Everything you wanted to know but were afraid to ask.

In order to understand why a system of audit and inspections has been established in British Columbia, it is necessary to re­view the history of medical care insurance in the province. 

When medical care insurance was established in BC (initially on an entirely private insurer basis), the British Columbia Medical Association was very much involved in setting up the honor system of billings that is the mainstay of the current system. There were different models that could have been adopted. 

A deliberate decision was made to have doctors submit claims and, other than undertaking a few basic validations, the claims were paid as quickly as possible. This was particularly the case when publicly administered medical care insurance was initially established in BC in 1965 for those citizens who were not covered by private insurance and subsequently in 1968 when medicare became universally available in BC. 

British Columbia was the first jurisdiction in North America where the medical profession and government jointly entered into an agreement regarding publicly funded medical care insurance.

It was accepted by both parties that, apart from a small minority, doctors were honest and it would be unfair to penalize the honest majority in order to detect the small minority that might take advantage of an honor system. Billings are reviewed after the payment has been made in order to detect unusual billing patterns. 

The alternative to the system adopted in BC is used by many private insurers, where billings either require pre-approval or undergo careful scrutiny before they are paid. Such alternative systems have significantly higher administrative costs and delay the payment to the service provider considerably.

As part of its agreement with government, the BCMA established the Patterns of Practice Committee (POPC) that reviewed doctors’ billing patterns and made recommendations to the Medical Services Commission (MSC) regarding aberrant billing patterns. 

Computerized practitioner billing pro­files were developed so the process could be done effectively and efficiently. As time passed, the practitioner profiles became progressively more sophisticated and lawyers began to be involved in the process, representing the doctors under review. 

As the process became more complex from a legal perspective, the legislation under which MSC operates had to be improved to reflect the increasingly formalized legal environment. The BCMA POPC did not have the appropriate authority or the resources to operate in such a legal environment, and in the early to mid-1990s decided to step back from the process to a great extent. Consequently, the Billing Integrity Program (BIP) was formed to deal with the complexities of a post-billing audit system.

Each year, the MSC produces a very large and detailed computerized analysis of each practitioner’s billings known as the “practitioner profile.” Because this computer printout is so large and complex, the BCMA produces a much smaller version known as the “mini profile,” which has graphical representation and simplified statistical parameters. 

The mini profiles are distributed by the BCMA to all physicians billing MSP so that doctors can see if their billings are within the normal statistical boundaries of their peer group. This provides doctors with an opportunity to identify potential billing issues that may require corrective action.

The role of the BIP is to detect, deter, and recover inappropriate fee-for-service billings on behalf of the MSC. The BIP uses a variety of methods to identify and investigate high-risk practices, including service verification surveys of beneficiaries, statistical analysis of claims data to identify unusual patterns of practice, and receipt of complaints from the public, profession, and third-party insurers. 

Because the burden of illness or co-morbidity within practices can vary widely, there is a section within the practitioner profiles where practice costs are case-mix adjusted, using a methodology developed by Johns Hopkins University, to account for the relative burden of illness within a given practice. 

Where feasible, BIP staff will ask for a written explanation from a physician regarding an unusual billing pattern but, if doubt remains, the case is referred to the MSC’s Audit and Inspection Committee (AIC), which has the delegated authority to conduct an on-site audit under Section 36 of the Medicare Protection Act and Regulations (Act). 

Although the AIC is responsible solely for audits and inspections of physicians’ practices, there is a similar process that applies to all other health care practitioners who submit claims to MSP.  

If the AIC orders an on-site audit, then an audit team is assembled, composed of forensic accounting and administrative staff from the BIP plus a peer medical inspector jointly nominated by the BCMA and College of Physicians and Surgeons of BC. 

The team is on site in the doctor’s office for approximately 1 to 3 days and the medical inspector reviews a statistically valid sample of medical charts representative of the previous 5 years of practice. This typically includes the detailed review of the physician’s clinical records of 40 to 50 discrete patients who usually represent about 1000 individual claims over the 5-year period—the usual span of an audit. The medical inspector’s role is to as­sess the claims, based on seven standard criteria:

• Was the service medically necessary (as required by the Act) and is there evidence that the service was actually performed?

• Is there an adequate medical record documenting the service billed?

• Is the service an insured benefit under the Act?

• Was the correct fee item used?

• Does the practitioner number submitted on the claim correctly iden­tify the person who performed the service?

• Are there quality-of-care concerns?

• Is the frequency of service justified?

The sampled claims are reviewed in detail and are either accepted, adjusted to the value of the correct fee item(s), or rejected. The findings are then summarized in a detailed audit report that is submitted to the AIC. The percentage of errors in the sampled claims (i.e., those MSP claims that are determined to have been paid incorrectly for whatever reason) is then extrapolated for all claims paid for the 5-year audit period. 

This statistical process has been independently reviewed and verified as valid. Although a 5-year audit period may seem excessive to some, it has been found that by the time the audit issues have been identified and investigated in the honor system by which billings are submitted, considerable time may have passed and the recovery of the incorrectly disbursed public funds is warranted. 

Before the audit team completes the report, the physician is provided with the opportunity to review it and clarify any aspect that may not be correct. Following this, the report is finalized and submitted to the AIC.

Where there are no substantive findings, the AIC will close the file and advise the physician. However, when the pattern of practice is not justifiable, the AIC will recommend that the MSC seek financial recovery, order that the physician abide by an appropriate pattern of practice or billing, or both. 

The physician has an option to use an alternate dispute resolution process in which the physician and BIP representatives attempt to negotiate a settlement for consideration by the chair of MSC. In the event that the matter is not resolved through the alternate dispute resolution pro­cess, the physician has the right to a hearing. 

The hearing panel usually comprises a government appointed chair who is a lawyer, three practising peers, and a lay member of the public. In this quasi-judicial setting, the panel will hear evidence under oath and the physician is entitled to be represented by legal counsel. 

After hearing the evidence presented, the panel will render a decision that may include a determination that the physician owes nothing or any one or more of the following:

• Recover payments based on the quantified billing errors extrapolated over the entire audit period, with costs and interest.

• Issue a pattern of practice order re­quiring the physician on future compliance with the Payment Schedule.

• Modify the physician’s billing rights, either on an opted-out basis (where the physician must bill the patient directly according to the Payment Schedule and the patient is reimbursed by MSP) or on a de-enrolled basis (where the physician may bill whatever the market will bear but the patient is not entitled to any reimbursement by MSP). In both these instances the physician must inform the patient of all the details before the service is rendered.

In all cases that proceed to a hearing, the MSC publishes the physician’s name and a summary of the case in the MSP Physicians’ Newsletter. As well, the College is notified. 

Notwithstanding the formal hearing process described above, most cases are settled through the alternate dispute resolution process. 

In those rare cases of repeated noncompliance with practice orders or fraud, the MSC may order permanent de-enrolment of billing privileges, subject to the right of the physician to a hearing, refer the case for consideration of criminal charges by law enforcement authorities, or both.

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This article was written by the members of the Billing Integrity Program. Members of this program serve anonymously.