Frank Jones of Mints Insurance Agency joins Bob Mazey of New Jersey Agents Alliance on his program “Insurance Insider” to talk about “Challenges Around Billing Audits”.

Topics Include:

– The Biggest Challenges Facing the Healthcare Industry

– Should Every Medical Provider Expect an Annual Audit

– What Medical Providers Need to Know to Prevent Nightmare Audits

Listen to the full episode and comment with questions you have about billing audits!


Hi, my name is Bob Mazey, and I’m the president of the New Jersey Agents Alliance, and welcome to another edition in an ongoing series of interviews with key decision makers and leaders in the insurance space and in the insurance industry. Today, we’re interviewing Frank Jones, one of the principals at Mints Insurance Agency located in Belleville, New Jersey. Frank has a particular specialty in the health care industry, and he’s going to talk with us today about some of the special or unique challenges unique to the health care industry.

The Largest Challenges Facing the Healthcare Industry


So without further ado, I’d like to introduce you to Frank and start off with sharing with the group. What are some of the largest challenges that the health care industry faces right now? And what are some of the things that you can do to to manage that? Awesome. Thank you, Bob. I appreciate being here and the opportunity. So we’re I’ve been operating in a health care space for probably 20 years. And you have evolving risks that happen.


You have a different market changes in malpractice. But right now, the most pressing thing within the health care arena are billing audits or clawbacks.

Billing Audits in the Healthcare Industry


So when you say billing audits, billing to the patient, billing to the insurance company, so the way the practice is in health care systems and treatment centers work is you go in for treatment. They then develop the diagnosis and build the insurance companies for the CPT codes for the proper diagnosis based on what the treating provider sees isn’t necessary in building insurance companies. All of those claims go into the carriers, the payers, whether public or private, CMS or any of the third party payers, and they’re adjudicated electronically.


So no hands or I touch those claims now. They just go through the system at some point in the future. The payer, whoever that might be, has contractually an opportunity to and a desire to review those files for appropriate billing as they deem it. And so the billing audits that occur are regular ongoing events. Practices are used to them. Treatment centers are used to them. But what has happened since 2008 is that particular effort has become a silo, a division, if you will, a revenue channel for CMS and the payers to go in and pull back dollars they’ve previously paid to providers on their basis, an allegation of no medical necessity or under the guise of the allegation of fraud.


So are they the judge and jury or is there a third party that will sort of arbitrate or level set of what’s appropriate? It seems like it’s it feels to me like it’s one sided, perhaps, but maybe I don’t understand. No, no. You understand completely. That’s that’s part of the frustration, even as is a service company or a vendor, if you will, to the facilities. It’s very frustrating because there is no independent third party.


As a matter of fact, in my office, we refer to the audits, by and large, as legalized extortion. I don’t know, you know, who’s going to be listening to this and who’s going to view it and who’s going to understand this. But John Gotti was a mafia boss in New York. So I’ve heard. Yes. And he had another boss called Sammy The Bull Gravano, who’s doing his own podcast right now. If we had Sammy the Bull explaining to us how the Mafia worked, it may be akin to the way that the carriers work.


Interesting. So is this a new phenomenon or is this how it’s worked for ever? This is how it’s worked for a while, 05 to 08, Congress did a sampling focusing on three states in an area of medical practices that were known to be high in fraudulent activity. They were so successful, if you will, that they opened up to three more states and they collected about one point one billion dollars over a three year period. And then in 08, Congress made that program permanent in the reports, in the findings, rather, and they report about three quarters the way through the report, all the way to the bottom of the page, about four or five lines in there, said of those that had overpayment demands, of those that fought, of those that fought, 33 percent won the challenge and the problem that we’re facing that we’re dealing with and the reason why this billing audit coverage is policy, that we’re it is the most sought after policy.


And my office in just an area of expertize that I have people reach out because they hear about what we do. We’re not the only ones with access to it, but we’re one of, if not the agency. Has the most experience and understanding and knowledge of the full breadth of it, OK, that people reach out to us for help, right. So tell me more about how that coverage works, what triggers it? What are the limits?


Why would a medical practice want to have that versus not wanting to have it? That’s exactly what’s going. Great question. Yeah. So what happens is the demand comes and I don’t know what medical practice or facility that has a capital defense fund set up within their budget. Nobody’s doing it. So what would typically happen is the demand from the carrier would come, the facility would feel that there was no other way around this and would cave to the pressures because to defend themselves is costly.


So the policy provides all of the resources, if you will, financial resources to get a viable defense, to provide coverage for shadow audits, which would allow a consultant to come in and and extrapolate the data and and in essence, give the facility or the practice enough information to validate what their position was to fight the allegations. It covers fines for regulatory fines and proceedings and the coverage start coverage and takes them all through the process. What the coverage does not do by rates of insurance, it cannot cover actual fraud.


So show me that for a second. Most of these cases. All right, so right now, the insurance carriers legally are allowed to look back at a year and a half worth of billings on these audits unless there is an allegation of fraud up front. And who would make that allegation? Would that would just be the payer or the third party auditor? Sure. By the way, the third party auditors secure nine to 12 percent of the recoupment when they allege fraud.


There’s a financial incentive, if you will, a little one, a little interesting. So most of the audits alleged fraud because now the window goes from a year and a half of billings, back to six years of billings, quite a substantial growth in size. So generally speaking, they’ll take a data set from a sampling of files and they might say, listen, it appears that you overcharged us as we deem overcharging by our reviews of non medical professionals of the files and lack of medical necessity as we deem it.


You are in charge of 17 percent on the sampling. So we’re going to take that and we’re going to apply that over the six years of Billings now. Did you want to write a check for that? Would you want to tap your credit line? Did you want to work for free from us? How do you want to handle the audit? Interesting. And I imagine this is all approved by the federal government. This is an obvious legal practice.

Should Every Medical Provider Expect an Annual Audit?


It seems that health care providers are under so much pressure to contain cost. Margins are probably the thinnest they’ve ever been in a long time. You’re seeing a lot of mergers and acquisitions and consolidation of medical practices to gain some economies of scale. So should every medical provider expect an annual audit or is it random? It’s how does that sort of work from an exposure standpoint? Yeah, a great question. So it is it is random, but to a certain extent.


But what happens is either the third party auditors or one of the payers hits, if you will, on a given specialty. For example, two of the biggest targets right now are integrated practices, what is commonly phrased and the practice where there’s cross pollination of clients holistically treating the patient. And then also sadly, egregiously, and I dare even say grossly is addiction treatment centers. So and that’s that’s a good place that just kind of talk about it is as the addiction epidemic continues and it continues.


But as it grew, if I were to put for you on a chart the growth trajectory of the epidemic, the loss of life and continued growth of those with substance use disorder and the insurance health insurance carriers, declination of permission of detox, the shortening of length of stay for inpatient, the fail first positions to manage the health care spend. You’d see just it’s maddening data. But what has happened is those two areas of health care have been hit the hardest as of the last two to three years.


And is there a reason, persay or because it’s such an emerging area of care, that’s where the attention is being focused. Both so you see the buildings increased. I mean, the care increases, the buildings get increased, and you have the discussions with people in the marketplace and they say, well, you know, those particular facilities are whatever they are talking about. They’re very fraudulent. They’re billing or they’re treating patients at a very high level level, a very high quantity of the patients.


So the buildings are going to go up. I mean, you’re always going to have the outliers, which are the people that absolutely are the people that are not doing it for the care. I mean, every business needs to make money to keep treating patients and to keep the doors open. But sure, they exist. They’re the overwhelming minority. Interesting. Yeah, interesting. So what percentage of medical practices that you work with or see perhaps prospects that either have this coverage or don’t have this coverage?

What Medical Providers Need to Know to Prevent Nightmare Audits


OK, great question. If you’re firing on all cylinders, seems like a logical progression. No, I guess I appreciate that. So I can’t give you a percentage. But what I can tell you is the majority of new clients that we’re getting are coming from the health care medical practice world are coming because they’ve heard about the auto coverage. OK, they have a friend that got caught in an audit and couldn’t get out, or in some cases, the worst case was they lost their practice.


We’re dealing with one right now, Bob, if you don’t mind me, sharing your true physician out in the Midwest who had a CMS audit come in three weeks later, another a third party payer audit came in another week later. And this isn’t made up for podcast. This is actual real-life data collected in a conference call with the attorney last week with the provider, and she broke down in tears. It is you are we have been privy to audiotapes from these third party auditors that are threatening they’re literally threatening PR nightmares, some actions by a court on fraud.


And the provider in that particular situation was absolutely beyond above board. But it’s very unnerving and it can make people run the other way and good quality providers. They’re just inundated with regulation and now they have this to deal with. It’s horrendous. Well, it sounds like it could be a pretty financially devastating event to a provider. And again, at a high level, I know every risk is different, every practice is different. But is this expensive?


And is that why perhaps some practices don’t have it and some have it? Is the underwriting cumbersome? Is it difficult? What sort of qualitative things do you look for, for a practice that doesn’t have this coverage and quite frankly, probably needs it? So is it just, hey, give me a couple of hundred dollars extra and we’ll take care of this? Or, you know, is there a thought process? Is there a claim history review, their past experiences, so on and so forth?


Does that factor into it as well? Yes, the past experience with audits does factor into it. Most of the practices that we write, the audit for all the coverage for do not have prior audits. It’s a very simple application. The carrier and carriers have a very easy, smooth underwriting process, a few very important points of data that drive the premium or the revenue or the billings prepare how much CMS, how much cash and the number of patient, uh, files that they have because that speaks to the breadth of the operation.


Your average premium minimum premium is somewhere around twenty four hundred dollars I think was twenty four. Seventy five now. Twenty five hundred dollar deductible. Million dollar limit. And we built into it a cyber component. And that cyber product is a very deep, very broad coverage because that’s a secondary, uh, uh, most common claim we’re seeing right now is claims of violations based on patient data being released. And when these when these audits occur, who are the players?


Is it really just the auditing firm and the provider? Or are there specialists, perhaps attorneys or accountants or forensics, forensic accountants, other third parties that the client can bring in to sort of validate or bolster their position? Or is the provider just sort of at the mercy of the auditor and you just basically hope it goes well? You know, what does the team look like, if anything? Yeah. So the team generally, if they have coverage, obviously it looks like my agency, our right and a very experienced law firm.


You want engaged to defend you. We’ve had insurance previously that go back to their corporate attorney, which it sounds to me like this is a specialty. This is a deep specialty. You want to understand not only the laws, but how experientially these audits work. And so we have a strategic partner non-financial arrangement, by the way, a relationship with a firm out of New Jersey that is the nation’s leading law firm in defending audits. They’ve taken many carriers to task in class action suits and one in a big way.


And there there’s nobody better out there in the industry. And is it OK? You can say the name of that law firm or. Sure. Yes, we talk to you already. And Warner, brilliant practitioners of law understand this. I’ve learned so much from them over the years. And then from that they quarterback the full defense of it. So they’ll get the forensic accountants if necessary. They get the shadow audit consulting company. There is one nationally that does a tremendous job that we work with a lot and suggest.

How Long Do Billing Audits Take?


And as we wrap up. So how long do these audits typically occur is to say get it at eight o’clock in the morning and leave by 5:00? Or do these processes last days, weeks, months longer? Can you just give us a feel for how long this experience lasts? Yes, it’s a painful experience, but if you want to sell themselves right, the auditors get a sampling of files. So that’s usually done off site. It’s when the demands come in, you see anywhere from a year to three years.


And we have one of our insureds that eventually, hopefully will be doing a podcast with that’s ready to go public. And we’re hoping to get some media attention. What he and his practice has been through is nothing short of theft. I mean, he stole his time, his energy almost destroyed. His marriage destroyed a couple of the practices that he has across the country defending himself. And he is 100 percent clear and innocent. And unfortunately, CMS knows it, but he’s one of a number of parties and they’re just looking to get some money.


Right. Well, I have to tell you, this is a fascinating topic, I’m sure. We can talk about this all day, just from a personal standpoint, there’s certain industry groups that I don’t want to squeeze for price. If I’m going to a doctor, I don’t want to I want a doctor that’s doing well and getting paid well, as I would an airline pilot. There’s just certain things, and it always fascinates me why there’s such pricing wars for cheap airline flights, because it’s I don’t want a cheap pilot and I certainly don’t want a cheap doctor or a medical firm.


And it sounds to me like this could be a real expense and a disruption to a medical practice. So I must say that I was not aware of this. I’m thrilled that you’re an expert in this field. If people want to engage with you or talk more about this or learn more, how is it best to contact? They can contact the office at (856) 825-2880 or go to Great.


Super. Well, thank you for sharing this with us today. Thank you for imparting this this great knowledge on us. Again, my name is Bob Mazey. Thank you for watching. And we look forward to seeing you again. Thank you.