HEALTH LAW SUPPLEMENT Summer 2005

Records and Oxford. Oxford Health Plans recently issued record-keeping guidelines for its participating mental health providers. The plan for such guidelines originated in a settlement agreement from 2002 when Oxford initiated many audits of mental health professionals that resulted in findings by the company that records were inadequate to document service. (Oxford demanded reimbursement from providers based on these “findings” but then agreed to drop the financial demands, largely due to a lack of generally accepted extant standards for mental health records.) This firm was one of several involved with the audits, the settlement of which eventually involved the New York State and American Psychological and Psychiatric Associations.
Oxford now requires of its participating providers that progress notes of a psychotherapy session include: patient name, clinician name, date of service, diagnosis, CPT code, participants, brief summary of focus, and for psychiatrists a description of medication evaluation and management. The “brief summary of focus” should include in general terms the topics discussed and therapeutic interventions.
If clinicians wish, they may maintain separate additional records with more information (“process notes,” known under HIPAA as “psychotherapy notes”). But only progress notes will be required in an audit. Oxford is the first private insurer to enunciate standards for record-keeping for mental health care, but it’s likely that other insurers will now follow suit. It may even be the case that Oxford’s guidelines will become part of the “standard of care” expected of psychotherapists, at least as far as adequacy of records for reimbursement by insurers is concerned, because they were developed in collaboration with professional associations.

Records and managed care insurance company audits. We are currently defending several psychotherapists from demands by managed care insurers, some in lawsuits and some in negotiations, for a refund of monies previously paid to the participating therapist by the insurer. The demands typically follow audits of the complete records of several patients of the therapist. Sometimes the audits are random, and other times they are initiated after a patient complains to the company that he or she didn’t see the therapist on a date that an EOB lists as a date of service. It appears to us, based on the number of our clients dealing with this situation, that such audits and demands, particularly of the random type, are becoming more common.
Fraudulent billing by psychotherapists is quite unusual in our experience, at least by our clients. Upon audit, the insurers often do find that either on claims forms submitted or in notes maintained by the therapists, sessions were misdated, mis-coded or undocumented. They consider such errors – which they acknowledge to be inadvertent – to be a breach of their contract with the participating provider, which generally require that providers be able to accurately document all billed services upon request by the company.
Sometimes the companies demand refunds only for sessions where an error was made. For example, a common error is that the actual date of service was a day or two before the date on the progress note, presumably because the therapist wrote the note after the day of the session and inadvertently wrote the date the note was recorded rather than the date of service in his or her records. This is bad enough, to be penalized for a clerical error by not being paid for a service actually rendered. Demand of this type may range from a few hundred to a few thousand dollars.
But based on their findings, some companies “extrapolate” damages, and demand the refund of large sums. For instance, if the insurer finds an error rate of 15%, they may demand reimbursement of 15% of all payments they have made to the practitioner over the past 6 years (the statute of limitations for breach of contract and also in New York State the required retention period for records.) Demands of this type may range from tens of thousands of dollars to several hundred thousand dollars, for large practices.
All this is to point out the importance of maintaining accurate records and billing accurately, most particularly if you are a participating provider on managed care companies where the extensive contract that you sign periodically (and may not read) requires you to do so. If you do not participate on managed care panels, do not accept assignment from private insurers and only bill and accept payment directly from patients, then you cannot be subjected to insurance company audits by private insurers. (N.B. If you treat Medicare or Medicaid patients, then you are subject to audit by governmental agencies whose demands may be similar to those of private insurers if records are lacking, but we have seen no upsurge in these audits.)

Records and professional disciplinary (licensing board) actions. We have defended before licensing boards (and are now currently defending) psychotherapists who have been accused of outrageous patient abuse by very severely disturbed patients. The allegations may involve sexual misconduct, other boundary violations, drug-taking, cursing and the like.
When the therapist has a complete record (a full intake and progress notes for each session) documenting the patient’s level of disturbance and the possible precursors and motivation for the false allegations (and also preferably documentation of consultation with a colleague), then usually we are able to have the complaint dismissed at an early stage without the necessity of a lengthy, costly and emotionally wrenching hearing. It’s clear enough to the investigator, reviewing board member (a member of the same profession) and prosecuting attorney either that the misconduct didn’t occur or can’t be proven with the requisite standard of proof (a preponderance of the evidence), or both.
But when a record is lacking or inadequate, then there is the risk that, no matter how wildly improbable the allegations may be, prosecutors will view it as a “he said – she said” matter, where prosecutorial discretion is limited and the “question of fact” must be presented to a hearing panel to decide. Hearing panels usually are able to divine truth, but sometimes they are not and for that reason, the uncertainty is nerve-wracking.

Corporate practice further defined: New York’s highest court ruled in March that healthcare practices that are constructively controlled by non-practitioners, i.e., business persons, may be denied reimbursement for legitimately rendered no-fault services solely on the basis of their violation of the prohibition on the “corporate practice of medicine.” This prohibition is nowhere denoted as such, but rather weaves throughout various State laws, regulations and cases, for example in the ban on fee-splitting. While the Court’s holding may be peculiar to no-fault cases, it should nevertheless cause healthcare practices that contract with management companies to review those agreements to ensure that they don’t have provisions that the Court indicated it viewed as a giving up of control to the management company. State Farm Mutual Automobile Insurance Co. v. Mallela, March 29, 2005.

Advance care directives, another reminder: As did most attorneys, we received some calls asking about advance care directives following the publicity of the Schiavo case. The importance of these, which in New York State include a Living Will and Healthcare Proxy, can’t be stressed enough. For information, either to prepare you own documents or prior to consultation with an attorney, go to the American Bar Association’s free workbook, “Tool Kit for Health Care Advance Planning,” at www.abanet.org/aging/toolkit/home.

INFORMATION IN THIS NEWSLETTER IS NOT LEGAL ADVICE FOR ANY PARTICULAR CLIENT OR SITUATION. CONSULT WITH AN ATTORNEY INDIVIDUALLY FOR LEGAL ADVICE REGARDING YOUR CIRCUMSTANCES.

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