affairs policy on documentation is different from CMS documentation policies.”

  Q: Are audits, probes and reviews different terms for the same thing?

  A:  “No, audits, probes and reviews are all different. The reviews are conducted by different contractors. One contractor that a psychologist should be extremely wary of is a probe by the Medicare Zone Integrity Program Contractors (ZIPCs). If a provider receives a letter from a ZPIC, you can be sure that the ZPIC has already invested resources in reviewing that clinician’s profile. Additionally, they are the only contractors that are capable of going directly to the Department of Justice.”

   Q: Are there any issues that would place a psychologist at great risk?

   A: “The use of the extended psychotherapy codes 90808, 90814, and 90821 will most certainly result in at least an internal review.”

   Q: Are psychologists under greater scrutiny than other providers?

   A: “Mental health providers in general are in the top 10 of providers who are reviewed, along with podiatrists, chiropractors and physical and occupational therapists.”

   Q: Are psychologists working in nursing homes or assisted living settings more likely to be audited than those in out-patient settings?

   A: “Yes, psychologists who provide services in nursing homes are subject to the highest level of scrutiny.”

   Q: Does participation in the Physicians’ Quality Reporting System (PQRS) help in the case of an audit?

   A: “Yes, it will strengthen the position of the provider in the event of an audit.”

   Q: What is the most important thing clinicians can do to ensure that their records will be acceptable in the event of an audit?

   A: “Make sure records meet the criteria of Medical Necessity. There are two acceptable definitions; one is written by the AMA and the other by CMS. The CMS definition is: ‘Services or items that are reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the malfunctioning of a malformed body part.’ In general, when a patient reaches a point where further improvement does not appear to be indicated or there is little expectation of improvement, the services are no longer considered reasonable or necessary. The concept of medical necessity includes a complex interaction of diagnosis, treatment and policy.”

   Q: What is the percentage of audits that result in fines or criminal charges?

   A: “I don’t know the specific percentages, but if criminal charges are brought, it is rare that the government does not win a conviction. On the administrative side, if the psychologist has good records, good representation and can withstand the stress of the appeal process, he can often be successful at the administrative law judge level. This is where the psychologist has the best chance of overturning an unfavorable decision.”

    Paula E. Hartman-Stein, Ph.D., is a clinical geropsychologist and consultant at the Center for Healthy Aging in Kent, Ohio. She served on two work groups for quality measure development for psychologists. She offers consultations on how to implement PQRS. She can be reached through e-mail at