Talk to some psychologists and they'll tell you their holiday cheer was dampened by managed care.

But more than just general managed-care doldrums sparked some New York psychologists' heavy moods. Last year, Oxford Health Plans--which operates in New York, New Jersey and Connecticut--began retrospective audits of the records of some mental health professionals with whom the company has contracted. For the most part, the audits occurred in New York, where Oxford has most of its providers.

"The company did this under the guise of looking for fraud--not an uncommon practice in the field," says Russ Newman, PhD, JD, APA's executive director for professional practice.

But APA and the New York State Psychological Association (NYSPA)--on behalf of audited psychologists--stepped in because the company's methods and justification of these audits seemed far from normal. The two organizations penned a letter demanding corrective measures from Oxford in October. Nearly a month later, the company agreed to stop requiring repayments based on alleged deficiencies in recordkeeping.

APA will continue to monitor the situation to ensure that the company does indeed follow through on its promise, says Newman.

Is this legal?

APA took issue with the audits for two reasons. First, according to practitioners, Oxford demanded patient records without first showing that the company had obtained valid patient consent. Some psychologists felt pressured to turn over their notes--especially those who receive the bulk of their referrals from Oxford, says Newman.

Then, after performing audits, Oxford demanded repayment of practitioners' reimbursement for services previously rendered--to the psychologists' and APA's alarm.

Basically, the company determined that records for particular therapy sessions were not sufficiently detailed to justify 45-minute sessions, for example, and unilaterally decided that only payment for 20-minute sessions was warranted. Thus, providers were asked to pay back a portion of what they'd already been reimbursed based on what Oxford deemed inadequate record-keeping.

According to Newman, the legality of this move is questionable. In the letter to Oxford's chief executive officer, Charles Berg, he and NYSPA's executive director Gayle Everitt wrote, "Since, as we understood it, the stated purpose of the audits was to assure that 'all billed office visits really took place,' it is at best unclear how the result can be your company's decision to only pay for part of a session."

No grounds for downcoding

In the same letter, Newman and Everitt pointed out that there is no support for this practice--termed "downcoding"--in either Oxford's provider manual or New York state law. The latter, which only mandates that records accurately reflect the evaluation and treatment of the patient and makes no reference to individual sessions or specific note-taking requirements.

"There were no grounds for them to ask for this money back--they effectively refused to pay for services they contracted for," says Newman. And, he points out, the provider manual assures that Oxford will attempt to resolve record-keeping problems through corrective action.

Furthermore, he notes, the provider contracts require Oxford to pay psychologists the amount stated as long as the psychologists have provided medically necessary, covered services, used the proper billing format and obtained sufficient pre-certification. So Oxford violated provider contracts and failed to give providers proper warning, Newman says.

Under pressure from APA and NYSPA, the company publicly announced that it would stop demanding repayment and would even return money providers had already paid back.

At press time, APA and NYSPA anticipated ongoing dialogues with Oxford to continue pressing psychology's concerns.