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Insurance Department outlines provider audit problems, plans rules and investigations; committee will hold bill for interim study
Summary
The insurance commissioner described audits, prepayment review and ‘‘clawbacks’’ that sometimes leave small providers with unexpected account debits; department will issue a revised bulletin, file rule changes (INS 1003) and conduct targeted investigations before the committee acts.
DJ Betancourt, commissioner of the Insurance Department, briefed the Commerce and Consumer Affairs committee on complaints about carrier audits, prepayment review and post‑payment ‘‘clawbacks’’ of previously paid claims.
Betancourt told the committee that audits commonly follow automated red‑flag triggers when a carrier detects code‑use anomalies or billing pattern changes. The process often includes prepayment review to check future claims and occasionally a retroactive recovery (clawback) of prior payments. The commissioner said the department has received accounts of small providers who discovered large sums removed from operating accounts without clear, timely instructions on how to remedy the situation.
Key concerns identified by the department included: (1) impersonal or poorly worded audit notices that imply wrongdoing where none exists; (2) carriers that use contract language to auto‑draft clawbacks directly from provider accounts; and (3) audit look‑back periods that in some cases exceeded the statutory 12‑month limit unless fraud is reasonably suspected. Betancourt described the need for better customer service, clearer instructions, accountable contacts for audits, and improved compliance with the 12‑month look‑back statutory limit.
The commissioner said the department will not immediately seek broad statutory overhaul; instead it will (a) reissue and tighten a departmental bulletin that explains legal expectations for audits and prepayment review, (b) advance rule amendments to INS 1003 and file them with JLCAR within the next two to three weeks, and (c) conduct targeted investigations to quantify frequency and severity of the problem. Betancourt advised the committee to retain the bill that prompted the briefing as an interim vehicle while the department completes those steps.
Committee members asked whether audits cause providers to withhold services; the commissioner said most claims (the overwhelming majority) are paid within 30 days, but acknowledged that isolated incidents can disrupt cash flow and threaten small providers’ operations. The department will return with findings and any recommended statutory changes if investigations show they are needed.
