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The Cost of Noncompliance is Greater Than You Think

The Statistics Paint a Disquieting Picture

chiroeco ejournal article intro imageIn the October 2016 Office of Inspector General (OIG) report, it was estimated that 82 percent of payments made in 2013 to doctors of chiropractic were “unallowable” or noncompliant with CMS rules in one way or another. 

The amount of overpayments to DCs was estimated to be approximately $360 million. 

And almost every day in the news you can find reports of a chiropractor arrested for some type of fraud or abuse of third-party payers. In Florida this year, for example, a DC was sentenced to almost 15 years in prison resulting from a scam he and several others had arranged to defraud car insurance companies. 

Also this year, a New Jersey chiropractor was arrested for being part of a scheme that directed patients to specific radiology centers in exchange for kickbacks. Again in New Jersey, another DC has been arraigned on charges of healthcare claims fraud, conspiracy, and commercial bribery for a massive criminal operation that involved dozens of participants ranging from DCs to MDs to clinic operators who took bribes to refer patients to an MRI center. 

These cases involved amounts ranging from the tens of thousands to the millions of dollars and are typical of the kind of misconduct auditors are paid to find. 

Pay Attention

A key distinction here, however, is that the 82 percent figure given by the OIG is not pointing at only DCs committing egregious, willful violations of the law. Rather, the majority of what it deemed improper payments were arguably due to carelessness and ignorance of the rules. Such cases are avoidable and the wise doctor of chiropractic will take steps to ensure that his or her billing and documentation are compliant and accurate. 

By now you’ve surely been told that you should conduct a practice self-audit, or consider having a professional do one for you. In addition, you know you should have a compliance manual. Yet often as not, discussions of compliance tend to end here – and this is a mistake. A binder gathering dust on a shelf is not a compliance program. 

Rather, you should think of compliance as being a dynamic and ongoing process, a style of practicing with an ever-vigilant focus on avoiding danger. 

Red-Flag Realities

Just a decade or two ago, you could assume the risk of an audit was small, given that a human would have to spot problems in your paperwork and initiate a review. Today, though, computer algorithms are continuously comparing your practice to that of your peers. Anything you do that isn’t “normal” in this context is potentially a red flag that can bring you under closer scrutiny. 

“In 2001, the OIG stated that everyone needs written rules,” says Kathy Mills Chang, MCS-P, a coding and MEET THE EXPERTScompliance expert. She points to the following four areas identified by the OIG as posing particular difficulties for DCs:

  1. Poor documentation
  2. Documentation of medical necessity
  3. Coding
  4. Patient finance inconsistencies 

“Just because you’re getting paid doesn’t mean you’re billing correctly,” Chang says. “When you sign on line 31 of the billing form, you’re saying ‘I hereby swear I’m following the rules.’ It’s like filling out your taxes.” 

Every Chart Tells a Story

“On a claim form, we report to a third party what we did,” says Evan Gwilliam, DC, CPC, a certified coding expert and trainer. “The ICD-10 diagnosis code says what happened to the patient, and the CPT code says what we did to treat it.” 

When these two items are linked, they tell the story of what you did and why you did it. 

Take CPT code 98943, which is for extraspinal chiropractic manipulative treatment. And consider a case where you are treating the knee. The insurer will go back to the ICD-10 code, and if they see M99.06 (segmental and somatic dysfunction of lower extremity), the story will make sense. 

“If you get sloppy on the claim form and use the wrong diagnosis code, it won’t be payable. This is an issue we see frequently,” Gwilliam says. 

The person on the payer’s side only sees your claim form, not your notes. Thus, it should tell a coherent story so that there is no need for a claims review. 

A Matter of Necessity

One issue the Centers for Medicare and Medicaid Services (CMS) and the OIG have underscored repeatedly is the question of “medical necessity.” Whether the condition you are treating is chronic or acute, there has to be a presenting problem you are coding for and the subject of a patient complaint. Failing this, in the eyes of the payers you may be providing non-reimbursable wellness or maintenance care. 

So how do you ensure you have established medical necessity to treat a patient? According to Gwilliam, the following formula should keep you on firm footing, provided you can answer each statement affirmatively:

  1. Is there is a problem or complaint consistent with a condition?
  2. Is there a clear explanation for the complaint?
  3. Is the treatment appropriate for the diagnosis and phase of the condition? (For example, in the chronic phase of care are you applying ice?
  4. Is the patient progressing toward a resolution? Will there be a measurable outcome? 

“Basically, you can pick any service, exercise, electro-stim, and if these four criteria are met, it should be considered medically necessary by any payer,” Gwilliam says. 

Medical necessity has to be documented in your notes. With Medicare, especially, you need to know when you’re crossing the line from necessity to maintenance. “Some DCs think you can’t go past 12 treatments,” says Deborah Green, Esq., a lawyer who specializes in healthcare law. “But if you think a treatment is medically necessary, and you can prove that by administering more treatment that is required, has a beneficial effect, and improves the patient’s functioning, and you can document that, you should be able to obtain authorization from Medicare to go past 12 treatments – if you want to get paid.” 

It’s hard to believe, but there are DCs out there who don’t take these matters seriously. Chang recalls one doctor in particular: “The documentation in his case didn’t match what he was billing for. There was no treatment plan, no diagnosis. You don’t even have a prayer of getting through an audit in a case like that.” 

Going back to Gwilliam’s formula, your documentation has to tell the following story in a compelling way:

  • Is there a complaint?
  • Can I explain it?
  • Can I treat it?
  • Am I making progress with the patient? 

“This causal chain explains the medical necessity. When we find a doctor who’s having problems, we discover one or more elements of the causal chain have not been documented,” Gwilliam says. 

Up to Code

Typical coding problems Chang sees are cases such as when a DC is billing a large number of codes, and billing them together: “And CPT code 98942 is a red flag.” In this case, it would need to be substantiated with a separate diagnosis for all five areas of the spine, and not apply to a chiropractic adjustment on the full spine performed for maintenance. 

She has also noted problems arising when a DC bills for four units of exercise at a time, billing them together, or patterns of overutilization, where a DC is keeping a patient in active care and not transitioning them to a plateau or maintenance phase. If the typical DC’s treatment plan is eight visits over the course of a month, and you’re seeing patients for six to eight months at a time in active care, you’re likely to come to somebody’s attention. 

That’s not necessarily a problem. “It’s about profiling,” Gwilliam says. “The federal government looks at who is in compliance. They look at claims data to see who is an outlier.” 

Gwilliam tells people that’s it’s OK to be an outlier. “You just have to be ready to prove the medical necessity of your treatments. You can see a patient as long as it’s medically necessary, even up to 30 times.” 

Make no mistake, what he’s getting at is that your documentation has to provide a convincing narrative about what you’re doing. Your diagnosis, prognosis, coding, and record of improvement need to justify your actions. 

By the same token, Chang notes that if you’re an Atlas adjuster, you’ll be performing most of your work at C1. This could make you look like an outlier but that’s the nature of your practice. You just need to be fully prepared to explain this if you are questioned about it by a payer. 

And of course you have to bill within your scope. “Some DCs get inventive with coding and try to bill for something out of their bailiwick,” Green says. “You’ll see this occur in a multidisciplinary practice, especially with an MD-DC practice, where the chiropractor starts to think they’re an MD or DO. When it comes to the treatments offered by other professions, you are limited to the scope of your license.” 

Money Business

Now, if you put yourself in the position of a third-party payer – whether the government or a private insurer, you want to know you’re being treated fairly by the healthcare provider you are reimbursing. If you’ve set your rate based on the doctor’s fee schedule, you expect the DC to adhere to it. And, unfortunately, some don’t. 

“A huge problem is the doc who never collects the amount of the deductible,” Chang says. “That’s big time issue No. 1. The OIG may not be as involved in this with private payers, but the state regulatory agencies will get involved in it. If you didn’t charge the deductible to the patient, then why did you charge it to the insurance company?” 

The penalties associated with failing to collect co-pays aren’t always clear (although with Medicare it’s a big deal). Rather, if an auditor finds a problem in this area, then chances are the insurer will want to go through your records looking for other problems. A red flag this big suggests they’ll find something else, too. 

A common co-pay is 20 percent of the total fee for service. So in the event your fee is $100, then the insurer is supposed to pay $80 and the patient is liable for the remaining $20. “This is designed to prevent overutilization,” Green says. “Sometimes they’ll catch this when they do a customer review of billing, and sometimes one DC will report another.” 

This is understandable, in that the doctor who correctly charges the deductible is at a disadvantage with one who doesn’t. There is an exception for patients who are genuinely impoverished, but the provider has to make that determination. “Medicare has its own forms you can use to show that the patient truly is poor,” Green says, “but otherwise failure to collect the co- pay is fraud on the insurance company.” 

If you do call a patient’s insurer to notify them you want to waive a co- pay on compassionate grounds, or that you want to provide additional treatments beyond the number their plan authorizes, Green advises getting the name of the person you obtain permission from and record all details of the conversion. “It will go far toward proving what you’ve done if you’re questioned about it,” she says. 

All of our experts are in agreement that a discount medical plan organization (DMPO) is one way to avoid the problem of having dual fee schedules. Whether for cash or credit-paying patients, a DMPO allows you to legally offer a discounted rate for services. 

Out of the Doghouse

How close are you to emerging from the extra scrutiny you’re getting from CMS and the OIG? A few trends are working in your favor. Wider adoption of practice management software and EHR systems, together with the enactment of ICD-10 with its more stringent coding requirements, are nudging providers toward compliant record-keeping and billing. The better software systems will alert you to billing discrepancies and many are capable of recognizing the specific quirks of individual insurers. 

Another defensive bulwark is the use of an electronic claims processing clearinghouse, some of which specialize in chiropractic. The clearinghouse files claims on behalf of a participating practice, but checks them for problems first. The clearinghouse will notify the practice if they find any errors or issues that might be grounds for a rejection. The practice can then address the flagged items, and resend a compliant claim. 

“I think progress is being made out of necessity,” Gwilliam says. “And DCs are realizing that they need to step up their game. Those who refuse to comply will have to drop out of the profession.” If you feel overwhelmed by this topic, you aren’t alone. In reader surveys taken by Chiropractic Economics, when asked what they’re most interested in reading about, readers typically rank coding first or second. Nobody wants to leave money on the table, and nobody wants to be facing recoupments, either. That’s why you might want to get advice from a professional. A certified professional coder (CPC) can assist you in avoiding noncompliance and mis-coding issues, and a certified chiropractic professional coder is specifically trained in helping DCs. 

As Chang puts it, “You don’t have to know everything; you just have to know someone who does. It’s the same as having an accountant. Do your research and find high-quality advice.” 

Daniel Sosnoski is the editor-in-chief of Chiropractic Economics. He can be reached at 904-567-1539,, or through

Article reprinted with permission from Vol. 63, Issue 7 (May 5, 2017), of Chiropractic Economics, your first source for news. For a free subscription, go to”

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