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The Legal Department articles are not intended to serve as legal advice and are offered for educational purposes only. The information provided should not be used as a substitute for independent legal advice and it is not intended to address every situation that could potentially arise. Please be aware that laws, regulations and technical standards change over time. As a result, it is important to verify and update any reference or information that is provided in the article.
Are the recordkeeping requirements of government programs and managed care companies similar or different? In this article Dave Jensen, JD explores the recordkeeping requirements of these disparate systems.
David Jensen, JD (Former CAMFT Staff Attorney)
Reviewed December, 2021 by Bradley J. Muldrow, JD (CAMFT Staff Attorney)
Clinicians, in general, seek payment for their work from one of three sources: government programs; insurance companies, including managed care companies; or, direct-pay patients. Each of these sources has its own requirements for keeping patient records: for government programs and insurance companies, clinicians typically agree to adhere to certain recordkeeping requirements as part of the contractual arrangements they have with such entities.
As an aside, in terms of practice management, clinicians who contract with government programs and/or insurance companies should have a binder or a file that contains these provider agreements and manuals so that such recordkeeping requirements can be ascertained and followed. Especially with the insurance companies, as we shall see below, the recordkeeping requirements can vary from one insurance company to another. Consequently, you must know how to comply with the requirements of the insurance companies you have contracted with as a clinician. Some of these standards are not homogenous.
But, if a clinician sees only direct-pay patients, the clinician has not agreed in a contract to adhere to any specific recordkeeping requirements. That does not mean, however, that there are not any. Clinicians with only direct-pay patients are bound by California Business & Professions Code § 4982(v), which generally requires them to keep records consistent with sound clinical judgments, the standards of the profession, and the nature of the services being rendered. Unfortunately, these requirements are very vague, especially when measured against the more specific requirements of the government programs and the insurance companies.
All of which leads to a clumsy problem for clinicians. Suppose a clinician sees patients from government programs, from insurance companies, and some direct-pay patients. Such a practice would be a mixed-bag of recordkeeping requirements. This essentially means that the clinician is likely required to keep records in three separate ways, which seems problematic. But, before we posit solutions to the problem, perhaps it is best to get a better idea of the extent of the problem.
The Id, Ego, and Super Ego of Recordkeeping
The government programs have traditionally been identified as the strictest of the three systems in terms of recordkeeping requirements. The recordkeeping requirements of government programs are strict, and lack of compliance with such requirements can mean loss of revenue, recoupment, and termination of the clinician’s provider status. Government programs also have audit rights that they exercise freely. But, government programs also conduct trainings on documentation to help providers with compliance efforts. In terms of Freud’s tripartite conception of the personality, government programs can be likened to the Super Ego with all of their rules and enforcement powers. “You must obey the standards!” screams the Super Ego.
In contrast, the direct-pay by patients in private practice model has traditionally been identified as the loosest of the three systems with regards to requirements for treatment records. Compliance necessitates having some sort of record that could be used to evidence that sound clinical judgments have been made, that standards of the profession have been followed, and that some sort of therapeutic service has been provided. In terms of Freud’s tripartite conception of the personality, the direct-pay by patient model can be likened to the Id with its contempt for rules, enforcement, and long-term consequences. “There are no standards for recordkeeping!” screams the Id.
The recordkeeping requirements of insurance companies have traditionally been located somewhere between the Super Ego demands of the government programs and the wild child rebellious behavior of the Id in the direct-pay by patients in private practice model, but where exactly? Are the insurance company requirements more Super Ego-like or more Id-like? Or, are they more Ego-like, seeking to balance the competing demands of the Super Ego and the Id? “You both need to grow-up and get along,” screams the Ego!
A Government Program and Several Insurance Companies Compared
To compare the recordkeeping requirements of government programs and insurance companies, I reviewed the documentation requirements of such entities. For the government program, I reviewed the recordkeeping requirements of Alameda County Mental Health, which seems to be representative of other counties on these issues. I also reviewed the recordkeeping requirements of several insurance companies.
In terms of the process, again, I looked for evidence of government programs and insurance companies having specific standards or requirements for the contents of records, and not just broad language about keeping records pursuant to generally accepted principles of recordkeeping. Such evidence was typically set forth in the provider manuals of government programs and insurance companies. For government programs, the information is also available on the websites of county mental health departments.
It is also important to point out that the standards set forth below are not all of the standards a government program or an insurance company may have for keeping records. I focused my query on four areas: standards affecting general aspects of recordkeeping, such as legibility; standards regarding the initial evaluation of the patient; standards regarding the treatment plan for the patient; and, standards regarding the progress of the patient in therapy.
Additionally, I gathered some of this information in 2014 and some in 2015 and it is possible that a government program, or an insurance company, has amended its recordkeeping requirements since then. So, take the information summarized herein with the proverbial “grain of salt,” and review your agreements and provider manuals for the specifics of your situation. Pay particular attention to any “supplements,” “memos,” or “addendums” you have received from a government program or an insurance company on the issue of recordkeeping.
The far left column sets forth a list of requirements for records that I gleaned from my review of the documentation standards of Alameda County and the insurance companies. Columns two through seven evidence whether Alameda County or an insurance company requires adherence to that requirement.
Although only five insurance companies were reviewed, which admittedly is a small sample of the available insurance companies in California, some general issues are likely evident. The first one is that the recordkeeping requirements of the insurance companies reviewed are Super Ego-like and not at all Id-like. On most issues, in fact, the standard of the insurance company is identical to the standard of the government program.
The most glaring difference between the government program and the insurance companies concerns the issue of “medical necessity.” For government programs, medical necessity, and all the analysis of “functional impairments,” must be clearly documented in the treatment record. For insurance companies, however, the thrust of the work seems to be about arriving at a diagnosis that can be supported by the patient’s history. This seems to be an issue of scale or degree as opposed to mutually exclusive categories. Clinicians submitting claims to government programs will likely need to address the issue of “functional impairments” more comprehensively than clinicians submitting claims to insurance companies, although, certainly, both systems are interested in how a patient’s life is being impacted by a diagnosis. This question helps establish the treatment plan and progress towards meeting the goals of therapy.
Another interesting observation is this: both government programs and insurance companies swirl around the same core set of professional activities. Both systems want a thorough evaluation of the patient; both systems expect to see a treatment plan for each patient; and, both systems require that patient progress be monitored and accounted for in ongoing progress notes.
And yet, although there are similarities between the recordkeeping requirements of the government program and the insurance companies, there are some notable differences, even among the insurance companies themselves. For instance, although US Behavioral Health and Value Options require session stop and start times be included in the treatment record, Magellan, MHN, and Avante Behavioral Health, at least at the time I reviewed their documentation requirements, did not require such information in patient files.
Moreover, US Behavioral Health was alone in requiring records to be kept in blue or black ink. These issues highlight the need of reviewing the recordkeeping requirements of each of the government programs and insurance companies you have contracted with because the requirements might just be a little bit different, especially if you like to use green ink in your practice!
So, What About the Id of Pure Private Practice?
Those clinicians who have only direct-pay patients are likely thinking I’m so glad I don’t contract with government programs and insurance companies because I don’t want to adhere to all these rules. This might be the wrong way to view the issue. As we learn from Nietzsche, who probably learned it from Epictetus, it is all about perspective.
Ultimately, the requirements of the government programs and insurance companies are about evidencing that a patient has received a professional service from a clinician. Take for instance the issue of legibility, which government programs and insurance companies uniformly insist on. Clinicians with only direct-pay patients will become seriously ill or injured, and some will even die. When these events occur, it is paramount that a third party be able to decipher a treatment record so that appropriate decisions regarding a patient’s care can be made by third parties. It is folly to believe that since no law requires treatment records to be legible to third parties a clinician’s records can be illegible to such parties. There is always room for the Rule of Reason and common sense.
Furthermore, if the BBS is investigating an allegation of incompetence, it will be as interested in initial evaluations, treatment plans, and progress notes as any government program or insurance company would be about such matters. The BBS likely will not give a hoot about whether you used green ink instead of blue or black ink. It will be concerned about the job you did—or did not do—as evidenced by your treatment records.
The axiom you learned in graduate school is very much alive: If it wasn’t written down, it did not occur. So, whether one contracts with government programs or insurance companies, or whether one has only direct-pay patients, the job is always the same: assess, evaluate, and manage the case. And, that is the “stuff” that should be in everyone’s records!