A letter arrives from a commercial insurer asking for two years of patient charts. The practice has to figure out fast what kind of review this really is. Commercial payor audits and SIU investigations can look almost identical on the page, but they carry very different stakes.
A standard payor audit usually means the plan is checking whether billed codes match the chart. An SIU investigation, run by a payor’s Special Investigations Unit, means the plan already suspects fraud, waste, or abuse.
Mathew Levy, Esq., with physicians and practices across New York through audits and SIU inquiries, from the first records request to a negotiated resolution.
A commercial payor audit attorney at the firm can help you review the notice and understand your options.
What Triggers a Commercial Payor Audit or an SIU Investigation?
Most reviews start with a pattern a computer system flags, not one bad claim.
- Billing that sits well above peers in the same specialty, such as heavy use of a single high-value procedure code.
- A patient or employee complaint about billing or about services that were never actually rendered.
- Claims analytics software that scores submissions for likely coding errors or fraud indicators. Any of these can open a file, but only a suspected fraud finding moves it from a documentation review to a full SIU case.
Routine Audit or Fraud Investigation? Why the Letterhead Matters
If the request comes from the SIU, that alone signals a fraud investigation rather than a routine audit. A claims or quality department letter usually just wants documentation. A letter from the Special Investigations Unit usually means the plan already has a concern, and that detail should shape your response.
Your Rights Under New York’s Overpayment Recovery Law
- A health plan must give a provider thirty days written notice before engaging in additional overpayment recovery, stating the patient name, service date, payment amount, and a reasonably specific explanation.
- The provider must get a chance to challenge the recovery under the plan’s written policies and procedures.
- A health plan cannot start overpayment recovery more than twenty-four months after the provider received the original payment.
That overpayment recovery law carves out one major exception. The lookback limit does not apply when the recovery effort is based on a reasonable belief of fraud, intentional misconduct, or abusive billing. That exception is exactly where a routine audit can turn into an SIU matter.
How New York Regulates the Insurers Running These SIUs?
Section 409 of the New York Insurance Law and Regulation 95 require insurers to file a plan to detect, investigate, and prevent insurance fraud. That plan must include a Special Investigations Unit kept apart from underwriting or claims. HMOs with 60,000 or more enrollees must file that same plan.
A practice in Nassau County, or anywhere else in New York, is often dealing with a unit built to meet those filed standards, not an informal review. What the SIU is ultimately checking for is conduct that meets the state’s definition of insurance fraud, which in plain terms means knowingly submitting a false statement to get paid.
What to Do in the First Days After an Audit or SIU Letter Arrives?
- Calendar every deadline in the letter the day it arrives, including the response date and any appeal window.
- Confirm which department sent it. A claims or audit letter and an SIU letter call for different responses.
- Pull the records exactly as they exist in the chart, without edits or additions, and keep a copy of everything sent.
- Loop in a healthcare attorney before responding, especially if the letter mentions the SIU or threatens recoupment or termination.
An SIU investigation attorney at Weiss Zarett Brofman Sonnenklar & Levy, P.C can help providers in New Hyde Park and across Long Island. Sorting out which type of letter they are holding is the first step before anything goes back to the plan.
When a Payor Audit Turns Into Recoupment, Termination, or Litigation?
Not every audit ends with a clean closing letter. Some escalate into extrapolation, where the plan projects an error rate found in a small sample across a much larger set of claims, inflating the demand well beyond the records actually reviewed.
Others lead to withheld future payments or termination from the plan’s network, and a confirmed fraud finding can mean a report to state regulators or law enforcement.
Attorneys at the firm helped a physician provider save $1.3 million on a commercial insurance overpayment demand. They analyzed the plan’s billing documentation and guidelines, negotiated with the plan, and got a payment hold reversed so the practice could keep treating patients.
Mathew J. Levy, one of the attorneys on that matter, focuses on Medicare, Medicaid, and other third-party payor audits. Prior results do not guarantee a similar outcome.
When negotiation does not resolve the dispute, the provider agreement usually spells out whether the next step is arbitration or a lawsuit. Practices anywhere in New York should read that language before an audit ever shows up.
Frequently Asked Questions
What happens if I ignore an SIU records request?
Ignoring it rarely makes the problem go away. A plan can suspend payments, end the provider agreement, or refer the matter to regulators or law enforcement without ever hearing your side. Responding by the stated deadline, even to request more time, keeps the door open to explain the records before the plan reaches a conclusion.
Can I negotiate an overpayment demand instead of paying it in full?
Often, yes. Reviewing the sampling method and the documentation behind the number frequently opens room for a lower settlement or a payment plan. This works best when a provider raises specific, well-supported objections rather than a general dispute of the total.
What is the difference between a prepayment review and a postpayment audit?
A prepayment review holds claims before paying them until documentation clears, which hits cash flow right away. A postpayment audit looks back at claims already paid, which is where overpayment notice and timing rules come into play. Either one can run alongside an SIU file if fraud is suspected.
Weiss Zarett Brofman Sonnenklar & Levy, P.C: Your Commercial Payor Audit and SIU Defense Law Firm
Opening an audit letter or an SIU notice does not mean the outcome is already decided. Most reviews stay in the documentation lane unless a plan’s data flags a pattern serious enough to open a fraud file, which is why an accurate first response matters more than a fast one.
Mathew Levy, Esq., has represented physicians and healthcare practices across New York through payor audits, SIU inquiries, and the recoupment or termination disputes that can follow.
If a commercial plan is asking for records or threatening to take money back, get a clear read on what you are actually facing before you respond. Contact our firm today.
