August 2000 Bulletin

AMA model contract prevents MCO retrospective audits

Retrospective audits are being used more and more often by managed care organizations (MCO), causing increasing alarm among physicians around the country, says the American Medical Association.

In a retrospective audit, an MCO reviews claims paid to a physician or physician group network over a period of time, sometimes going back several years, the AMA explains. If the MCO determines that it has paid physicians more than it should have, the MCO may issue a letter asking for repayment of the amount. Or, the MCO may attempt to offset the alleged "overpayments" by reducing from future reimbursement until the "overpayment" amount is satisfied.

In its updated publication, Model Managed Care Contract, second edition, the AMA says an MCO may explain that it determined that the claim was incomplete or coded incorrectly, or the MCO may say it paid for a claim that later was determined not to be covered. Sometimes, the MCO may not do an audit, but will use a formula and arbitrarily compare the physicians utilization with whatever standards the MCO is using to determine if the physician is giving appropriate care.

The AMA’s model managed care contract specifically precludes MCOs from offsetting future payments or from demanding overpayment reimbursement. The model contract requires the MCO to notify the physician within 15 days to request additional information if a claim is not considered "clean," and to provide a reason for the claimed deficiency. The model contract also states that all payments to physicians and physician groups/networks will be final unless adjustments are requested in writing by the MCO within 90 days after receipt. The model managed care contracts is on the AMA web site.


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