Fraud, Audits and Not Screwing Over Your Business 3 of 5 with Jeremy Zug | PoP 404

Share this content
Fraud, Audits and Not Screwing Over Your Business 3 of 5 with Jeremy Zug | PoP 404

How can I prepare for an audit? What would be considered private practice fraud? How can I make sure my ducks are in order?

In this podcast episode, Joe Sanok speaks with Jeremy Zug all about private practice fraud, audits and what to do to prepare and be equipped to meet the legal requirements.

Podcast Sponsor

There are many ways to keep your practice organized, but TherapyNotes is the best. Their easy-to-use, secure platform lets you not only do your billing, scheduling, and progress notes, but also create a client portal to share documents and request signatures. Plus, they offer amazing, unlimited phone support so when you have a question you can get help FAST. To get started with the Practice Management Software Trusted by over 35,000 professionals go to and start a free trial today. If you enter promo code JOE, they will give you two months to try it out for free.


In this podcast episode, Joe Sanok speaks with Jeremy Zug about fraud, audits and how not to screw over your business.

Jeremy says audits can be fun, if you’re not breaking the law, of course.

It’s like arriving at a test, and you’re prepared. You can use the audit as a check and balance for your systems. Don’t be afraid of auditing. A lot of things are fixable, and an audit can be an enjoyable process.

Get your systems in order for auditing

Know what you need to do from a contractual perspective with the insurance companies that you work with. Know what you need to do to stay compliant in your claims submissions and processing, and track everything.

Audits are all about what you can prove and not what you believe. Auditors will sample some of your patients, there’s no way to know which patients are going to look at. If they find issues, they will dig in deeper. 

Set up your systems in an airtight way so that you’re collecting everything you should be collecting. 

What is considered private practice fraud?

Fraud: The knowledge of a requirement to collect co-pays and deductibles and billing insurance only. 

False Statements: Billing insurance (a charge) and failing to collect the co-pay / deductible. 

Fraud is intentional. A false statement can be unintentional and is considered less intense than fraud. It’s more absent-minded and can occur when someone is forgetful.

Audits can gauge which is which. And insurance companies are really good at looking at the data. The insurance companies and the government will see discounts around co-pays and deductibles as both fraud and false statements.

In an audit, they look at what services are you billing, and are you collecting from your patients. 

Fines for fraud can be hefty, they typically start at $10,000 per occurrence, so make sure you’re collecting copayments and deductibles.


Having a regular routine is really important with regards to the flow of payment.


Health insurers don’t aggressively pursue widespread fraud. More often than an audit, premium payments will go up in an area. Insurance companies are looking at the flow of money from a macroeconomic perspective in a certain market from the insurance company for services versus for patients. If those numbers don’t match up, they’ll just raise the premiums.

If you use an Electronic Health Record, all the necessary data is included in the EHR. This makes auditing really easy.

If you think of your business as an eco-system and ask yourself “Do I have every silo of my business documented and optimized so that if I do any kind of quality insurance check, I know what should be there?” If so, you have no need to worry about being audited.


Useful Links:

Meet Joe Sanok

private practice consultant

Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.

Thanks For Listening!

Feel free to leave a comment below or share this podcast on social media by clicking on one of the social media links below! Alternatively, leave a review on iTunes and subscribe!

Podcast Transcription

[JOE]: When it comes to keeping your practice organized, you want software that’s not only simple but the best. I recommend Therapy Notes. Their platform lets you manage notes, claims, scheduling and more. Plus, they offer amazing unlimited phone and email support. So, when you have a question, they’re there to help. To get two months free of Therapy Notes today, just use promo code [Joe] when you sign up for a free trial Again, that’s promo code [JOE].
This is the Practice of the Practice podcast with Joe Sanok. Session number 404. All right, welcome to day three of this series that is all about billing and insurance credentialing. All that stuff. We’ve got Jeremy Zug, who is our resident Practice of the Practice consultant all around billing. He also is the co-owner of Practice Solutions. He’s been a partner for a number of years now and does tons of billing for people. Jeremy, welcome to the Practice of the Practice podcast and this YouTube series.

[JEREMY]: Great. Thanks for having me back. It’s fun.

[JOE]: Yes. Today we’re talking all about fraud audits and not screwing over your business; not that we want to just do a bunch of fear tactics, but there’s actually a lot of things that you can screw up and accidentally do fraud and audits. Where do we even start with this mess that you could create in your practice?

[JEREMY]: Yes. So, I think the first place that I always start, and I get asked about audits and fraud and my background includes auditing and audits. And I think that the first place to start is to realize that audits, if you’re not breaking the law, are actually a lot of fun. I think they’re really enjoyable because it’s sort of like arriving at a test and you’re prepared, right? You’ve done your studying, you know what you’re talking about, and so you’re just going to go into this audit as a check and balance to your systems. And so, I think that’s the first place to start; is don’t be afraid of an audit, don’t be afraid of any of these things we’re going to talk about, know that a lot of this stuff is fixable and an audit should be, if you’re not a criminal, should be an enjoyable process. How’s that for a start?

[JOE]: I’m just thinking like what if you haven’t done all those things and like, I mean, I’ve gone to tests that I wasn’t as prepared. Like I fell asleep during my ACT the first time because I stayed up late the night before. And that was not the smartest idea.

[JEREMY]: Yes. Well, that’s true. And I think the first place to start would be to get your systems in order. Know what you need to do as from a contractual perspective with the insurance companies that you’re in network with, know what you need to do to stay compliant in your claim submission and in the processing of your claims and then track everything. Track every bit of money in and out, keep all your PHI (Protected Health Information). So, we’ll talk about some of that stuff, but I want to talk about what fraud really is as defined by insurance companies and the government and what the difference is between fraud, which is really an intentional action and what a false statement is. So, could we start there and then we could go —?

[JOE]: Yes. I think that’s great, just so we’re on the same page with it.

[JEREMY]: Yes. So, there are two concepts there. Fraud and false statements. So, fraud is the knowledge of a requirement to collect copays and deductibles and billing insurance only. That is claim fraud, that you know that you need to collect a copay, you know you need to collect a deductible amount, which we talked about deductibles and copays and the last series in the last podcast, and don’t. You knowingly, willingly don’t make an effort to collect for whatever reason. That’s absolutely fraud. On the other side, false statement is more unintentional. So, billing insurance a charge and failing to collect the copay or deductible is a false statement regarding the charge. It’s important to not do that but it’s less intense than fraud. So, but at any rate, so if you’re —

[JOE]: [inaudible 00:04:34] similar, so dissect kind of the major differences.

[JEREMY]: Yes. So major difference. A one is very intentional and malicious. So, I know that my patient owes 20 bucks, but I’m not going to do it. I know that I need to collect it, I know I’m required to by insurance or by Medicare, and I’m just going to write it off because I can. That’s very clearly fraud in the sense that I’m just going to screw over the insurance company for cash and I get to offer free therapy to my patients. It’s very, very maligned toward the insurance company. The other one is, I know I need to collect it but I failed to give a reasonable effort to collect a copay or deductible or I’ve, I’m forgetful about collecting or I dropped the ball sometimes and then don’t. So, the second one, a false statement is less malignant. It’s more sort of casual, maybe the right term would be absent-minded.
All around collecting a copay or deductible, and those are the two really big differences. The insurance companies and the government will see discounts around copays and deductibles as both fraud and a false statement. So, there is sort of a middle ground there to where, let’s say that I know that you have a $20 copay, but I’m only going to charge you a 10. That is both fraud because I have a knowledge to collect but I’m not going to collect everything and a false statement because I’m failing to collect that other half.

[JOE]: And you may not know the case law for the people that they’ve been able to prove were committing fraud because that sounds like the worst of the two. What was different about them? Because I could see someone just kind of claiming absentmindedness when maybe they did commit fraud and it was a part of their practice. Like what are kind of indicators that prosecutors look for that people can avoid doing?

[JEREMY]: It’s a really good question. So, a lot of that [crosstalk]

[JOE]: Also, Jeremy is not an attorney nor am I, and you should consult your own attorney.

[JEREMY]: Touché. Or just collect copays and deductibles. So, a lot of that comes out in an audit where they really gauge what the situation is, but claim data. So, if you’re submitting claims to the insurance company, that doesn’t just disappear. Insurance companies are really, really good at data and looking at trend trending for providers. So, there was the biggest fraud case found this year for Medicare, and it wasn’t mental health-related because I saw the headline was like, “Oh my gosh, who is it?” But it was actually for like a hip replacement. It was like for a company that provides medical equipment and they only found this company because they saw the claim data and they were seeing that, well, you know, the way that your billing does not indicate correct practices. And so, they’re going to audit you and find out what exactly is going on.
And they were fined one point $2 billion. So, you know, that’s a lot. But typically, they’re going to look at, um, you know, what, what services are you billing? And they’re going to, in an audit, they’re going to look at, are you collecting from your patients? And typically, the profile of somebody who knows that they should collect and doesn’t, is pretty evident. You know, that person is typically very adamant that they’re not going to collect from insurance, “I’m not going to take credit cards. I’m just not going to do it.” The other person is also more evident in the audit. I don’t know if that answers your question but —

[JOE]: Well, I know that really helped. So, as we kind of look at just other things that you need to have locked down in regards to fraud audits and not screwing over your business, what else should we cover?

[JEREMY]: So, a couple things. One, fines for fraud can be hefty. So, they typically start at 10 grand per date of service or per occurrence. So, a couple of things. One, you just want to make sure you’re collecting copays and deductibles. And I know this, and Joe, perhaps you could speak more to this than I could because from my perspective it’s just business, but I know that there is a tension between when my patient is hurting or can’t afford it or you know, what have you, and actually collecting that money. So, maybe Joe you could speak a little bit to how to file that in the mind of a therapist a little bit better than I could.

[JOE]: Yes, I think it depends on your comfort level in a lot of ways. So even my own therapist that I go to, we never talk money. So, I just get a thing from, I think it’s or something like that and you know, it says the insurance covered X number of dollars, here’s the negotiated rate and I pay it through the website. Now for me as someone who pays his bill, that’s great for my therapist. But being that we never have the conversation really, if someone doesn’t pay it, like I don’t know how that kind of shakes out for him. For other people that want to make sure that that’s done right away, I think having some very clear triggers as to when the session is ending, and that’s true whether or not you’re doing money, but grabbing a receipt from an envelope or grabbing a receipt that is in a basket next to your chair. You know, I had a standing desk so I would physically stand up and have my computer and we’d schedule the next session and then we’d pay.
So, they knew when I stood up that we were going to start scheduling and they’d pay for their session. So, I was a hundred percent private pay so people just paid every session.

[JEREMY]: Right.

[JOE]: I didn’t [inaudible 00:10:33]. But I think having that routine as to how do you wrap up the session also helps land the session. If someone dives into something in the last minute, and we’ve all had that person, to be able to say that’s a great starting point for our next session and then you kind of stand up to go do the scheduling, that then has been sort of a trained thing; that now we schedule, then we pay, then we say goodbye. So, I think it’s more just being able to figure out for you what works for you. Other people may have, you know, “You do your scheduling for your next session with a receptionist on the way out. You also pay with them.” So that may be your comfort level. But having a regular routine I think is really important in regards to the flow of payment.

[JEREMY]: Yes [crosstalk].

[JOE]: I mean if you’re sending the bill in the mail, you only have 30% collections. Like that means you’re donating your time 70% of the time.

[JEREMY]: Well that’s exactly right. And I have providers or you know, therapists like actually yell at me for suggesting that you keep credit cards on file. Because they, you know, and part of that is they care about their patients and they don’t want to add a financial burden. But it’s really important. And I think on this topic, it’s important to note that yes, the fines as claimed by the insurance companies and the government are hefty but there was an article published yesterday by ProPublica. I don’t know if you read them, Joe. The headline is ‘We asked prosecutors of health insurance companies care about fraud. They laughed at us.’ So, part of that is health insurers don’t aggressively pursue widespread fraud, which makes it really easy for scammers.
And so more often in an audit, what will happen is you’ll see your premium payments go up in your area, which is more common than not, where insurance companies are looking at the flow of money from a macroeconomic perspective into a certain market from the insurance company for services versus from patients. If those two numbers don’t line up, they’re just going to increase your premiums to make up the difference. And so, that’s a really, not only for the fraud piece and compliance to your contract, but it’s also a really important economic variable for keeping your premiums as low as possible. So, it’s the folks that are committing fraud and false statements that contribute to rising premium costs. And I think we like just attribute that a lot of the times to the government, which is certainly a variable, but this more often than not also increases premium amounts as well.

[JOE]: Yes. Can we, we’ll link to that in the show notes. I’ll have Jeremy send me a link to that article so we can make sure that ends up in the show notes as well. Oh, I had a question but I forgot what it was.

[JEREMY]: Yes, so, we could talk about audits maybe, and then if you think of a question, we can go from there. So, the reason why I’m not afraid of audits generally speaking is because audits are all about what you can prove and not what you believe. So, if I can prove that I had a session on 9, 10, and I collected from my patient on 9, 10, and the insurance company paid me on 10, 10, it’s all good. I can produce like my explanation of benefits or EOB, or my electronic remittance advice. And I can produce all of this documentation to show that I’m in compliance.
You win the day every time. And the way that auditors tend to work is they will sample some of your patients. So, there’s no way to know that they’re going to look at this patient that has a perfectly clean account versus this patient that’s kind of a mess and their billing is a wreck. They’re going to sample some and if they find issues auditors will dig in deeper. So, when I did internal or external audits, what I would do is I would sample the same thing. I would go into an organization and say, “Produce these documents for me.”
If I found issues on those documents, I would look deeper. And more often than not, you find a lot of problems when you do that. So, if you’re able to set up your systems in an airtight way so that you’re collecting everything you ought to be collecting when it comes time for an audit, it’s really easy to just produce those documents and you really become nothing other than a glorified cleric that produces documentation for an auditor. When you get there, then that’s a really fun place to be because they’re looking for problems.

[JOE]: Now, for electronic health records, does all that typically stay kind of within it so that you can show all that?

[JEREMY]: Totally. So, like if you used Therapy Notes, you could, you know, and you go to the billing tab at the top and then click on ERA, you can produce all of the ERAs that you’ve ever received. And then those tie into all of the dates of service that they apply to as well. So, an audit with Therapy Notes would be extraordinarily easy because you could produce line by line, date of service by date of service. You know, in antiquity past that I’ve collected everything I should. So, —

[JOE]: You know, as you just said that I’m going to ask you a question that’s off topic but not. I remember in, I think it was middle school when I was playing a lot of Tetris when it first came out. I would have dreams about Tetris. Do you have dreams about Therapy Notes?

[JEREMY]: Sometimes I do, and it’s, that’s kind of a scary thought. I actually had a dream about Therapy Notes the other day.

[JOE]: Do you bill for that time?

[JEREMY]: What’s that?

[JOE]: Did you bill for that time?

[JEREMY]: I did. Yes. But yes, it is kind of like a game though, to me anyway. I think that if you have the pieces lined up, you should be set. But if you’re operating on paper or that you tend to be a little more scattered, audit would be a very scary thing for you because you’re not really sure what to produce. If you think about your practice, so, like zoom out from your practice for a minute and don’t think about, you know, perhaps the emotion that went into building your business, because there is something there. It’s incredibly meaningful. But if you think about it as a system, as an ecosystem, if you can think about, “Do I have every element, every category, every silo in my business documented and optimized, and I can do any kind of quality assurance check at any random point and know exactly what should be there,” you know, you win the day on this stuff every single time.

[JOE]: Such good advice. So, we have a billing webinar that’s coming up on November 6th at three o’clock Eastern, two o’clock central, one o’clock mountain and noon Pacific. So, you can sign up for that billing webinar over at webinar. Also if you want to chat with Jeremy, if you are doing your own credentialing, if you are doing your own billing or if you are a much larger organization that wants to out-source or in-source your billing, he does trainings on that too for mostly six, seven, and eight figure practices. But reach out to Jeremy over at and I have a conversation with him and he’ll let you know kind of the best course of action in regards to his consulting and training.
Jeremy tomorrow, we’re talking all about tech in billing to save time and money. So, looking forward to that. We’ll talk to you soon. Chat with you.

[JOE]: This podcast is designed to provide accurate and authoritative information in regard to the subject matter covered. It is given with the understanding that neither the host, the publisher or the guests are rendering legal, accounting, clinical, or other professional information. If you want a professional, you should find one. And thank you to the band Silence is Sexy for your intro music. We really like it.