Professional News
Insurer Alleges Billing Improprieties, Demands Repayment From Psychiatrists
Psychiatric News
Volume 38 Number 21 page 1-24

Oxford Health Plans, based in Connecticut, has taken an unprecedented step for a managed care company by demanding psychiatrists repay large sums of money for alleged inadequate documentation of psychotherapy sessions.

Oxford has audited 80 psychiatrists, psychologists, and social workers in New York, New Jersey, and Connecticut this year.

"This is only about 2 percent of the 4,200 psychiatrists and mental health professionals in our specialists network," said Chief Medical Officer Alan Muney, M.D., by both phone and e-mail communication with Psychiatric News.

About 20 of the audited psychiatrists have contacted the New York State Psychiatric Association (NYSPA) for assistance (see page 24), Executive Director Seth Stein, J.D., told Psychiatric News.

Oxford has asked psychiatrists to repay sums ranging from $10,000 to $150,000, said Stein. Stein noted that in addition to heading up the state association’s response to Oxford, in his capacity as a lawyer he is representing some district branch members in dealing with Oxford.

Muney said, "We have determined that some providers have engaged in fraud because there is a consistent pattern involved, but most didn’t provide sufficient documentation to substantiate the codes they billed for.

"Every practicing physician is required to document patient visits in the medical record to substantiate the billing codes used. This includes the history, physical exam, diagnosis, treatment plan, and medications."

Oxford appears to be concentrating on insufficient documentation in the psychotherapy session notes, according to an August 19 letter from NYSPA to APA. NYSPA President Barry Perlman, M.D., wrote, "One of the most frequent disallowances is a downcoding of 90807 (psychotherapy visit with medical evaluation and management) to 90806 (psychotherapy visit only) based on the absence in the individual session note of any mention of medication or other medical evaluation or management."

Oxford also downcoded 90805 to 90804 for the same reason, noted Perlman in his letter.

According to Oxford, at least a few therapists billed for 45 to 50 minutes of psychotherapy without documenting the time spent with the patient in their notes, which was then downcoded to 30 minutes.

"There was at least one case of an unlicensed therapist who billed under a licensed psychiatrist for services that the therapist rendered," said Muney.


The therapists who were interviewed anonymously by the New York Times for the September 30 article complained that Oxford has refused to say what standard of documentation they need to meet.

Muney insists that Oxford has. "We use the AMA, APA, and Medicare guidelines. We used the AMA Current Procedural Terminology book that applied to the dates of service we reviewed," said Muney.

When asked how providers are supposed to know what guidelines Oxford uses, Muney responded, "The Oxford provider manual and the provider contract contain general expectations based on industry standards regarding billing, codes, and documentation. These guidelines apply to all providers, both in and out of network."

Chester Schmidt Jr., M.D., the author of CPT Handbook for Psychiatrists, Second Edition, told Psychiatric News, "There are no national or universal standards or guidelines for documentation for psychiatric diagnosis and psychotherapy for purposes of payment. Different payers have different requirements. The Centers for Medicare and Medicaid Services [CMS] allows local carriers to develop their own medical review and payment policies as long as they don’t conflict with CMS requirements."

Schmidt is chair of APA’s Committee on RBRVS, Codes, and Reimbursements.


Oxford hired Audit Review Services (ARS) to review psychotherapy claims it had paid between 1997 and 2002, according to an April letter from ARS to a psychiatrist who asked to remain anonymous.

ARS explained in the letter that it had reviewed claims from a sample of randomly selected service dates from each of 30 randomly selected Oxford members, totaling 105 service dates.

"The audit review determined that you billed for 49 sessions that were not individually supported in the medical record and that you billed 37 dates of service of medical evaluation services as individual psychotherapy," according to the letter sent to the psychiatrist.

Stein commented, "The most disturbing aspect of the audit was the use of extrapolation to project the disallowances from the sample of charts to the entire universe of claims paid by Oxford for a significant period. As a result, an audit of 30 charts with a total disallowance of about $3,000 became a demand for repayment of more than $50,000," said Stein.

ARS calculated the total overpayment amount by reviewing a specific set of claims and assuming all the providers’ claims would contain miscoding. Thus, ARS extrapolated the amounts to the total number of claims submitted for the same type of services, according to the letter.

One provider’s coding practices resulted in an overpayment of at least $60,406, according to the letter.

Muney said, "We have full confidence in the methods used by ARS. Medicare conducted a similar audit of mental health records using the extrapolation method [Psychiatric News, April 6, 2001], which outraged some physicians who were targeted.

"We have to take into account that when providers bill inappropriately, it increases health care costs, which get passed onto our members."

He emphasized that the vast majority of providers sailed through the audit. "We have not taken a broad, shotgun approach here. Oxford routinely conducts audits of its providers’ records to ensure both quality of care and affordability," said Muney.

Irvin (Sam) Muszynski, director of APA’s Office of Healthcare Systems and Financing, said, "We are very concerned about the scope and process of the Oxford audit, in addition to confidentiality issues in the review." The office is communicating with Oxford Health Plans regarding the company’s actions.

Members who have questions about the Oxford audit can call APA’s Managed Care Help Line at (800) 343-4671.

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