With Audits Up, SUD Providers Are Especially Vulnerable to Enforcement Actions

If the pandemic has a silver lining, it’s the spotlight COVID-19 has put on the behavioral health industry.

A growing number of Americans are struggling with substance use disorders (SUD) and mental health conditions, prompting lawmakers and payers to take notice, and in many cases invest more attention and funding into fixing the problem. But with more money comes more problems, particularly in the form of audits.

“Anytime there’s a greater spend, there’s a greater focus from a compliance standpoint and an enforcement standpoint,” Polsinelli shareholder Bragg Hemme previously told Behavioral Health Business, noting that her law firm has seen an increase in activity around both government private plan compliance enforcement in recent years.


The evidence to support that uptick in audits isn’t just anecdotal: Data from last fiscal year shows that the behavioral health industry saw a “marked increase” in False Claims Act (FCA) settlements, according to the 2020 Healthcare Fraud & Abuse Review published earlier this year by the law firm Bass, Berry & Sims.

Within the behavioral health industry, SUD providers are especially vulnerable to payer audits. Denise Hall-Gaulin — a principal at the healthcare consulting and certified public accounting firm PYA — explained why.

“There has been a lot of fraud and abuse in the past in this business,” Hall-Gaulin told BHB. “And as we’re coming out of COVID, there’s gonna be a lot more funding for the Office of the Inspector General and CMS to do investigations because … with increased delivery of these services, they’re going to want to ensure that they’re getting what they paid for.”


To some degree, those investigations have already begun, according to a 2020 survey from Avea Solutions. The revenue cycle management software provider polled SUD treatment stakeholders last year on a number of topics. Of those who responded to the survey, 20% reported an increase in audits.

“I absolutely believe [audits are] going to be coming more and more,” Hall-Gaulin said. “In fact, I know they will be because we’re doing more and more of this work.”

In the past three to four years, she said she has seen a 30% to 40% increase in calls from SUD providers. Her firm PYA serves as an independent review organization, while also helping behavioral health providers address compliance issues, manage risk, increase productivity and improve outcomes.

Most often, she sees SUD providers run into issues related to government payers. Because most owners and operators started out as clinicians themselves, they don’t always have the best knowledge of best billing practices or state-by-state variations in Medicaid program rules.

Scott Leshin, CEO of SJ Health Insurance Advocates, agreed.

He shared his insights on the topic recently in the State of Addiction Treatment 2021, a report designed to give SUD treatment providers a comprehensive overview of COVID-19’s impact on commercial SUD treatment. The publication was produced by Joanna Conti and published by Vista Research Group.

“The main thing to remember about audits is that they come with insurance coverage – Medicare, Medicaid and private,” Leshin said. “This is the two-edged sword of insurance. Still, there is reason to be cautiously optimistic that with the right preparation, facilities will not be at increased risk.”

Protecting oneself from an audit comes down to having the right people, processes and technology in place, Hall-Gaulin explained.

On the people front, that means having a detailed understanding of who can provide which services — and where. Many times, providers get into trouble because they don’t realize their clinicians don’t have the proper certification to provide a certain service in a certain state.

“That’s one of the things that kind of gets overlooked because you’re so worried about the documentation of the service, making sure the treatment plan is in there, making sure everybody understands what the treatment plan is and reporting back on the response to therapies,” she said, also noting that it’s important for providers to thoroughly educate clinicians and ensure they’re detail-oriented and buttoned up in their documentation practices.

Additionally, SUD providers should have a process in place for internal audits, which need to be conducted regularly, Hall-Gaulin said. The idea is to catch and correct compliance issues before government or private payers flag them.

Finally, technology is also key. Hall-Gaulin advised providers to implement behavioral health-specific EHRs, as well as billing technologies that can be audited for accuracy.

In the event a provider has already made a mistake in any one of those areas, it’s not too late to get ahead of the problem. For example, the federal government has a 60-day overpayment self-disclosure rule, which allows organizations to self-report overpayments and correct past claims in a certain time frame.

“You could go back a full year with Medicare, and if you say, ‘Oops, we did a bad thing, and we need to correct all the claims,’ you could correct them,” Hall-Gaulin said. “But anything past that, you have to essentially do a probe sampling and potentially a statistically valid sampling of what the problem is.”

Even if the latter is the case, it’s important for providers to be upfront any time they uncover an issue, she went on to stress.

“The biggest thing is, … if you discover there’s an error, especially an overpayment error, you need to work to self-disclose before somebody else comes in and makes you, which is always worse.”

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