Audits, & Compliance
Jeffrey Randolph, Esq.
Current Procedural Terminology
CPT is the coding language spoken between all health
care providers and insurance companies that allows
reimbursement for services rendered.
There are over 7,500 CPT codes but chiropractors
typically only use 25-30 codes the majority of the time in
Chiropractic Manipulative Treatment CPT Codes were
established around 1996-97.
A “modifier” is a numeric or alphabetic appendage to a
CPT code which notifies the payor that the code does
not meet the exact CPT definition. (i.e. CPT 99201-25)
CPT Codes (cont’d)
CPT Codes are updated by the AMA CPT
The panel consists of:
11 physicians from the AMA;
4 Members from the insurance carriers and
2 Members from the Healthcare Professionals
National Correct Coding Initiative
The NCCI is a federal program that
establishes a system of coding edits used
across the nation by Medicare.
The NCCI determines which codes for
Medicare reimbursement purposes should
not normally be separately reimbursed
and “bundles” their reimbursement
ICD-9-CM Diagnosis Codes
International Classification of Disease Clinical
Modification is a standardized coding of patient
You must place the appropriate ICD-9 diagnosis
codes in Box #21 of the CMS-1500.
Your diagnosis codes must support the billing
codes you use. I.e., if you bill for an extra-
spinal shoulder adjustment, a shoulder diagnosis
must be issued and linked to the procedure
CPT Codes for Chiropractors
There are three major general classifications of
codes chiropractors typically bill:
1) Evaluation & Management (E/M)
e.g. 99201 – new patient eval.
2) Chiropractic Manipulative Therapy (CMT)
e.g. 98942 – 5 region manip.
3) Physical Modalities
e.g. 97012 – mech traction
Evaluation & Management (E/M)
New Patient E/M: 99201-99205
Established Patient E/M: 99211-99215
Patient Consultation E/M: 99241-99245
New Patient E/M
Used when you first treat a patient that is
not a consultative referral.
A patient is “new” if they have not
received care by you or your group
practice within the past 3 years.
Three major components:
3) Medical Decision Making
New Patient EM Levels 1-5
CPT HISTORY EXAMINATION MDM
99201 Problem-Focused Problem Focused StraightFor.
99202 Expanded P-F Expanded P-F Straightfor
99203 Detailed Detailed Low Complex
99204 Comprehensive Comprehensive Mod. Complex.
99205 Comprehensive Comprehensive High Complex.
(NOTE: Time spent is no longer a key component since 1992)
E&M for Established Patients
Any patient treated by your or your group
practice in the past 3 years.
Should be performed every 12 visits or 30
days (not every visit).
May be used with new or established patients.
Patient must be referred to you by another
practitioner for your professional opinion.
Same 3 key components (History, Exam, Medical
Must send a written report to referring
Must identify referring practitioner in Box 17 of
CMS-1500 & UPIN in Box 17a.
Chiropractic & Physical
CPT Manual divides the spine into 5
Five Spinal Regions:
1) Cervical (including atlanto-occipital joint)
The AMA CPT Manual divides the body
into 5 extra-spinal areas:
1) Head (including TMJ)
2) Lower Extremity
3) Upper Extremity
4) Rib Cage
Primary Chiropractic Codes
CPT 98940: 1-2 Region CMT
CPT 98941: 3-4 Region CMT
CPT 98942: 5 Region CMT
CPT 98943: Extraspinal (1 or more regions)
NOTE: Medicare only reimburses for CPTs 98940-98942.
When Billing a CMT & Extraspinal on same visit, use modifier -51 on the
extraspinal (i.e. 98943-51).
CMT & E/M Billing
If E/M and CMT are performed on the same
date, bill with a modifier -25 to indicate a
significant separately identifiable service
AMA CPT Manual: CMT codes include a pre-manipulation patient
assessment. Additional E/M services may be reported separately
using the -25 modifier, if the patient’s condition requires a
significant, separately identifiable E/M service, above and beyond
the usual pre and post-service evaluation associated with the
Refer to the AMA CPT Manual
Modifier -25: Separately Identifiable Procedure.
i.e. 99213-25 when billed with 98940
Modifier – 52: Reduced Services.
i.e. 97140-52 for less than 15 minutes
Modifier – 59: Distinct Procedural Service
i.e. 98943-59 when billed with 98940
Defined as: “any physical agent applied to
produce therapeutic changes to biological
tissue including but not limited to thermal,
light, acoustic, mechanical or electrical
Also used to enhance, facilitate and
prolong the effects of the spinal
Broken down into two major categories based upon providers level
of interaction with patient:
2) Constant Attendance
2) Must prove functional improvement.
3) CCI edits may apply
4) Medicare does not reimburse
5) Some carriers may limit the number of modalities reimbursed per
visit (i.e. 2 per visit)
6) In No-Fault States, most CMT & modalities included in daily cap for
reimbursement (i.e. NJ - $90 daily cap).
Supervised Physical Modalities
The application of a “supervised” modality does not require direct
(one on one) contact between the provider and patient. May be
billed only once per encounter as they are not time based.
Primary Supervised Codes:
CPT 97010 – Hot / Cold Packs
CPT 97012 – Mechanical Traction
CPT 97014 – Elec. Stim, unattended
CPT 97016 – Vasopneumatic Devices
CPT 97018 – Parrafin Bath
CPT 97022 – Whirlpool
CPT 97024 – Diathermy
CPT 97026 – Infared
CPT 97028 - Ultraviolet
Physical Modalities Requiring
Application of these modalities require direct (one-on-one) contact
between the patient and the provider. Time based procedures and
must follow timing guidelines.
Primary Constant Attendance Modalities:
CPT 97032 – Elec. Stim. (attended)
CPT 97033 - Iontophoresis
CPT 97034 – Contrast Baths
CPT 97035 – Ultrasound
CPT 97036 – Hubbard Tank
CPT 97039 – Unspecified Phys. Modality
e.g. Low Level Laser
AMA CPT Guidelines:
1 Unit: 15 minutes
If < 15 minutes, use modifier -52 and reduce billed
CMS (Medicare) Guidelines*
1 Unit: 8-22 Minutes
2 Units: 23-37 Minutes
3 Units: 38-52 Minutes
* Does not include pre and post manipulation work.
Therapeutic Procedure Codes
Application of these modalities require direct (one-on-one) contact between the patient and the
provider. Active therapies as opposed to previous therapies which are passive.
CPT 97110: (Therapeutic Exercises) Used to develop strength, endurance, range of motion, and
flexibility. (i.e. treadmill, isokinetic exercise, lumbar stabilization exercises, gymnic ball).
CPT 97112: (Neuromuscular Re-Education) Used to increase balance, coordination, kinesthetic
sense, posture, and proprioception.
CPT 97113: (Aquatic Therapy) with therapeutic exercises
CPT 97116: (Gait Training) including stair climbing
CPT 97124 (Massage Therapy) Effleurage, petrissage, tapotement. A more passive procedure
for restorative response.
CPT 97140 (Manual Therapy Techniques) Mobilization, manual lymphatic drainage, manual
traction,trigger point therapes, myofascial release.
Therapeutic Procedure Codes (cont’d)
CPT 97150: (Group Therapeutic Procedures) for a group of 2 or
more patients report 1 unit for each patient. Billed once per session
regardless of time.
Does not require one-on-one patient contact but does require
i.e. Neuromuscular reeducation in a group setting (use 97150 in
place of 97112)
CPT 97530: (Therapeutic Activities): use of dynamic
activities to improve functional performance. Requires
one-on-one patient contact. Used when multiple
parameters are involved including balance, strength, and
range of motion. Must be related to a functional activity
and functional improvement expected.
Billed in 15 minute increments.
STRAPPING- treatment to stabilize an
injury and/or afford comfort to the patient
CPT 29200 – Thorax
CPT 29220 – Low back
CPT 29240 – Shoulder
CPT 29260 – Elbow or wrist.
CPT 29280 – hand or finger
Diagnoses & Coding
The proper diagnoses and order they are inputted on the CMS-1500
form will prevent unnecessary denials.
The diagnoses that you assign directly relates to the level of care
deemed medically necessary by UM reviewers. Your ICD-9 codes
trigger a computer database which allows a programmed level of
You need to relate your diagnoses (Box 21) with the CPT Code
Diagnoses reference (Box 24e) you put on the form.
For Medicare, you must diagnose a subluxation to be reimbursed.
Always carry out your ICD-9 diagnosis codes to the 4th or 5th digit
and do not use non-specific or non-classified codes.
As the patient’s condition improves from
treatment, you must periodically re-
evaluate the patient’s condition and
update your diagnoses.
Documenting Medical Necessity
Documentation is key to back up your treatment and
Use the Standard SOAP format modified to SOAAP by
adding an extra “A” for Activities of Daily Living.
Medicare follows the “PART Format:
“P” ain / Tenderness
“A”symmetry / Misalignment
“R” ange of motion
“T” issue / tone changes
Documentation is key! An insurance adjuster must be
able to see what you see of the patient.
1) Document how symptoms impact activities of daily
2) Document goals for the patient and establish a
reasonable timeline to reach those goals;
e.g. Patient will increase tolerance to sit for up to 60 minutes within the
next four weeks.
3) Document the patients progress toward those goals in
the daily SOAAP notes.
4) Update your treatment plan every 30 days or 12 visits
or any time there is a significant change in the patient’s
i.e. exacerbation, new injury, discharge exam.
Medical Necessity Documentation
5) Document functional measurements
(i.e. Range of Motion) to document
6) Document measurements, comparison
data, test results, co-morbidities, etc to
paint a picture of what is going on with
Expected Medicare CMT
CPT 98940: 40%
CPT 98941: 45%
CPT 98942: 15%
Medical Necessity Documentation
7) Full spine adjustments: You should
prioritize your adjustment and code for
the primary area of concern.
8) Do not upcode or downcode your
services as this is insurance fraud. Make
sure your documentation supports your
Audit Red Flags
Establishing Your Compliance
Red Flag #1
Billing a 98941 or 98942 on every patient each
visit because you are a full spine doctor:
The insurance companies only want you billing
for areas that the patient complained of, or
where you diagnosed a problem and have
objective findings. If you bill for an area where
there is no problem or subluxation, it is
Red Flag #2
Full spine x-rays on each and every patient on the
initial exam and then again as a re-check:
Performing and billing these on every patient
when there is no complaint or diagnosis in each
spinal region. Re-x-raying all areas in order to
view a patient’s “progress”. Only bill for x-rays
which are considered “medically necessary”, and
perform the minimum views needed to gauge a
Red Flag #3
Billing out a 97140 manual therapy in place
of a manipulation code because it pays
If an insurance company does not see a
manipulation code and only therapy codes
a red flag might be triggered.
Red Flags # 4
Billing an E/M code on each visit: 99211-5.
In order to bill out an established patient 2 of the 3
key components have to be fulfilled.
If in fact you did not fulfill 2 or 3 of the 7 it should
not be billed.
Red Flag #5
All new patients are billed as a 99204
or 99205: these are complex
examination codes that are used but
not as frequently in a chiropractic office
Red Flag #6
Billing for both a spinal and extremity
adjustment on each patient:
This sets up a pattern.
The insurance companies knows that not
every patient is going to need an extremity
adjustment unless you’re a chiropractor for a
Red Flag #7
Spending less time than the
guidelines state when doing timed
codes: codes requiring 15 minutes
of contact time with the patient
require 15 minutes of time spent
with them. Spending less time
requires the use of a 52 modifier.
Red Flag #6
Billing for attended electrical stimulation
when in fact it was unattended:
Bill the actual code that best describes the
NEW PIP Regs:
Unattended stimulation must now be reported
using HCPCS Code G0283 which is part of the $99
cap & not separately reimbursed.
Red Flag # 9
Billing insurance company when the
patient wasn’t even in the office.
This is per se fraudulent billing & will
earn you an orange jumpsuit.
Red Flag # 10
Billing a new patient code if you have
seen a patient within the last 3 years.
You should bill the established patient
This applies even if the patient has an
auto accident, work injury, new insurance
Red Flag # 11
Not collecting co-payments or
If you are waiving co-pays or
deductibles, have your patient sign a
financial hardship form.
Red Flag # 12
Separating the diagnostic global
fee into professional and technical
Both components are included in
the code and you should not un-
bundle them .
Red Flag #13
Advertising free consultation and then
billing out a new patient E/M code for the
In New Jersey, you must put the
approximate value of the free exam and
cannot bill for services on the same day
without a waiver form signed.
Red Flag # 14
Billing for manual therapy (97140),
neuromuscular re-education (97112), or
massage (97124) in the same area as
the spinal adjustment on the same day.
Insurers consider these as redundant
when performed in the same area on the
Red Flag # 15
Multiple or on-going passive
Patients should be progressed to
active care as their treatment
Red Flag # 16
Services rendered beyond maximum
therapeutic benefit or billing for
Insurance companies will pay for therapeutic
or supportive care which has a defined
clinical end point.
1) DOCUMENTATION IS KEY!
2) If you bill a five region CMT code, make sure
your SOAP notes support all five regions.
3) Make sure your notes support any extra-
4) Make sure level five consults meet CPT
Manual Criteria (www.amapress.com).
Compliance – Audit Exposure
Drilldown into CPT Code for all claims within the Red, if max times/pat > limit.
selected provider period set with month of service
Orange, if max times/pat = limit.
= October 2005, and CPT code = 99201.
Drilldown for all patients with CPT code = 98941 and
max times/pat = 25 times.
Compliance – Audit Exposure
If max times/pat > limit, drilldown for all patients above the limit.
(e.g., if limit = 15, drilldown for all patients with 98941 18 times in
If max times/pat < limit, drilldown for all patients that are at the max.
(e.g., if limit = 15, and current max/pat = 12, drilldown for all patients
that have with 98942 12 times in that month)
The drilldown into CPT Code returns all claims
within the selected provider period set with that
month of service and CPT code.
Bill S. 2824
1) Took effect July 11, 2006. Regulations are
still being written by DOBI.
2) Limits post-payment review look backs to 18
months except in the case of fraud or a pattern
or inappropriate billing or claims.
3) Insurers must post on the internet all clinical
guidelines relied upon in utilization management
and they may only be used as a screening tool.
4) UM denials must be made by a practitioner
licensed in NJ.
Bill S. 2824 (cont’d)
5) Insurers have 15 days maximum to respond
to authorization requests or the request is
6) If care is properly preauthorized, insurer
cannot later deny reimbursement absent fraud
7) Insurer cannot change any diagnostic codes
without written justification.
8) External appeal program remains for medical
necessity appeals with interest rate raised from
10% to 12%.
Bill S. 2824 (cont’d)
9) New binding arbitration system set up (similar to PIP) for non-
medical necessity appeals with award of attorneys fees and costs.
A) 90 days to file from receipt of denial;
B) Must be at least $1,000 in issue.
C) DANGER – arbitrator can award insurer a refund plus 20% interest if they
find doctor engaged in a “pattern and practice of improper billing.”
10) Insurer can be assessed a penalty of $10,000 per day for
violating the Act.
11) Insurers cannot use “extrapolation” of data in post-payment
A) A lawsuit or arbitration is filed;
B) An administrative proceeding is initiated;
C) There are altered / reconstructed records or a material number of records
D) There is clear evidence of fraud & the insurer refers the matter to the
Office of Insurance Fraud Prosecutor.
Bill S. 2824 (cont’d)
12) Claim Blocks are permitted.
A) Can delay imposition of block by appealing and
arbitrating except in the case of fraud referral to
13) Post-Payment audits can be submitted
to binding arbitration following an internal
A) Must appeal within 45 days and exhaust
internal appeal process.
B) DANGER – extrapolation allowed.
What Do I Do if Audited?
1) Cooperate with the audit – stonewalling will get you a more
2) Don’t volunteer information or talk substance with the auditors.
3) Do not ever “touch up” or otherwise change your notes or chart.
4) It is your job to ensure auditors get all of your supporting
5) Only send notes for the time frame being audited and do not
send original, only copies.
What to Do if Audited (cont’d)
6) Avoid the audit in the first place by avoiding the audit
Billing Precision offers automatic audit flagging of your claims.
Set up a compliance program in your office to ensure proper coding
and compliance with laws and regulations.
7) Prepaid Audit Defense Plan
Many general prepaid legal plans exist but only one deals
specifically with audit defense.
Your malpractice and general liability insurance policies do not
cover audit defense legal fees and costs, leaving you fully exposed
to audit liability.
An audit prepaid defense plan does not indemnify you for any
monies you ultimately owe based upon an audit, but provides free
and discounted legal defense coverage and financial preventive care
for your practice.
What does implementing a compliance
Performing a baseline audit on your practice.
Preparation of a self-audit report and
recommendations to bring office into compliance.
Incorporating self-audit results into an office
Training yourself and staff on compliance
standards through team meetings.
Ongoing monitoring of your practice compliance.
Tell me more about the baseline self-audit.
Your office fills out a comprehensive compliance
questionnaire regarding your billing practices, practice
structure, network affiliations, etc.
An attorney and a certified coding expert with experience in
chiropractic coding and billing will come to your office to go
over the questionnaire and have the coder review a random
sampling of patient files.
All network participating provider contracts are reviewed by
the attorney and relevant provision summarized.
A baseline audit report will be written by the attorney
incorporating the findings of the baseline audit and making
specific recommendations to reduce your practice exposure.
A conference call or in-person meeting is held to
review the baseline audit report and discuss your
plan of action to make your office fully compliant.
You are provided a Practice Compliance Manual
incorporating the baseline audit findings and
recommendations and a monitoring schedule will
be set up to ensure you are following the manual
on an ongoing basis.
You take over monitoring with only periodic, as
needed, intervention by the attorney/coder.
Why do I need an attorney to prepare the
baseline audit report and manual?
Anything revealed is protected by the attorney
If the coder is retained by the attorney, their work
product is also protected by the privilege.
Make sure you retain an attorney experienced in
health care law, not your uncle who does real
estate closings even though he may do it for
cheaper or free.
What exactly does the baseline audit report
i) corporate structure;
ii) leasing arrangements;
iii) practice area overview;
iv) a review of all managed care participating provider
v) licensed professional staff employment practices review;
vi) company education and training;
vii) company employment practices, including but not limited
to workplace harassment, anti-discrimination policy,
background checks, and licensure verification procedures;
viii) history of administrative or legal problems;
ix) referral relationships;
x) diagnostic testing policies;
xi) audit history;
xii) clinical treatment guidelines;
xiii) insurance & patient billing procedures;
xiv) billing, coding, and documentation review of a
random sampling of files performed by a certified
chiropractic coding expert;
xv) financial waiver policy and practices;
xvi) company delegation policies; xvi) policy on
treatment of family and staff; & xviii) company
If you are audited and settle the case, you
will most likely have to institute a
Having a pre-existing compliance program
makes it easier to settle an audit
reimbursement case and may be the
difference between just owing money
back and a criminal fraud action.
10) The most important question: How
much will this set me back?
Depends on size of practice, number of network
affiliations, whether you are multidisciplinary, and
how compliant you already are.
Standard fees average from $1,500 for a sole
proprietorship with few compliance issues to
$3,500 for a multidisciplinary practice with major
2006 PIP Regulation Amendments
$90 daily cap raised to $99, an approximately 10% increase, but
CPTs 97112 (neuromuscular reeducation), 97530 (therapeutic
activities) and 98943 (extraspinal mani.) are added to the cap.
Osteopathic manipulation is added to the $99 cap.
Fee Schedule set at 130% of Medicare (RBRVS) rates, increased
10% from 120% as originally proposed.
Non-Fee Schedule codes are no longer to be paid at 120% of
Medicare rates but rather are still paid at the providers usual and
customary rate as determined by the insurer. PIP Carriers are
authorized to use Ingenix database to determine UCR.
2006 PIP Regulation Amendments
CPT 97014 (unattended electrical stimulation) not reimbursable
and must be reported using HCPCS Code G0283 which is part of
Nerve Conduction Studies must be interpreted by the physician
that performs it on site or directly supervises its performance.
Needle EMG interpretation must be performed by the same
physician that performed or directly supervised the Nerve
Conduction Studies and must be performed on the same day.
EMG/NCV results must be reported in a single, unified report.
2006 PIP Regulation Amendments
Mechanical traction (DRX/VAX-D) must be billed under CPT 97012
which pays $24.60 in the North and $23.64 in the South.
Low level / cold laser must be billed under CPT 97026 which pays
$7.22 in the North and $6.86 in the South.
MUAs are fee scheduled codes where previously they were UCR.
Fee schedule reimburses primary doctor $197.57 in the North,
$190.58 in the south and facility fee of $1,694.39 in the North
and $1,569.61 in the South. Assistant is reimbursed at 20% of
primary doctor’s fee. Previous UCR fees were approximately
$1,500 primary doctor, $750 assistant, and $5,000 facility.
Question & Answer
Jeffrey B. Randolph, Esq.
Labady & Randolph, LLC