Challenging Your VSP Audit Results

You've received an Adverse Action letter from VSP. Now what? VSP Audit results can and usually should be be challenged. Here are the steps in that process and what you need to know. 

Legal Representation

Your challenge to the audit starts with legal representation. Dr. Steinberg regularly represents optometrists and ophthalmologists across the United States that are being or have been audited by third-party payers such as VSP, or, more commonly, appealing the results of targeted audits by VSP's Special Investigations Unit (SIU). Over the past 20 years Dr. Steinberg has defended literally hundreds of optometrists facing VSP restitution demands and threats of termination of their VSP provider status. 

VSP audits typically result in disciplinary orders such as probation (called "conditional status" by VSP) or, more commonly, termination from the VSP panel and restitution orders demanding the repayment of tens, and often hundreds of thousands of dollars (plus audit costs of more than $5,000). Doctors removed from the VSP panel are automatically reported to the National Practitioner Data Bank (NPDB) and can no longer provide services to VSP patients on an in-network basis. This can be a devastating loss to a practice. More often than not, with good representation, these penalties can be negotiated down and mitigated. 

A new law in 2019 changed the VSP audit and collections process, limiting VSP's ability to easily impose repayment demands to a 1-year look-back.  Another new law in 2025 dramatically changed the arbitration process in VSP disputes, making VSP far less likely to want to engage in arbitration. It is therefore essential that, before you engage with VSP to dispute the results of an audit, you consult with experience counsel. Anything you talk to VSP about will be used by VSP to prove their audit is correct and to try and collect from you. And make no mistake about it -- VSP wants to recover money from you, every dollar they can. VSP needs to know you have counsel that knows their tricks, and is not afraid to challenge them. 

Click Here to read more about VSP Audits and the VSP Audit process generally.

EXPERT TIP: If you've been already been audited by VSP and just received a Notice of Adverse Action from VSP, do not panic. It probably says you must pay a lot of money back to them and that you are being terminated from VSP in a couple weeks. Click here for information you need to know. Most of the time the matter will be resolved with VSP without a termination through carefully planned settlement discussions and/or appeals. 

If your matter cannot be settled informally by your attorney, VSP's "Fair Hearing Process" gives doctors a right to appeal the VSP penalties and have VSP's decision reconsidered. The first stage appeal allows for an independent review. That is followed by an appeal to a panel of three VSP doctors. And if that does not resolve the matter, you have the right to an arbitration in front of a retired Superior Court judge.

Dr. Steinberg handles all aspects of the appeals process and represents doctors at VSP's administrative hearings and during post-hearing legal proceedings challenging these VSP orders. As a VSP doctor himself, and having spent the past twenty-plus years representing his colleagues from across the United States in VSP appeals and hearings, Dr. Steinberg is uniquely experienced and skilled at guiding you through this often confusing, and always intimidating process.

The Process

The process of challenging the results of a VSP audit follow a consistent pattern. It starts with detailed examination of the audit with your legal representative so that each of you understand what aspects of the audit are subject to a reasonable challenge and which parts accurately identified a violation of VSP rules. This leads to a decision on the best approach to take. 

Review of Results and Records

The first step is always the same: a thorough review of the Notice you received, the summary spreadsheet that comes with that audit, and the various records needed to understand the auditor's conclusions. Your lawyer needs to know what defenses there are, what if any errors the auditor made, and to what extent the audit is not wrong. Only then can a likely outcome be identified and a plan be developed for that to do next. 

Settlement Discussions

In most cases the process then proceeds to informal settlement discussions between your lawyer and VSP's in-house attorney. More often than not, audits can be resolved via these discussions. Your lawyer may make a proposal to VSP to resolve the matter. VSP will often counter that proposal (usually asking for more money than VSP is being offered!) and the parties go back and forth until an agreement is reached. Key to this is the earlier review of the defenses, because this is the time to convince VSP that the audit is not correct in one respect or another. Also key to this step is a thorough understanding of how the VSP restitution demand is calculated, because that will significantly affect the amount of money being discussed in the settlement. Often just a single patient in the audit group can result in a $10,000 change in restitution. This is why the initial review is so important.

Administrative Review

If a settlement cannot be reached, for whatever reason, you have the right to an administrative review of the audit. This is performed by a doctor hand-picked by VSP. Do not expect a very favorable outcome from this administrative review as the reviewer's, in my experience, are very biased in favor of VSP. Nonetheless, this is a key step for two reasons. First, ANY finding in your favor (for instance, the reviewer deciding termination is not warranted) is final. You can accept anything favorable and continue to appeal the remainder. Second, after you submit your appeal VSP then submits their opposition. This is the first time you will get to see the entire basis of VSP's findings and what their claim is against you. If nothing else, the administrative review provides you the information needed to prepare for the next level appeal. 

EXPERT TIP: Never waive your right to the administrative review. It allows you to obtain all of VSP's evidence against you so you can be fully prepared for any further appeals. 

Peer Review Hearing

If/when the administrative review does not produce a satisfactory outcome, you, and only you, can request that the matter move on to a Peer Review Hearing. Here there will be a roughly one-hour on-line (Zoom) hearing with three VSP-selected VSP doctors. Again, these doctors are hand-picked by VSP, often members of the VSP Board of Directors, and definitely not unbiased. They are strong supporters of VSP and the VSP auditors. Nonetheless, where there is clear error by the auditors the hearing panel will change the outcome. Generally the matter proceeds like this:

• The VSP administrator goes over various procedures and rules for the hearing (about 10 minutes)
• VSP's auditor makes his/her presentation (about 20 minutes), usually using 4-5 records as examples to prove their audit was correct
• You make your counter-presentation (about 20 minutes), which can include asking questions of the auditor
• VSP's attorneys and your attorney then can each make closing arguments (about 5 minutes each)

Several weeks later you'll receive the decision of the panel. Either side has the right to appeal any part of that decision to arbitration.

Most cases end at this point. Only a small group go on to arbitration because arbitration is expensive and complex.  

Arbitration

Arbitration is essentially a trial, but not in a courtroom. The parties jointly agree on an arbitrator, usually a retired Superior Court judge, to hear the case. Arbitration involves typical examination and cross-examination of witnesses, presentation of evidence, etc. What makes arbitration unique in this process is that the arbitrator is not biased in favor of VSP and the arbitrator usually knows little to nothing about the subject matter. He or she is not a doctor and may have never had a case involving optometry before. Thus, the entire process is longer - because you cannot assume the arbitrator knows anything about glasses or what a CL fitting is, etc.  

The arbitration decision is binding on both sides. Judicial review is very limited. Even if the arbitrator makes a manifest error of law, that will not result in overturning the decision. The rules of evidence generally don't apply as strictly -- for instance, hearsay can be considered. 

That said, recent changes in law have made arbitration far less desirable for VSP and that gives you some negotiating leverage. Audits may be resolved via settlement while the arbitration process is proceeding because of these new laws that expand your rights. For instance, you now (as of 2025) have the right to take a deposition of the auditor and possibly even the head of VSP's auditing department. Before 2025 that right did not exist. That gives VSP a good reason to offer a more favorable settlement.