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Protest Over Audit Spurs Insurer To Define Standards

Protest Over Audit Spurs Insurer To Define Standards

Oxford Health Plans set off a firestorm of protest last year after demanding hundreds of thousands of dollars in repayments from psychiatrists, psychologists and social workers in the New York City area, all based on an audit of clinical records that used an unspecified documentation standard and extrapolated audit records to cover claims from 1997 to 2002.

Both the American Psychiatric Association and the New York State Psychiatric Association (NYSPA) protested the audit, arguing that Oxford provided no written documentation standards, used a questionable method of extrapolation and ran afoul of patient confidentiality laws. Last November, Oxford backed down and dropped the audit, agreeing to return all patient records and any settlement money it had already received. It also arranged to begin meetings with the APA, NYSPA, the New York Society of Clinical Social Work and eventually the New York State Psychological Association to develop acceptable documentation standards.

"Rather than continue to pursue repayment of claims," the insurer said in a Nov. 25, 2003, statement, "Oxford determined that partnership with major behavioral health organizations to develop and adopt clear, consistent standards for all behavioral health providers å was in the best interest of the company, its providers and its members."

The discussions, which were set to begin at the end of January, will include the use of extrapolation and the qualifications of reviewers involved in documentation audits. The aggressive nature and scope of the Oxford audit set it apart from other retrospective audits, Irvin L. "Sam" Muszynski, J.D., director of the APA's Office of Healthcare Systems and Financing, told Psychiatric Times.

One of the reasons APA put pressure on Oxford was so that insurers would not think they had carte blanche toinappropriately target psychiatrists, Muszynski said.

Prior to managed care, retrospective review was the law of the land, but under managed care, psychiatrists are subjected to prospective forms of review, such as pre-authorization. "I think it's a little unreasonable that you go through a bunch of hoops up front and now they're still going to come back at the end and take it away," he said. "It's just another form of third-party management."

Oxford's lack of written guidelines for documentation was the most egregious aspect of the audit, Muszynski said. And that is often the case in these kinds of situations.

Oxford is one of the largest insurers in the tristate region of Connecticut, New York and New Jersey, with 1.5 million members. Its network of psychiatrists, psychologists and social workers totals about 5,000; of those, Oxford selected 300 providers for auditing, 100 from each profession.

Although Oxford's medical director said the audit was triggered by irregularities in documentation, it appeared to focus on individuals who had significant levels of participation with the managed care company, NYSPA's executive director and general counsel Seth P. Stein, J.D., told PT. Audits for the individuals he represented as general counsel had more to do with the level of participation, the number of patients treated and the level of billing, he said.

Demands for repayment that Stein saw ranged from $25,000 to $150,000.

In a letter to the APA, NYSPA president Barry P. Perlman, M.D., wrote, "This issue is critical to our members, to APA members in the tri-state region and APA members across the country who may have to respond to similar audits by managed care companies and potential demands for substantial repayments."

Stein said that to his knowledge, the Oxford audit was the first managed care audit to focus exclusively on psychiatrists and other mental health care providers. Further, because the care had been pre-approved, the audit was strictly a documentation review, and that in itself was somewhat unusual.

Many doctors who were targeted for the audits have since dropped out of Oxford's network, he said.

Interest in Extrapolation

The irony is that just as the new Medicare drug benefit law severely restricts the use of extrapolation, the private sector has grown increasingly interested in it. Stein said, "It seems like the private sector is going in an opposite direction from the federal government."

Under the new Medicare law, which President Bush signed last December, the program's fiscal intermediaries are permitted to use extrapolation only for cases in which serious misconduct appears to have occurred, Stein said. The Oxford audit, on the other hand, focused on whether records were acceptable and was not prompted by allegations of impropriety or improper billing.

The audit's use of extrapolation raised two areas of concern, he said. Should extrapolation be permitted even if it is not included in the provider contract or manual, and will an extrapolation be performed in a statistically valid fashion?

In one case, noted by the New York State Psychological Association, 93% of a provider's notes were found to be adequate, "even according to these odd and elusive criteria," the association said. But Oxford still demanded repayment of 7% of the psychologist's fees over several years, for a total of about $10,000.

The Medical Society of the State of New York and NYSPA have gone to the New York State Insurance Department with their concerns about the use of extrapolation by insurance carriers and have urged that standards be developed so that if extrapolation is used, it is conducted in a manner that is statistically valid, Stein said.

Ultimately, NYSPA believes that extrapolation has to be addressed in the provider contract, but almost no carrier or third-party payer has the use of extrapolation as a part of their provider contract or provider manual. He said, "Imposing extrapolation has to be agreed upon in advance. It can't be something that's imposed without a contractual basis."

Variability in Standards

Stein reviewed the records of eight or nine psychiatrists whom Oxford had targeted and found great variability from doctor to doctor in terms of the standards that were used to review the records. "That's one of the reasons I think Oxford is interested in talking to the professions about documentation standards," he said. "Because even within their own protocols, there was significant variability."

The varying standards could even be found within a single doctor's records. Stein explained, "Records that were found to be fine were little different than records that were disallowed."

In the Oxford audit, two significant areas of disallowances were identified by NYSPA that did not conform to standard psychiatric practices. They involved documentation for medication management and the length of session notes. In some cases, the two issues accounted for two-thirds or more of the total disallowances for an individual, Stein said.

Oxford determined that psychiatrists should have documented medication management in every note. But the APA responded otherwise. In a Sept. 15, 2003, letter to NYSPA, Muszynski and APA medical director James H. Scully Jr., M.D., referred to the APA's "Psychotherapy with Medical Evaluation and Management" resource document, which states, "Medical evaluation and management are intrinsic to all psychotherapy conducted by a psychiatrist."


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