The Post-Payment Audit
You own a four-clinician group practice; roughly 60% of revenue comes from Medicaid managed care and Medicare. A payer sends a post-payment audit notice requesting records for 25 claims from the last 18 months. Reviewing charts before responding, you find: nine claims billed 90837 (psychotherapy, 60 minutes) where the note documents 45–50 minutes; four group sessions billed with eight attendees where the sign-in sheet shows three; three intakes billed under a clinician with a provisional license and no supervision note on file; two telehealth claims for a client who had moved to another state; and several notes with identical language repeated across different dates. The audit response is due in 21 days. One clinician asks whether she should 'tighten up' the old notes before you send them.
1. What is your immediate response to the audit notice and to the clinician's question?
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Answer the clinician first and unambiguously: no. Altering a record after an audit notice is received is a serious integrity and legal problem. Amend only through a dated, signed addendum that preserves the original entry and states what is being corrected and why; never overwrite or backfill. A chart that reads as contemporaneous but was written after the audit request is worse than the original error.
Immediate steps:
- Issue a written litigation/audit hold: no deletions, no edits to the audited charts.
- Preserve originals and send legible copies with a cover letter and a log of exactly which records went out and when.
- Engage a health care attorney or coding compliance consultant before the 21-day deadline; the response letter should be accurate and non-speculative.
- Do not send explanatory narratives that speculate about cause.
- Notify your malpractice carrier if the notice suggests a fraud inquiry rather than a routine coding review.
Reasoning: The audit is a records-integrity process. Your credibility depends on producing what exists, exactly as it exists. Voluntary internal correction comes later, after counsel reviews the exposure.
2. Identify each compliance problem in the sample and state the correct practice.
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- Nine 90837 claims at 45–50 minutes. 90837 requires 53 or more minutes of psychotherapy; 45–53 minutes is 90834. The correct practice is to bill by documented time and record start and stop times in the note.
- Group sessions billed at eight attendees when three signed in. Billing for services not rendered is a false claim. Group therapy also has payer-specific minimums and documentation requirements; three attendees may or may not be billable, and the group note should list who attended, the modality, and the interventions.
- Three intakes under a provisional licensee with no supervision note. Billing under supervision requires that supervision actually occurred and is documented, and that the payer's enrollment and supervision rules were met. Missing supervision documentation converts a legitimate service into an unsupported claim.
- Two telehealth claims for a client in another state. Licensure follows the client's physical location at the time of service, and the payer's coverage rules follow it too. Verify licensure, registration, and payer policy before the session, not after.
- Duplicated note language across dates. Cloned documentation does not reflect the encounter and undercuts every other claim in the sample.
Reasoning: Each item is a documentation-to-billing mismatch. The pattern suggests template-driven charting and no pre-bill review, which is an administrative issue and not solely a clinician issue.
3. Design the corrective action plan. Address self-disclosure and repayment, extrapolation risk, and the operational fixes.
Read the worked answer
Quantify before you commit. Run an internal audit on a broader random sample (for example, 30 charts per clinician) to estimate the error rate across the same code families.
Self-disclosure and repayment:
- Once an overpayment is identified, report and return it within the applicable deadline (for Medicare, generally 60 days from identification) and document the calculation method.
- Consider proactive self-disclosure to the Medicaid plan; it typically fares better than waiting for the payer to extrapolate.
- Extrapolation risk is the real exposure: a small sample error rate can be projected across all claims in the period. Counsel should be involved before you agree to any extrapolated figure, and your own audit data is the counterargument.
Operational fixes:
- Pre-bill review of all 90837, group, and intake claims for 90 days.
- Time-in/time-out fields required in the EHR; group notes auto-populated with the attendance roster.
- Supervision logs signed contemporaneously and reconciled to claims.
- Telehealth verification of client location and clinician licensure at each session.
- Note templates that prompt individualized content and flag copy-paste.
- Designate a compliance lead, monthly chart audits, and documented staff training with attendance records.
Reasoning: Payers respond to credible, documented remediation. A plan that fixes the system, not just the 25 charts, is what limits extrapolation and preserves the contract.