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Strategies for a Dental Practice to Prevent or Prepare for a Clinical Audit

Christine Taxin, Adjunct Professor, New York University, New York, New York

November 2011 Course - Expires November 30th, 2021



This article reviews the need for dental charts to reflect accurate procedural and diagnostic reporting for insurance reimbursement and for a practice to be prepared in the event it becomes audited. Factors involved in compliance and aspects of a clinical audit are discussed. The need for proper documentation and coding is emphasized, along with the importance of transparency. The article also describes the role of third parties in auditing claims and explains steps that can help minimize the risk of a practice becoming targeted for an audit.

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At some point over the course of a career, a dentist may be confronted with a clinical audit. By keeping in compliance will rules and regulations, the dental office can be prepared for an audit and possibly even prevent the need for one. This article explains the elements of a clinical audit and offers strategies to ensure a dental practice's documentation is in the best possible form to emerge successfully from an audit if one should occur.

Overview of a Clinical Audit

When an audit of a dental practice is ordered by either an insurance company or a government agency, auditors will review several areas. They will check the office's use of diagnostic testing, including why a test was ordered and the outcome of a test, including radiology. They will also examine the documentation of office visits, verifying there were at least three reasons a patient was seen, listed in order with the correct code. For example, when a new patient with systemic or other health issues is being billed, documentation should list such factors as the patient's risk and health history. Other documentation to be reviewed during a clinical audit includes the general patient chart, medical records, and patient records. The auditors will also check to see whether the office records meet compliance requirements under the practice's contractual obligations. Depending on the extent of audit requests, the practice may want to seek outside guidance or counsel.1,2

Auditing a dental office for compliance may begin with the area of record maintenance, move through patient diagnosis and treatment, and continue until the postoperative evaluation and case follow-up are completed. An audit can assess the standard of clinical record-keeping by doctors and can create an understanding among them of the importance of keeping records with matching diagnostic codes.  Insurance companies will review and pay claims, but they may reserve the right to return within a 7-year period of reviewing the documentation and codes used to see whether an office may have committed an infraction if it is discovered that the dentist's notes did not match a code description.1,2

Proper Documentation

Billed services may be entirely legitimate, but provider notes are the only record of a patient visit. If a service is not documented at all or is inadequately documented, an auditor or investigator may deduce that the service was not provided appropriately. Documentation is the only way to substantiate that care was provided. From the point of view of the auditor, if it is not documented, it did not happen.1,2

Proper and Improper Coding

When billing for individual services rendered during each patient encounter, it is essential to use Current Procedural Terminology (CPT®, American Medical Association, codes that most accurately describe the services. Before a particular code is used, the description of that code should be read to ensure it most closely matches the services provided. When coding, one must be able to match the notes used to describe the visit. An example of an incorrect set of documentation is when a practice creates a bill for a prophy and the documentation reads scaling and root planing. The two different services with their respective codes are shown in Table 1.3,4

The Need for Audits

Dental audits were rare in the past. Now, however, with insurance companies and third-party payers auditing more routinely, it is much more likely that a dental practice will face an audit. Most dentists who bill third-party plans are audited at least once during their lifetime of practicing dentistry.5

Many of these dentists are left wondering why audits are becoming a more routine exercise of third-party payers. The answer: alarming statistics. The Federal Bureau of Investigation estimates that 10% of the money expended on healthcare is due to fraudulent activity. Insurance companies estimate that fraudulent healthcare billing represents up to $10 billion each year.6

Medicare fraud is becoming more rampant. The US General Accounting Office estimates that out of every $7 spent on Medicare, $1 is lost to Medicare fraud. Fraud adds enormous costs to the nation's healthcare system. As fraudulent healthcare charges have increased, insurance companies have become more serious about auditing healthcare practices. With a thorough understanding of the audit process, dentists will become prepared for what appears to be inevitable.7

Laws Involving Transparency

For patients who make financial arrangements, complete details of credit granting must be accurately disclosed to them, including fees, payment amounts, late fees, and due dates. The Truth in Lending Act (TILA), passed in 1968, is intended to ensure that credit terms are disclosed in a manner that allows consumers to more clearly understand the terms. Before the TILA was enacted, consumers were presented with credit terms and rates that did not normally follow a standard format, which made it difficult to compare loans. Now, all creditors must use the same terminology.8,9 The intent of Regulation Z, as the TILA was originally known, should always be honored. Dentists should be transparent. Promises to patients should be kept.10

An owner of a business or practice must be mindful to always provide service with the promise to bill the patient's insurance with full transparency and to do so within the legal transparency rules. In 1986, the Lincoln Law, or False Claims Act, was amended to include "whistleblower" protection. This allows private citizens to report fraudulent behavior or file lawsuits (qui tam suits) on behalf of the government and in turn be rewarded with a portion of any settlement. The False Claims Act establishes an alliance between federal law enforcement and private citizens in protecting the government from fraud in the form of false claims. The law prohibits the "knowing and willful" submission of a false claim for payment from the federal government. The law also allows the government to recover money from the individuals or companies that knowingly submitted false claims. The money recovered can be amounts the government spent in areas such as education, welfare, social security, and departmental or agency purchases.11

When someone is charged with violating the False Claims Act, no proof of intent to commit fraud is required. The Act defines "knowing" and "knowingly" to mean that a person knows the information, acts in deliberate ignorance of whether the information is correct or false, and operates in reckless disregard of whether the information is true or false. Penalties for violating the False Claims Act include $5,000 to $11,000 per false claim, three times the amount of damages sustained by the government, and criminal penalties of up to 5 years in prison and up to $10,000 fines.12

Dental-Office Fraud

The definition of fraud is "theft with intentional use of deceit."13 The deliberate use of deception is what separates fraud from honest billing errors. An example of dental insurance fraud: the California Department of Insurance Commissioner announced that a Beverly Hills dentist and his office manager were taken into custody on multiple felony counts for insurance fraud, fraudulent billing of more than $339,000, grand theft, and tax evasion.14

The most common types of fraud committed by dishonest providers include the following15:

Services not rendered: Using accurate pa-   tient information acquired through identity   theft or other means, creating entirely false   claims, or adding false information to claims to bill for services or procedures that were not performed.

Upcoding: Billing for services or proce- dures that are more expensive than those that were provided by using a false proce- dure code and often "inflating" a patient's diagnosis code to a more serious condition to justify the procedure code.

Unbundling: Billing parts of the same pro- cedure separately as if it were two different procedures, such as billing a fixed bridge in two parts.

Mischaracterization: Billing to receive insurance payments by misrepresenting non- covered treatments as necessary and covered.

Unnecessary services: Providing unneces- sary services to receive insurance payments, such as nerve-conduction and other diagnos- tic tests. A patient's diagnosis may be falsi- fied to justify tests, surgeries, or other pro- cedures that are not medically necessary.

Increasing or waiving co-payments or deductibles: Billing a patient more than the co-pay amount for services paid in full by a benefit plan under a managed-care contract or waiving the patient's payment and then billing the insurance company for it. A practice should not waive a patient's co-pays or deductibles for dental care and then overbill the insurance carrier or benefit plan. Insurers often set policies about waiver of co-pays when they contract with the provider. Medicare prohibits waiving co- pays except in cases of "financial hardship."

Kickbacks: Accepting payments for patient referrals.

Audits by Third Parties

Auditors flag abnormal or atypical charges because they may suggest provider abuse. Additionally, third parties track information on practice charges by analyzing the average cost per claim, the average price per person, and how often specific treatments are performed. With this information, third parties may target specific dental practices for an audit. During an audit, a third-party payer will analyze each claim filed. Some examples of what can be tracked are overutilization of x-rays, surgical extractions, occlusal guards, scaling and root planing, and gingivitis.16

Audits That Profile Providers

Auditors analyze all patterns of services rendered and look for the legitimate reason the functions are submitted. For example, providers who concentrate on periodontal issues show a significant number of periodontal treatments billed. The profile of each code and the number of times it is used within the provider's zip code are then matched with the practice's documentation that supports evaluation of the clinical activity patterns of each provider, using common benchmarks for appropriate utilization by specialty (peer to peer). Some providers will be outside the curve and targeted for possible upcoding, unbundling, or overutilization. One may think that using a lower-value code would keep a practice from being profiled, but that is not usually the case. Auditors pay more attention to the types of systems used, the number of patients, and the documentation for the treatment submitted.17

Table 2 shows two examples of what auditors may track, per provider. The first item was billed as D4341, which is for a full quadrant, but the notes stated that only two teeth were in the quadrant. The code was incorrect for the documentation. The second item was for charging a separate fee for the isolation of a tooth with a rubber dam, which is part of the regular procedure and should not be billed.18

How to Minimize Risk of Becoming an Audit Target

Charts are the most significant point of liability. If personnel at a dental practice have ever wondered whether their charts are missing something, or if they have received claims asking for information that they do not have, learning how to establish chart audit/documentation rules will provide security and aid in avoiding missing information needed to bill for a patient. A practice does not need to be in an insurer's network to be the target of an audit. The dental chart should be considered a legal document. It is the first line of defense in the event of a malpractice suit or in fighting unwarranted fraud fines; it is also the trigger for an audit.

The ADA surveyed several malpractice carriers about various record-keeping errors they had observed in malpractice proceedings. The No. 1 record-keeping error they identified was a failure to have a treatment plan. The No. 2 record-keeping error was a failure to update the medical history.19 The medical history must be recorded and then signed by both the clinician and the patient. At least once per year, the patient should be asked to verify that his or her current medical history is correct by signing the correct form (or tablet in paperless offices). Management experts recommend having the patient fill out an entirely new medical and dental history every 2 to 3 years. There have been numerous malpractice cases where patients were prescribed drugs by dental professionals that were contraindicated by the patients' medical histories.20

Clinicians have a legal and ethical responsibility to record complete and accurate information. Dental professionals have no excuse for shoddy, inadequate records. Thorough documentation includes the complete and accurate recording of all collected data, treatment planned and provided, recommendations, and other information relevant to patient care and treatment. All entries should record information objectively and comply with Health Insurance Portability and Accountability Act (HIPAA) regulations.21,22

The following tips for chart notes may aid in preventing or preparing for an audit23:

Never alter or add to original chart notes. If an entry must be fixed, do not cross out or remove existing notes-put a line through the incorrect records and then write the word "addendum" with the most recent chart entry.

• For paper charts, do not skip lines between entries. Do not leave white space. Do not write in margins or below the last line, and always use permanent ink. Handwritten notes must be legible.

• With electronic charts, some common issues include the use of templates for every patient (same documentation for all patients) and abbreviations that cannot be read by the auditor or that the judge does not understand. All documentation notes can use the abbreviations on a list that can be matched to the practice's records. All providers should have shortcuts so that additions can be made at any time. A list of abbreviations can be downloaded from

• Record diagnostic tests ordered and why they were ordered (example: x-rays, biopsy, cone-beam computed tomography).

• Record the outcome of tests and what that will mean for the patient's health and out-come of treatment completed or not completed.

• Record events of the visit in the order they happen.

• Record all materials used, especially anes- thetics (what kind and how much).

• Stick to the facts and do not use unclear ver- biage, such as "Patient seemed angry." Note instead, "Patient said, ‘I'm sick and tired of this sore tooth.'"

• Do not ever record money or personal issues in a chart that one would not want a jury to see. When documenting treatment, the all-money transactions should only be in the ledger, and the treatment plan with fees must be in the treatment plan within the office's system of tracking. No money should ever be with the chart notes.

To reach the highest level of success when implementing changes to ensure an office is in full compliance with laws, seven steps should be taken, as outlined below.24 It is not necessary to complete all the steps at one time. If the dental team is provided with one change per week and the office self-audits the differences after the week is over to ensure everyone made the correct changes, then the next step can be attempted. Making the improvements should be a habit, not a chore.

1. Conduct internal monitoring and auditing (self-audit coding and documentation, identify risk areas). HIPAA forms must be updated and signed with permission to speak to a significant other or a medical provider.

2. Implement compliance and practice standards (develop policies or procedures for dealing with those risks, identify staff responsibilities, and establish office policy concerning differ- ent coding or billing issues, such as profes- sional courtesy and all other write-offs).

3. Designate a compliance officer or contact (assign a staff person to oversee the practice's compliance activities, including staff compli- ance, training, and quality audits).

4. Conduct appropriate training and education (implement a training program).

5. Respond appropriately to detected offenses and develop and implement a corrective action plan (steps to identify and correct problems; may include refunds or disclosure to proper authorities).

6. Establish open lines of communication (open communication between staff and physician to address and document specific problems or concerns).

7. Enforce disciplinary standards through well-publicized guidelines (create disciplin- ary mechanisms to deal with offenders to add credibility and integrity to a compliance plan).

The emphasis of the clinical audit should be on improvement in care. An audit can only improve healthcare if it includes a mechanism for change. Providing a compliance plan for the office is an invaluable tool in strengthening efforts to prevent and reduce improper conduct by better protecting the practice from the potential for erroneous or fraudulent conduct. For further information, many of the recommendations outlined in the US Department of Health and Human Services' Office of Inspector General's compliance plan are practices that every office should implement.25


1. Keefe A. How your practice can avoid non-intentional dental fraud. Delta Dental. Published July 21, 2016. Accessed July 18, 2018.

2. Tinker D. Compliance/risk management. Dental Consulting Connection. Accessed July 18, 2018.

3. Summerford K. Dental coding with Kyle: D4341 and D4342, scaling and root planing. Dentistry IQ. Published January 20, 2016. Accessed July 10, 2018.

4.  A guide to reporting D4346. American Dental Association. Published May 17, 2016. Accessed July 10, 2018.

5. Liles R. Dental audits are ongoing around the country. Are you prepared? Liles Parker. Published May 16, 2017. Accessed July 18, 2018.

6. Health care fraud costs billions. Federal Bureau of Investigation. Published June 12, 2009. Accessed July 10, 2018.

7.12 healthcare fraud, waste, & abuse facts. Advize Health. Published April 29, 2015. Accessed July 10, 2018.

8. Truth in Lending Act - TILA. Investopedia. Accessed July 10, 2018.

9. Regulation Z. Federal Reserve. Accessed July 18, 2018.

10. Subchapter I-Consumer credit cost disclosure. US House of Representatives. Accessed July 18, 2018.

11. Transparency and disclosure of health costs and provider payments: state actions. National Conference of State Legislatures. Updated March 2017. Accessed July 10, 2018.

12. The False Claims Act: a primer. US Department of Justice. Accessed July 10, 2018.

13.Theft by deception law and legal definition. US Legal. Accessed July 10, 2018.

14. Insurance Commissioner Jones announces arrest of health care provider and staff for insurance fraud [press release]. California Department of Insurance. Published May 4, 2012. Accessed July 10, 2018.

15. What does health care fraud look like? National Health Care Anti-Fraud Association. Accessed July 18, 2018.

16. Top 10 claim concerns: ADA, NADP share views on dentists' concerns. Accessed July 18, 2018.

17.Audit protocol - Updated April 2016. US Department of Health and Human Services. Accessed July 10, 2018.

18. Dental Compliance Specialists. Accessed July 10, 2018.

19. Glasscoe-Watterson D. Documentation dilemma. RDH. Published July 1, 2009. Accessed July 10, 2018.

20. Updating the medical history. CNA HealthPro. Published 2005. Accessed July 10, 2018.

21. Consumer protection. Federal Trade Commission. Accessed July 18, 2018.

22. Sharing consumer health information? Look to HIPAA and the FTC Act. Federal Trade Commission. Published October 2016. Accessed July 18, 2018.

23. Dental clinical criteria and documentation requirements. BlueCross BlueShield of Tennessee. Published April 1, 2005. Accessed July 19, 2018.

24. National Medicaid audit program. Medicaid Integrity Program. Published November 2012. Accessed July 19, 2018.

25. Developing an effective compliance plan: a guide for healthcare practices. MedPro Group. Published 2018. Accessed July 10, 2018.

Table 1

Table 1

Table 2

Table 2

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PROVIDER: Dental Learning Systems, LLC
SOURCE: CDEWorld | November 2011

Learning Objectives:

  • Review the elements of reporting to ensure compliance and reimbursement.
  • Discuss the principles of documentation.
  • Describe adapting a compliance system for billing focused on the nuances between medical and dental reimbursement.
  • Review how to ensure that the procedure and diagnostic codes that a practice reports are reflected in the documentation of services rendered.


The author reports no conflicts of interest associated with this work.

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