New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on April 10, 2002, representing the position of the New York State Insurance Department.

RE: Audit of Health Insurance Claims

Questions Presented:

1) How long after claims for health care services have been submitted and paid may an insurer audit the records of the submitting health care provider, who is part of the insurer’s network of participating providers?

2) May the insurer contact the patients on whose behalf the health care claims were submitted by the in-network participating provider?

3) May the in-network participating provider charge the insurer for the work involved in providing the information that the insurer requested for audit purposes?

Conclusions:

1) The New York Insurance Law does not address the auditing of a health care provider by an insurer. An in-network participating health care provider should refer to his or her contract with the insurer to determine whether the contract imposes a time limitation on audits conducted by the insurer. If no time period is given, the statute of limitations for contracts in New York is generally six years, pursuant to N.Y. C.P.L.R. § 213 (2) (McKinney 1990). Additionally, an insurer that suspects possible fraudulent activity in the filing of claims is under an obligation to investigate such activity, and to report such activity to the Insurance Department pursuant to N.Y. Comp. Codes R. & Regs. tit. 11, Part 86 (Regulation 95). Regulation 95 does not provide a time limitation for fraud investigations.

2) The New York Insurance Law does not address whether an insurer may contact the patients upon whose behalf the health care claims were submitted by the in-network participating provider.

3) The New York Insurance Law does not address whether an in-network participating provider may charge an insurer for the work involved in providing information that the insurer requested for audit purposes. The participating provider should refer to his or her contract with the insurer to determine whether the insurer is contractually obligated to pay for such services.

Facts:

A physician under contract as an in-network participating provider with an insurer stated that in late 1998, the insurer requested that copies of twenty patient records be provided for auditing purposes. The physician stated that the insurer contacted, or attempted to contact, those twenty patients (some of whom are since deceased) to confirm with them that they had received the treatment recorded in the physician’s patient-charts. The physician stated that some of the patient records that the insurer requested copies of were more than seven years old. The physician stated that two years thereafter the insurer’s agent advised that $3,600 was owed to the insurer because the information the physician submitted did not comply with the insurer’s claim filing procedures. The physician stated that the agent did not provide sufficient detail about his alleged failure to comply with claim reporting procedures. The physician stated that three months later the insurer sent a more detailed explanation, but that it was incorrect.

Analysis:

The inquiries posed by the in-network participating provider regarding insurer audits are not addressable by the New York Insurance Law. An in-network participating health care provider should refer to his or her contract with the insurer to determine whether his or her concerns are addressed therein.

With respect to the inquiry regarding the last date in which an insurer may conduct an audit, please note that, generally speaking, if a contract does not specify a time frame in which an act or obligation thereunder must be completed, the six year statute of limitations applies, pursuant to N.Y. C.P.L.R. § 213 (2) (McKinney 1990), which states:

The following actions must be commenced within six years:

* * * *

2. an action upon a contractual obligation or liability, express or implied, except as provided in section two hundred thirteen-a of this article or article 2 of the uniform commercial code or article 36-B of the general business law[.]

Additionally, N.Y. Comp. Codes R. & Regs. tit. 11, Part 86 (Regulation 95) obligates an insurer that suspects possible fraudulent activity in the filing of claims to investigate such activity, and to report such activity to the Insurance Department. Please note that Regulation 95 does not provide a time limitation for fraud investigations.

For further information you may contact Senior Attorney Sally A. Geisel at the New York City Office.

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