What Happens in an Audit

You check the mail and notice a letter from a payer. The letter reads something like this:

Dear Doctor,

Periodically we analyze claims to determine the accuracy of the codes submitted. At this time we have noticed unusual patterns in your practice’s claim submissions, and request you provide copies of the patient records listed below. Thank you for your cooperation.


Utilization Review Department

The typical response: “Audit! Audit! But, I did not do anything wrong!”

Perhaps there has been no wrong doing by the practice, but in some way the practice has attracted the attention of either an insurance company or the administrators of a state Medicaid program. Of the phone calls I received in 2015 from offices receiving a letter from an insurance company, two were pediatric dentists, several general dentists, and an orthodontist! Most of these dentists had submitted the requested records months prior to contacting me and were now in receipt of a refund request. The requests ranged from $18,000 to $500,000.

Why and How

There are no “routine” audits or reviews, so why were these practices audited? The most common reason is that the frequency of certain CDT codes submitted is far beyond the peer norm for those reported codes. The insurance company’s computer easily identifies an unusual pattern of claims, an outlier, if you will. Simple utilization reports identify the practices submitting the highest number of claims of specific codes, or the highest frequency of a treatment per a given number of patients. If the norm for a treatment is 30 per 100 patients in your state, but your practice’s frequency is 50 per 100 patients, this information “jumps out” as potential overutilization.

For example, periapical radiographs are routinely exposed in conjunction with periodic oral evaluations. This is a low dollar procedure until it is multiplied thousands of times. It is, of course, a beneficial diagnostic procedure when medically necessary and the findings are documented in the patient record. Without both a diagnosis and documented findings by the dentist, there is no reason to take a radiograph. If the patient record indicates the patient had sensitivity, recent trauma, or other issues, and the chart is documented with this information, then there is not a problem.

However, when every patient has two anterior periapical radiographs exposed at regular intervals, and the patient record does not indicate a reason for the exposure, then the radiographs may be considered unnecessary. Can anyone imagine a patient’s record not documenting why a patient had a radiograph, a CAT scan, or an MRI? Plus, it is essential that the patient’s record document the image findings. Too often this is not the case in dentistry.

Other treatments that are closely monitored by third-party payers include scaling and root planing (D4341 and D4342), posterior one surface composite restorations (D2391), anterior restorations that include the incisal angle (D2335), surgical removal of erupted teeth (D7210), and core buildups (D2950). Keep in mind that, in reality, payers monitor every code submitted.

Another issue that may trigger a review is a patient complaint. If a patient complains to an insurance company (or the State Board of Dental Examiners) regarding a billing issue or the quality of care, the company will request a copy of the patient’s record. Depending on the type of complaint and if the complaint cannot easily be resolved, additional patient records may also be requested for review. All aspects of those records will be reviewed. The quality of care is reviewed by pre- and post-treatment radiographs. Patient ledgers are reviewed for appropriate billing and collection of copayments.


When a state administering its own Medicaid program performs an audit of records and subsequently requests a $500,000 refund, this is serious! When the audit is complete, including an appeal and a hearing, a financial settlement is reached with terms of repayment. This typically takes a year or longer. Just when you think that it is finally over, it actually is not. Cases, depending on specific state regulations, are reported to the insurance commissioner and/ or the state board of dentistry. Ultimately, cases can be reported to the National Practitioner Data Bank (NPDB).

Since audits are reported to the NPDB, other insurance providers will review the results when a new credentialing or recredentialing process is performed. Some carriers may exclude practices from their network, while others will be cautious to approve the practice for participation.

There can also be malpractice coverage or rate issues as a result of the audit.

What To Do When Audited

What should you do if you receive a letter similar to the one at the beginning of this article, and are requested to send patient records? For those doctors who would represent themselves if audited by the IRS or brought before a court hearing, do not read any further and good luck! For the rest, before sending copies of your records to the payer, enlist some help up front. It is better to have help from the beginning rather than after the initial review or request for payment.

The payer demand letter should list the patient record components requested. Typical requests require:

»» Patient medical/dental history.

»» Progress notes.

»» Periodontal charting.

»» Treatment plan sheet.

»» Patient evaluation data.

»» Lab prescriptions.

»» Specialist communication.

»» Copies of radiographs.

»» Copies of the patient ledger.

Do not send any more or any less information than requested. Do not send a letter attempting to explain why your frequency for a procedure is greater than all other dentists in your state and that your patients or the demographics in your area are different.

How to Prevent an Audit

The best prevention and defense are thorough proper documentation and patient recordkeeping. Patient records should include comprehensive baseline evaluation data collection. Documentation should also include the findings of oral cancer evaluations, six-point periodontal probings, adequate diagnostic radiographic images, and a documented diagnosis for every treatment provided. You must have radiographs (specifically ordered by the dentist, not taken as protocol) that are of diagnostic quality and your notes must clearly state the treatment that is provided and why. Progress notes should tell a short story: why the patient was in the office, the treatment that was provided, and the outcome of the treatment.

The patient’s medical/dental history may contain important information. For example, the patient’s last dental visit was five years before they entered your practice. This simple yet important fact may support the need for the treatment, in addition to the progress notes and necessary radiographs.

The doctor’s emotional angst is easy to understand. No one likes to have his or her treatments questioned. But, as the economics of the country and the healthcare environment have changed, dental insurance companies and state administrators of Medicaid have become more diligent conducting oversight and utilization review activities. Third-party payers and employers are now demanding greater accountability.

Do not assume that payers are always 100 percent correct. Connecting with someone who speaks their language can result in successful outcomes. Does it seem correct for a refund of $50,000 to be based on the review of 15 patient records? It may be when the findings are extrapolated to all patients who received the same treatment and those results were applied to the previous three to five years of similar claims. Last year, there were several large refund requests that were settled for a fraction of the original audit results, and some were even closed without any required refunds due to strong patient recordkeeping and advocacy.

Upon receipt of the first letter from the insurance company, do not delay with your response. Contact a professional who can assist you with the audit and get the ball rolling immediately.