Psychologists Beware: Insurance Carrier’s “Auditing” Of Psychologist Patient Files – What You Need to Know About Regulations, Confidentiality, and Risk Management

Health Insurance Carriers (hereafter “Carriers”) are becoming ever present in scrutinizing the provision of psychological services. Psychologists must be very careful in submitting claims when seeking payment for services from Carriers. When a Psychologist submits a claim, or when a patient is submitting a claim for reimbursement, it should be expected that the Carrier will scrutinize the claim to determine whether the service is covered, the rate of compensation or reimbursement, and look for potential fraud.

Carriers may seek to audit a Psychologist’s patient files by either submitting a written demand for specific patient claims, patient files or even by sending an investigator to the Psychologist’s office. Whenever a Carrier is pressing for an audit of a Psychologist’s records it would be wise to consult with counsel prior to providing any records or submitting to an interview with an investigator.

A. Questions for a Psychologist to Consider When Receiving a Request for Audit or Demand for Copies of Patient Records:

What is the proper course of action when an insurance Carrier initiates an audit or investigation?
Are you an in-network or an out-of-network?
What are your confidentiality obligations to patients?
What is the scope of disclosure the Carrier is entitled?
To what extent do the patient records comply with any agreement between you and the Carrier?
To what extent do your patient records comply with the New Jersey Administrative Code?
Do you have concerns about billing errors or service coding issues?

B. How to Initially Evaluate an Audit Demand

While you can try to assess the seriousness of an audit demand of your practice, having an experienced attorney review the demand/request and the records being sought is a prudent course of action. The immediate assessment involves:

Number of patients in question
Number of claims involved
Payments made on claims and appropriate coding of services
Whether there have been any errors during the billing process
Whether the records are maintained in compliance with any agreement with the Carrier
Whether the records are maintained in compliance with the New Jersey Administrative Code.

C. Confidentiality of Patient Records – What a Psychologist Needs to Know

Any demand for unlimited access to patient records is overbroad and a likely violation of the New Jersey Administrative Code
Investigators are not permitted unlimited access to a psychologist’s records/notes which may contain highly confidential disclosures regarding drug problems, alcohol problems, family problems, marital problems, or potential criminal activity
To the extent that the Carrier is seeking to confirm the service dates it should be remembered that the Carrier may itself already be in possession of documentation that confirms services authorized and the dates services were provided
Confirmation as to the authorization and provision of services may be verified in several documents and telephone conferences provided to the Carrier in processing the claims for services
Claim submissions generally consist of a billing Statement, a HCFA 1500 form, which contains the patient/subscriber information, diagnosis, procedure code, fee, and date(s) of service
To the extent the Carrier has Treatment Request Forms (TRF) for the services in question, the Psychologist/provider may have spoken with a Carrier clinician who authorized the services. To the extent that such pre-certifications or authorizations occurred, such records would already be possession of the Carrier.
A Psychologist must be careful not to provide any information beyond what is required by law to be disclosed.

D. Records that are Required to be Maintained

Under the New Jersey Administrative Code, the following records are required to be maintained:

a) A licensee shall prepare and maintain separately for each client a permanent client record which accurately reflects the client contact with the licensee whether in an office, hospital or other treatment, evaluation or consultation setting.

b) A licensee shall make entries in the client record contemporaneously with the services provided. A licensee may dictate an entry for later transcription, provided the transcription is dated and identified as “preliminary” until the licensee reviews the transcription and finalizes the entry in the client record.

c) The licensee shall include in the client record material pertinent to the nature and extent of the professional interaction, for example:

1) The location of treatment, evaluation, or consultation

2) The client’s name, address, and telephone number

3) The client complaint on intake

4) Medical history recognized as of potential significance

5) Past and current medications

6) Significant social history

7) Findings on appropriate examination

8) Raw data and interpretation of tests administered

9) Current functional impairments and rating levels thereof

10) A diagnostic impression

11) Contemporaneous and dated progress or session notes including specific components of treatment, evaluation, or consultation

12) Dates of all treatment, evaluation, or consultation sessions

13) An evaluation of progress (if applicable)

14) A prognosis

15) The client identity on each page

16) Fees charged and paid

17) The identity of each Psychologist of treatment, evaluation, or consultation (and supervisor, if any)

18) If services are rendered by a permit holder, the written disclosure form signed by the client as required by N.J.A.C. 13:42-4.4(f)

d) The client record shall contain information regarding referrals to other professionals together with reports and records provided by other professionals and integrated into the client’s treatment, evaluation, or consultation report.

e) A licensee may make corrections or additions to an existing record provided that each change is clearly identified as such, dated and initialed by the licensee. Any other alteration of records shall be deemed professional misconduct.

f) When records are to be maintained as confidential, the licensee shall establish and maintain a procedure to protect such records from access by unauthorized persons.

g) The licensee shall retain the permanent client record for at least seven years from the date of last entry, unless otherwise provided by law.

h) The licensee shall establish procedures for maintaining the confidentiality of client records in the event of the licensee’s relocation, retirement, death, or separation from a group practice, and shall establish reasonable procedures to assure the preservation of client records which shall include at a minimum:

1) Establishment of a procedure by which patients can obtain treatment records or acquiesce in the transfer of those records to another licensee or health care professional who is assuming the responsibilities of that practice.

2) Publication of a notice of the cessation and the established procedure for the retrieval of records in a newspaper of general circulation in the geographic location of the licensee’s practice, at least once each month for the first three months after the cessation.

3) Making reasonable efforts to directly notify any patient treated during the six months preceding the cessation, providing information concerning the established procedure for retrieval of records.

N.J.A.C. 13:42-8.1 Preparation and Maintenance of Client Records

E. Determining a Carrier’s Authority to Access a Patient’s Records

Patient/Psychologist communications are considered privileged communications. N.J.S.A. § 45:14B-28. Confidential relations and communications, provides:

The confidential relations and communications between and among a licensed practicing psychologist and individuals, couples, families, or groups in the course of the practice of psychology are placed on the same basis as those provided between attorney and client, and nothing in this act shall be construed to require any such privileged communications to be disclosed by any such person.

While such communications are privileged, the privilege is not absolute, and a carrier may assert a right of access pursuant to its contract with the subscriber/patient and assert that it is an “authorized representative” of the subscriber/patient. The New Jersey Administrative Code 13:42-8.3, provides:

a) For purposes of this section, “authorized representative” means, but is not necessarily limited to, a person designated by the client or a court to exercise rights under this section. An authorized representative may be client’s attorney or an agent of a third-party payor with whom the client has a contract which provides that the third-party payor be given access to records to assess a claim for monetary damages or reimbursement.

b) A licensee may require the record request to be in writing. No later than 30 days from receipt of a request from a client or duly authorized representative, the licensee shall provide a copy of the client record and/or billing records, including reports relating to the client. Limitations on this requirement are set forth in (e) below and N.J.A.C. 13:42-8.6(b) and in N.J.A.C. 13:42-11.

c) The licensee may elect to provide a summary of the record, if the summary adequately reflects the client’s history and treatment, unless otherwise required by law.

d) A licensee may charge a reasonable fee for the preparation of a summary and reproduction of records, which shall be no greater than an amount reasonably calculated to recoup the costs of transcription or copying.

e) A licensee may withhold information contained in the client record from a client or the client’s guardian if, in the reasonable exercise of his or her professional judgment, the licensee believes release of such information would adversely affect the client’s health or welfare.

1) That record or the summary, with an accompanying explanation of the reasons for the original refusal, shall nevertheless be provided upon request of and directly to:

i. The client’s attorney

ii. Another licensed health care professional

iii. The client’s health insurance carrier (except as may be limited by N.J.A.C. 13:42-11)

f) Records maintained as confidential pursuant to N.J.A.C. 13:42-8.1(c) shall be released:

1) If requested or subpoenaed by the Board or the Office of the Attorney General during any Board investigation

2) Pursuant to an order of a court of competent jurisdiction

3) Except as limited by N.J.A.C. 13:42-8.4, upon a waiver of the client or an authorized representative to release the client record to any person or entity, including to the Violent Crimes Compensation Board

4) In order to contribute appropriate client information to the client record maintained by a hospital, nursing home or similar licensed institution which is providing or has been asked to provide treatment to the client.

g) The licensee’s obligation hereunder to release information shall include the obligation to complete forms or reports required for third party reimbursement of client treatment expenses. The licensee may charge reasonable fees for completion of reports other than health insurance claim forms, for which no fee may be charged pursuant to N.J.S.A. 45:1-12.

h) When a request is made for release of already completed reports to enable the client to receive ongoing care by another practitioner, the licensee shall not require prior payment for the professional services to which such reports relate as a condition for making such reports available. A licensee may, however, require advance payment for a report prepared for services as an expert witness.

N.J.A.C. 13:42–8.3 Access to copy of client record

F. Assessing the Reason for the Audit/Investigation

By considering the scope of the request and the specific patient records being sought counsel may be able to determine whether the genesis of the investigation/audit is the result of concerns of fraud, patient complaints, or an audit due to the volume and frequency of claims. If the Psychologist is out-of-network the resulting cost of reimbursement/payment for services may be a factor in the carrier’s conducting an audit. An audit/investigation may also be a vehicle for the Carrier to initiate/engage in a discussion to bring an out-of network Psychologist into the network.

CONCLUSION

Given the number of Carriers that psychologists must deal with and the constantly changing and variety of insurance plans, the chance for honest mistakes in billing is increasing. Psychologists must be fully compliant with the maintenance of patient records and billing submissions so as not to violate contractual, regulatory, and/or statutory minefield that our complex health care insurance industry presents. Carriers may assert a right to the complete access to a patient’s file. The Carrier may assert such a right of access pursuant to in-network agreement, a disclosure waiver, the terms of a patient’s health care policy, or pursuant to a regulatory or statutory provision. Regardless of the Carrier’s basis for right to access, it is incumbent upon the Psychologist to ensure that the scope of the production is tailored and limited to the Carrier’s legal authority for access.

The role of an attorney representing a Psychologist in an audit, is to determine:

the Carrier’s authority for access to specific records;
the appropriate scope of the request and appropriate response and/or production;
whether there are billing/coding issues that are problematic; and
whether the Psychologist’s records comply with regulatory requirements under the New Jersey Administrative Code.

If appropriate, counsel may also be able to clarify and narrow the scope of the request for information to simplify what might be an overbroad and extensive production demand.

REFERENCES:

N.J.S.A. 45:14B-28, Confidential relations and communications, Patient/Psychologist Communications

N.J.A.C. 13:42-8.1 Preparation and Maintenance of Patient Records

N.J.A.C. 13:42-8.3 Access to Copy of Client Record

N.J.A.C. 13:42-8.6(b) and in N.J.A.C. 13:42-11, Limitations on Accessing Records

N.J.A.C. 13:42–11.3 Stage I (Preliminary Disclosure); required authorization

N.J.A.C. 13:42–11.4 Stage I: Information to be provided to the third-party payor

N.J.A.C. 13:42–11.5 Stages II, III and IV; Information to be provided to Independent Professional Review Committee

Eric Marcy, Esq. has represented licensed professionals before a variety of licensing boards. If you have any concerns regarding your professional license, if you believe that a complaint or investigation may commence, or if you are with a notice of formal administrative action, contact Somerville professional license defense lawyer, Eric Marcy, Esq. who is Of Counsel to Lyons & Associates, P.C. You can call 908-581-2388 (cell) or 908-575-9777 (office) or you may email him at [email protected]. Our offices are located in Somerville and Morristown, New Jersey, and we proudly serve clients throughout New Jersey, including but not limited to Somerset County, Morris County, Middlesex County, Union County, Essex County, Bergen County, Hunterdon County, Warren County, Sussex County, Passaic County, and Monmouth County.

Category: Eric Marcy, Professional License