Craig S Steinberg, O.D., Esq. Optometric & Healthcare Law

If you have just received a Notice of Adverse Action from VSP following an SIU audit of your office, here is some information that you may find helpful. I cannot urge you strongly enough to promptly seek the counsel of a qualified attorney before you do anything and before you speak with VSP.

[Note: for information about how VSP calculates restitution, and a detailed description of the errors VSP makes in that process, please click HERE and read the article, VSP Statistics 101.]

1. You have probably been ordered to pay restitution, and you may or may not have been given notice that your VSP member contract is being terminated. Read the Notice of Adverse Action carefully so you understand it.

If your VSP member contract is being terminated, you should know that VSP will probably report to the NPDB (National Practitioner Data Bank) that you have been terminated for false or misleading billing. That NPDB report will be on your "record" forever, and all other 3rd party payers will be notified or can discover this information. VSP may also report the termination to your State Board, and the Board may bring disciplinary action against your license for insurance fraud/unprofessional conduct.

In many cases, by appealing the audit, you can obtain a reversal of the decision terminating your VSP membership, and in so doing, avoid the reporting to the NPDB and to your State Board.

In some cases the VSP auditor will "offer" to reverse the termination and put you on "conditional status" (e.g. probation) IF you agree NOT to appeal and to pay the restitution in full. If this "offer" is made to you, record the date and time and make notes of what the auditor says to you. I consider this unethical, even a form of extortion, and you can advise the VSP hearing panel of the auditors "offer" during a hearing.

2. Your Notice of Adverse Action will probably indicate that you should speak with the auditor about the audit results, and that if you don't, after 10 days the audit becomes final.

Understand that IF you speak with the auditor, anything you say can be brought up by the auditor if you later have a VSP hearing. The auditor will take notes of your discussion and use your comments against you if he/she can do so. Because of this, I typically do not advise speaking with the auditor.

It has been my experience that the main reason the auditor wants to speak with you is to offer you a small discount in the restitution in exchange for you agreeing not to appeal and to pay the restitution. The auditor does not want you to appeal and bring scrutiny to his/her audit. The only leverage you have in negotiating a resolution is the "threat" of an appeal. I don't recommend giving that right up.

You do NOT have to speak with the auditor. It is up to you. If there are easy issues, you may want to speak with the auditor and provide additional information in the hope of getting your restitution reduced. But don't set your expectations very high. The auditors are not working FOR YOU. Chances are they chose to audit you because they already decided you are probably overbilling or defrauding VSP. From that point on, it appears to me that their only goal is to prove what they already believe to be the case.

3. You have probably been ordered to pay the "audit fees." This typically ranges from $6,000 to $9,000. Though VSP will try and collect them from you, you do not necessarily have to pay all these fees. 

Prior to the 2015 Network Doctor Agreement, VSP's Network Doctor Agreement (NDA) provided that you must pay VSP's reasonable out-of-pocket expenses incurred in the audit. But VSP charges you for the auditors time, even though it is not an out-of-pocket expense. I do not believe this is recoverable, and the VSP hearing panel has generally agreed. You should ask to see the breakdown of the audit fees and agree to pay only the legitimate travel expenses. If you ask for a hearing there is a good chance you will not have to pay the additional audit fees for the auditors or the optometry director's time.

If you have signed a new Network Doctor Agreement since January 2015 your contract probably says that VSP can charge you the fair market value of the auditors time. Nonetheless, there is room to challenge this in most cases.

4. You have the right to have a hearing to contest the audit. In many cases you will be able to obtain a reduction of your restitution and/or a reversal of the decision terminating you from the panel through the hearing process.

The VSP hearing is held before three practicing optometrists. While they are typically members of the VSP Board of Directors, and are therefore not "neutral" in the ordinary sense, they are practicing optometrists and often disagree with the conclusions of the auditor. So do not assume you will lose if you appeal. It is all about putting together your evidence and demonstrating, in an organized coherent way, that your billing was correct. In addition, there are often legal arguments that can apply to reduce your restitution. While every case is different, I've obtained many reductions in restitution, often of 50% or more.

5. VSP will start withholding your VSP checks until after a hearing and final determination of the matter. You need to plan accordingly. 

Though I do not believe it is legal for them to do so, even before you get a hearing to contest the auditor's findings, VSP will begin withholding your VSP checks and holding the money to apply it to your restitution amount. There is little you can do about this, other than submit a written complaint to the California Department of Managed Health Care and ask them to intervene. So, you should expect your office cash flow to be impacted -- you will stop receiving VSP checks. You should plan accordingly.

6. If the audit results are correct, and you have been overbilling or falsely billing VSP, you should NOT concede anything and you SHOULD obtain professional help immediately. 

As mentioned above, VSP will turn some cases over to the State Board for possible license discipline. With good legal assistance, this may be avoided, and, even if it can't be avoided, the ability of the Board to seek discipline can be significantly reduced by proper handling of your case. Do NOT just agree to pay VSP in the hope the matter will go away. That may be used against you by the State Board as a tacit admission of wrongdoing. VSP is most interested in getting paid, and with legal assistance an agreement can often be reached to mitigate or minimize your state board discipline exposure. I have been successful in many cases in negotiating settlement agreements with VSP, and in negotiating with the State Board, to avoid license discipline.

7. What are the most common findings and how do I respond to them?

VSP typically audits a "line of business." For instance, it may be VNCL (visually necessary CL), or elective CL, or primary eye care, or low-power spectacle prescriptions.

Lately (in 2014-2015) most audits have been focused on contact lens practices. VSP will challenge the clinical basis for a VNCL charge, and they will look closely for proof of a CL fitting, and that your fitting and material fees are correct. VSP does not permit you to charge more for a VNCL fitting than you'd charge for an elective fitting of the same lens type. And they do not permit you to charge more for materials simply because the patient qualifies for VNCL. They will assert they have been overbilled if you do that in either case. They also look to see if your records reflect that a fitting was actually performed if you billed for a CL fitting. And they look for proof that contacts were ordered AND were dispensed (e.g. there is a date dispensed describing WHAT was dispensed and when).

Your records are the key. They will save you, or they will bury you. But remember that financial records, invoices, credit card receipts, notes, and other items like these are part of the patient record, and they can be used to prove that lenses were ordered and dispensed. But, if you don't document the CL fitting/evaluation, it is hard to defend and you are likely to have to repay VSP a lot of money. Write MORE, not less.

Hopefully some of this information will help you if you've been audited. Please feel free to email or call me if you have questions, and certainly if you've received a Notice of Adverse Action from VSP.