Before medical school, I thought the legal side of medicine was far removed from the clinic. It was a world belonging to attorneys, insurers, and contracts that physicians rarely read.
When I started getting involved with the American Medical Association (AMA), I realized that was far from the truth. I started with policy writing, helping draft and debate resolutions on issues that sounded procedural, such as arbitration agreements, payer audits, or network terminations. At first, these topics felt abstract compared to anatomy or patient interviews, but as I read about how they affect physicians and patients, their impact felt more concrete.
The most striking example of this was a policy on Special Investigations Units (SIUs), fraud payment recovery investigations conducted by payers. I first understood insurer audits mostly as a billing problem, but as I continued to read about offsets, extrapolated audits, and network terminations, I realized that an investigation can affect whether a practice is paid, or worse, whether a physician can keep seeing a patient population.
Most physicians already know that insurer audits are frustrating. They know the routine: a records request, a repayment demand, a portal message asking them to defend care they provided months ago. In a clinic day crowded by prior authorizations, denials, and inbox messages, an SIU investigation can feel like one more administrative nuisance. But physicians should still be concerned about SIUs because they can directly impact their practice.
Payers may decide they overpaid one group of claims and then recover that alleged debt by reducing, delaying, or withholding payment on later claims submitted for other patients. The AMA’s Overpayment Recovery Toolkit describes mechanisms such as reducing payments owed to the physician, withholding, or setting off against future payments. For a small practice, that can threaten payroll, staffing, and the ability to keep the doors open. The audit math can be just as consequential. Post-payment reviews may rely on statistical sampling and extrapolation, meaning a payer reviews a sample of claims, identifies an error rate, and projects that rate across a much larger universe. CMS’s Medicare Program Integrity Manual recognizes the difference between actual overpayments found in sampled claims and projected overpayments extrapolated across a broader group. When physicians are not given clear information about the sample or error calculation, a few disputed charts can become a repayment demand far greater than the true owed amount.
To protect themselves, physicians should not treat audit letters like routine paperwork. They should preserve notices, responses, remittance advice, and deadlines. They should ask the payer to identify the claims at issue, the contract provisions being used, the appeal process, and any proposed offset or withholding schedule. If sampling or extrapolation is used, they should ask for the methodology and basis for applying the result to claims that were never individually reviewed. The AMA’s Overpayment Recovery Rights resource frames overpayment demands as disputes that physicians can question, not simply bills they must accept.
The impact of SIUs becomes even greater when an investigation leads to network removal. For physicians, being removed from network can mean losing access to an entire patient population, watching referrals disappear, and having years of reputation reduced to a payer dispute. Even if the allegation is later narrowed, the damage may already be done. More importantly, patients become collateral, losing relationships built over years of care when their physician is suddenly removed from network.
Federal law already recognizes this issue. The No Surprises Act includes continuity-of-care protections for certain patients in active treatment, including serious or complex conditions, pregnancy, scheduled surgery, inpatient care, or terminal illness. CMS guidance explains that eligible patients must receive notice and the option of limited transitional care under the same coverage terms.
There is an important catch: CMS materials also explain that these protections generally do not apply when the contract is terminated for failure to meet quality standards or fraud, often called termination "for cause." That exception makes sense in theory. Patients should not have to stay with a physician who is unsafe or has committed fraud. But many SIU investigations start before anything has been proven. If a payer can call the termination “for cause” and avoid continuity protections before the facts are settled, patients may lose access to their physician right when their care is most at risk.
So, who is responsible for the patient in the payer-physician separation? Payers are often better positioned to identify patients in active treatment, provide notice, and arrange safe transitions when care cannot continue. In fact, payers are legally responsible to patients, as many employer-sponsored health plans are governed by the Employee Retirement Income Security Act (ERISA), which requires plan fiduciaries to act in the interest of participants and beneficiaries. In a 2023 Department of Labor settlement, the department required a third-party administrator to stop cross-plan offsetting for ERISA-covered plans because it used payments owed for one patient’s care to recover alleged overpayments from another plan. Simply put, payers have duties to the patients whose benefits they administer, even when they are pursuing recoveries.
As a medical student, I am still learning how to care for patients. But my AMA policy work has taught me that patients are also affected by contracts, appeals processes, and administrative decisions that rarely appear in preclinical lectures. Moreover, I have learned that practicing physicians cannot do everything for each patient, but they can advocate for them by recognizing when administrative decisions threaten patients. If faced with network termination investigations, physicians should push for notice requirements that identify patients in active treatment and require plans to offer transition support.
SIUs and other legal contracts feel distant from medicine. Nevertheless, they determine whether a physician is paid, whether a patient can stay in network, or whether continuity protections exist for vulnerable patients. Their impact on physicians and patients alike is far from abstract, but rather, all too real.
If you have faced an insurer audit, share your learnings in the comments.
Jeffrey Gu is a first-year medical student at the University of Virginia.
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