Read the Notice of Adverse Action carefully so you understand it. You want to quickly determine the following:

• Is VSP terminating you from their network? If so, what is the date of termination?
• Is VSP demanding you pay restitution? If so, how much are they demanding (including audit fees)?
• What was the criteria VSP applied to determine what records to audit?
  • This will tell you what they were looking for in the audit
• What were VSP's primary audit findings (from the bullet points in the letter)?

If your VSP member contract is being terminated VSP will report that termination to the NPDB (National Practitioner Data Bank), saying that you have been terminated for false or misleading billing or for fraud. That NPDB report will be on your "record" forever, and all other 3rd party payers will be notified or can discover this information. VSP may also report the termination to your State Board, and the Board may bring disciplinary action against your license for insurance fraud/unprofessional conduct.

In most cases, by challenging appealing the audit, you will obtain a reversal of the decision terminating your VSP membership, and in so doing, avoid the reporting to the NPDB and to your State Board. Almost every case that is settled includes reversal of the termination and no reporting to the NPDB. In most cases VSP is just using the threat of termination to gain a negotiating advantage over you and to discourage appealing the audit. 

In some cases the VSP auditor will "offer" to reverse the termination and put you on "conditional status" (e.g. probation) IF you agree NOT to appeal and to pay the restitution in full. If this "offer" is made to you, record the date and time and make notes of what the auditor says to you. I consider this unethical, even a form of extortion, and you can advise the VSP hearing panel of the auditors "offer" during a hearing. 

Understand that IF you speak with the auditor, anything you say can be brought up by the auditor if you later have a VSP hearing challenging the audit. The auditor will take notes of your discussion and use your comments against you if he/she can do so. Because of this, I typically do not advise speaking with the auditor.

It has been my experience that the main, if not only, reason the auditor wants to speak with you is to offer you a small discount in the restitution in exchange for you agreeing not to appeal and to just pay the restitution (and the audit fees added onto it). The auditor does not want you to appeal and bring scrutiny to his/her audit. The only leverage you have in negotiating a resolution is the "threat" of an appeal. I don't recommend giving that right up right away!

You do NOT have to speak with the auditor. It is up to you. If there are easy issues, you may want to speak with the auditor and provide additional information in the hope of getting your restitution reduced. But don't set your expectations very high. The auditors are not working FOR YOU. Chances are they chose to audit you because they already decided you are probably overbilling or defrauding VSP. From that point on, it appears to me that their only goal is to prove what they already believe to be the case.

Prior to the 2015 Network Doctor Agreement, VSP's Network Doctor Agreement (NDA) provided that you must pay VSP's reasonable out-of-pocket expenses incurred in the audit. But VSP charges you for the auditors time, even though it is not an out-of-pocket expense. I do not believe this is recoverable, and the VSP hearing panel has generally agreed. You should ask to see the breakdown of the audit fees and agree to pay only the legitimate travel expenses. If you ask for a hearing there is a good chance you will not have to pay the additional audit fees for the auditors or the optometry director's time.

However, if, like most people, you have signed a new Network Doctor Agreement or a renewal since January 2015, your contract probably says that VSP can charge you the "fair market value" of the auditors time. Nonetheless, there is room to challenge or negotiate this in many cases. VSP sets the fair market value itself, and that value is well beyond "fair market" for an auditor. 

First, before any appeals, there may be an attempt to resolve the case informally via settlement. Many VSP audits are resolved in this way and do not proceed into formal appeals. The key here is having an experienced expert on your side to advise you. What are your chances of prevailing in an audit? What are the pros and cons of appealing? What does settlement look like? A good honest review by your expert attorney will help you answer these questions and decide the best course going forward. 

EXPERT TIP: Do not try to negotiate with VSP yourself. You lack the experience to know what VSP is willing to negotiate and what they will not. You don't know where you have leverage and where you do not. VSP does this all the time, you don't. VSP knows this and will use it to get the best deal they can for VSP! Make no mistake about it, VSP wants money from you. 

If the dispute cannot be settled informally, the VSP appeals process allows for three stages of appeal. In the first stage your appeal is submitted to a VSP-selected reviewer. You submit your appeal first. VSP's auditor then submits a rebuttal or opposition to your appeal. You are NOT given a chance to reply to that VSP submission. These "administrative" appeals are important, but difficult to win because it is not a level playing field. The reviewer is hand-picked by VSP and typically biased, and you're not allowed to know the evidence against you, much less a chance to reply to VSP's opposition. 

The next stage of the appeals process is a hearing. The VSP hearing is held before three practicing optometrists. While they are typically members of the VSP Board of Directors, and are therefore not "neutral" in the ordinary sense, they are practicing optometrists and often disagree with the conclusions of the auditor. So do not assume you will lose if you appeal. It is all about putting together your evidence and demonstrating, in an organized coherent way, that your billing was correct. In addition, there are often legal arguments that can apply to reduce your restitution. While every case is different, I've obtained many reductions in restitution, often of 50% or more.

Finally, either side (you or VSP) can appeal the results of the hearing process to a neutral arbitrator. Most audit appeals do not go to this step, which is more complicated and more expensive. Here the matter is resolved by, most commonly, a retired Superior Court judge in a trial-like manner. 

Though I do not believe it is legal for them to do so, even before you get a hearing to contest the auditor's findings, VSP may choose to begin withholding your VSP checks and holding the money to apply it to your restitution amount. There is little you can do about this, other than submit a written complaint to the California Department of Managed Health Care and ask them to intervene. So, you should expect your office cash flow to be impacted -- you will stop receiving VSP checks. You should plan accordingly.

That said, VSP will not typically do this during informal settlement discussions, so you do have some time to try and work it out. Again, this is an area where you need experienced counsel helping you. 

As mentioned above, VSP will turn some cases over to the State Board for possible license discipline. With good legal assistance, this may be avoided, and, even if it can't be avoided, the ability of the Board to seek discipline can be significantly reduced by proper handling of your case. Do NOT just agree to pay VSP in the hope the matter will go away. That may be used against you by the State Board as a tacit admission of wrongdoing. VSP is most interested in getting paid, and with legal assistance an agreement can often be reached to mitigate or minimize your state board discipline exposure. I have been successful in many cases in negotiating settlement agreements with VSP, and in negotiating with the State Board, to avoid license discipline.

VSP typically audits a "line of business." For instance, it may be VNCL (visually necessary CL), or elective CL, contact lens fitting fees, primary/essential eye care billing, or low-power spectacle prescriptions.

Most audits have been focused on contact lens practices. VSP will challenge the clinical basis for a VNCL charge, and they will look closely for proof of a CL fitting, and that your fitting and material fees are correct. VSP does not permit you to charge more for a VNCL fitting than you'd charge for an elective fitting of the same lens type, and they do not allow you to charge them more than you charge the general public for the same service. They also do not permit you to charge more for materials simply because the patient qualifies for VNCL. They will assert they have been overbilled if you do any of those. They also look to see if your records reflect that a fitting was actually performed if you billed for a CL fitting. And they look for proof that contacts were ordered AND were dispensed (e.g. there is a date dispensed describing WHAT was dispensed and when).

A common VSP audit, and easy money for VSP, is if you are charging more to VSP patient than to others for your contact lens fitting. This is especially an issue in patients with the $60 co-pay plan. While a "prompt pay" discount of about 20% is generally tolerated, your usual and customary fees need to be uniform without regard to who is paying those fees. If your fees to VSP are higher than to cash-pay patients this will generally result in a poor audit outcome. 

Your records are the key. They will save you, or they will bury you. But remember that financial records, invoices, credit card receipts, notes, and other items like these are part of the patient record, and they can be used to prove that lenses were ordered and dispensed. But, if you don't document the CL fitting/evaluation, it is hard to defend and you are likely to have to repay VSP a lot of money. Write MORE, not less.

Without delay you need to obtain an experience attorney to help you through the process from this point on. Please read through the article, Challenging Your VSP Audit Results and follow the guidelines there. Time matters so do not delay.