If you are like most therapists, the thought of an insurance audit fills you with anxiety and dread. Perhaps you have heard horror stories about companies recouping therapist earnings, or maybe you just loathe the idea of submitting the necessary paperwork.

Either way, the best way to survive an insurance audit is to be prepared for if and when one occurs. Here, we break down everything you need to know about insurance audits.

What is an insurance audit?

An audit is a review of treatment records to ensure there is no fraud, abuse, or waste. While some audits are initiated in response to “red flags” like mismatched CPT codes and atypical billing patterns, insurance companies also perform audits randomly as a routine part of business operations. Audits are scored on a pass/fail system and require a minimum of 80% compliance to pass.

I am not contracted with any insurance companies. Do I need to worry about audits?

Unfortunately, yes. If any of your patients use out-of-network benefits to pay for your services, insurance companies can request to review records for medical necessity. Even though you don’t have a contract with your patient’s insurance company, your patient does, and that contract includes the right to review records.

How can I avoid an insurance audit?

The short answer is you can’t. Insurance audits are kind of like the additional screens at the airport security line; if you travel (or practice) long enough, it’s likely to happen to you at some point. However, you can save yourself additional angst by following these best practices:

  • Keep good records

When it comes to insurance companies, less is more. Under HIPAA, insurance companies are only entitled to the minimum amount of information necessary to support the audit. This generally includes:

  • Patient name and date of birth
  • Dates of service
  • Start and stop times for each session
  • Symptoms and diagnosis
  • Treatment plan
  • Response to treatment

If you feel the need to document beyond what is listed, keep a separate file of therapist notes that cannot be audited by insurance companies.

  • Use an EHR

If you don’t already use an electronic health record (EHR), you might want to consider making the switch. In addition to storing patient records, EHR’s can help ensure that the details of your claims match those of your other records and that there are no inconsistencies in service dates, CPT codes, diagnoses, etc.

  • Know the rules around billing, CPT codes, and modifiers

Do you know the difference between CPT code 90834 and 90837? When to use a modifier or add-on code? Not surprisingly, there are myriad rules for behavioral healthcare claims. Sometimes, even the most minor aberration can trigger an audit. Familiarize yourself with the billing specifications of your patients’ insurance companies, or if all those CPT codes have you bleary-eyed, use a 3rd party billing service.

I’ve been audited by an insurance company! Now what?

First, take a deep breath. Depending on the nature of the audit, your job may be as simple as uploading a few documents to an online portal. Here are some audit “dos and don’ts” to guide you through the process:


Read the audit letter carefully and thoroughly. It should include clear instructions as to what documentation is required, how to submit it, and who to contact with questions.

Notify your patient that their insurance has requested their records. While your informed consent should include permission to release information to insurance, giving your patient a heads-up will allow you to address any questions or concerns they might have.

Check your insurance contract (if you are in-network) for your rights and responsibilities, and verify your state’s recoupment laws to learn when insurance companies are entitled to recover payment.

Enlist the support of colleagues, mentors, or professional organizations.


Edit your notes before uploading them; EHR’s will record these edits, and unless they are clinically justified, you could be accused of fraud.

Be afraid to reach out to the insurance company with questions, especially if anything in the letter is unclear.

Provide additional information beyond what is requested.

Panic if you don’t get a response from the insurance company. When it comes to insurance audits, no news is good news. If there is a problem with the records you submitted or if the company requires additional information, they will let you know.


An insurance audit can be a stressful experience even for the most practiced therapist. But with a little preparation and a lot of deep breaths, you can navigate the process with confidence and integrity.

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