BUSINESS: technology

Averting Audits: Part 1



Averting Audits: Part 1

Questions you must ask to avoid a third party audit


It is imperative to understand that technology cannot be utilized and then correctly billed to a third party insurance fee-for-service carrier without first answering a few questions.

1 Does it have FDA-approval and a designated CPT code?

The first step in determining whether technology can be utilized and billed correctly to a third party is to determine whether the technology is FDA approved and has a designated CPT code for billing.

Let’s say you are billing for the placement and materials for a bandage soft contact lens (CPT code 92071/92072 and supply code V2599). To receive compensation from a carrier, the lens must be FDA approved for this procedure, you must retain a receipt to prove you purchased this FDA-approved plano contact lens, and you must properly document your use of the approved lens in the patient’s medical record. “Missing any step” in this process could place the provider in jeopardy of “failing” an audit, which could lead to overpayment refund requests, fines, penalties and possible program exclusion. The same applies to codes, such as for visual fields and photos. Visual fields cannot be accurately billed to a third party carrier unless performed with a device FDA approved for that procedure.

2 How often can a procedure be billed?

Look at the local carrier determination (LCD) for patients’ insurance carrier for each procedure to determine what the carrier has established as indications and limitations of coverage and/or medical necessity, diagnoses that are covered for the specific CPT code, utilization guidelines and medical record requirements.

For example, each insurance company can have different rules for how often you can bill for a visual field on a glaucoma patient based on the severity of the disease. If you don’t know the frequency of utilization limitations, you may bill and get paid for several tests in a year, yet in an audit be forced to pay some of the money back to the insurance plan.

The bottom line: Read and print each contract to be certain you are in compliance with each carrier’s rules.

3 Does it meet the carrier’s definition of medical necessity?

Billing a carrier for a procedure that doesn’t meet its definition of medical necessity is a sure-fire way to get you on its audit radar. Therefore, look into this before submitting a claim.

Also, correctly document the needed information to demonstrate medical necessity to back you up, should you be contacted by a recovery audit contractor (RAC).

Audits aren’t going anywhere

Congress began using RACs for Medicare in 2007, achieved full implementation in 2010 and mandated that RAC audits would be ongoing. For fiscal year 2013, the Department of Health and Human Services reported an overall fee-for-service payment error rate of 10.1%, or $36 billion in improper provider payments.

Audit outcome data and lists of targeted areas of concern involving fee-for-service payments to providers are shared among CMS and private insurance carriers.

Be sure to ask the questions in this column to bill third party carriers appropriately. OM

Dr. Jasper is a Vision Source Administrator and in private practice in West Palm Beach, Fla. E-mail her at, or comment at