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Ignoring an Insurance Audit: A Full Guide

When an insurance company sends you an audit, you may feel the need to ignore it so that it will just go away. But this can prove dangerous to your business in the long run, as missing an insurance audit can cancel your policy or other negative results that you’ll regret later on down the road.

To ensure you don’t end up in this unfortunate situation, follow these tips on avoiding an insurance audit and how to handle one if you do get one.

What is an insurance audit for?

Insurance audits are done to check whether insurance companies have paid claims correctly. Insurance companies audit a specific period—typically one year—to ensure that their claims payments are accurate and in line with what their customers have been paying for their insurance policies.

If an insurance company suspects fraud, it can request to audit your records back up to three years (with some exceptions).

If you think that you may be a target for an audit, make sure that your documentation is organized and easy to access when you receive a request from your insurer.

When conducting an audit, insurers often review doctors’ reports and other paperwork related to specific claims and examine whether your submissions match those provided by providers.

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Step 1: Contact your provider.

Before ignoring your insurance audit, contact your provider and speak with someone who can help. Ask if they have specific questions or want more information to help process your claim. They may need more detailed information to process your claim.

Step 2 – Download your claims and Explanation of Benefits (EOB)

As soon as you can, after receiving a letter from your insurance company regarding an audit, download your claims and EOBs. You will want to keep them in a folder that can be easily referenced throughout your audit.

Having all of these records in one spot will make it easier for you to compare claims, receipts, invoices, and other documents to ensure they all match up.

It is best to have multiple copies of each record—you may need more than one copy during different stages of your audit.

For example, you might request additional documentation from your doctor or medical provider if anything is missing or altered on their end during its review.

Step 3 – Prepare Your Defense

When you get a notice from your insurance company, don’t panic. Before writing back to them immediately, take some time to read and understand their allegations. This will be invaluable for your case in answering insurance audit questions and help you avoid making any mistakes when responding to them.

The more information you can provide that is free of errors or inconsistencies, the better your chances of getting through an audit quickly and with minimal fees owed.

Step 4 – Respond to the Provider’s Offer

Finally, the provider has made you a price offer. It’s time to respond! This is where some patients are tempted to accept the deal without knowing what their provider does or does not cover. Again, we stress the importance of thoroughly understanding insurance coverage rules and how your health plan works. 

The easiest way to do that is by requesting your insurance card and reading all of the information included in it—notably the pamphlet titled What You Need to Know About Your Coverage. If you have questions after reading through that pamphlet, it may be a good idea to talk to someone at your health plan or insurance company.

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Step 5 – Review the Agreed Upon Resolution

Once you receive the audit results, review the Agreed Upon Resolution (AUR) and consider your next steps. What’s right for you might not be suitable for another business owner. 

For example, if you know one of your employees changed a claim, even with their best intentions to help out a customer, it might be a good idea to correct the situation on your end so that it doesn’t happen again.

 On the other hand, if you’re unfamiliar with what led to those claims being filed in the first place and don’t understand how they could have possibly been denied coverage in error, it might be worthwhile to pursue legal action against the insurance company involved for monetary damages – your attorney can help with that step.

How long do insurance audits take?

How long an insurance audit takes largely depends on how far back you have to go in your records. Suppose you don’t have records dating back to when your policy began. In that case, you won’t be able to effectively account for every accident and injury over the years—and that means it will take a lot longer for your auditor to uncover discrepancies.

If you expect to renew with your current company, try keeping them on file for at least three years after coverage expires. Some companies will ask for six months’ worth of documentation, but some prefer as much as two years’ worth of coverage on file.

How long does it take to get insurance

What happens if I don’t complete an insurance audit?

Ignoring an insurance audit can carry a hefty penalty. You may have heard that companies that ignore a tax audit are subject to stiff penalties if they don’t eventually cooperate. Those penalties might even be more than what you owe in some cases! How will you know if your insurance company plans to take you to court?

 If they plan on legal action, they won’t accept incomplete documentation. What happens if I don’t complete an insurance audit? The policies aren’t going anywhere, and neither is your insurer—they’re just waiting for your response.

Final Thoughts

If you receive a notice of insurance audit, understand that you have a limited time frame to respond. Insurance companies are well aware that people ignore these notices and do so at their peril.

The longer you wait to get your act together, the more likely it is that something will be found amiss or missing. Even if you’re sure there’s nothing fishy going on, double-check every detail of your record-keeping just in case.

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