July 7, 2010

Selecting the Right System to Manage Your Payer Audits

By

vhoy100The Recovery Audit Contractor (RAC) demonstration project from 2005 through 2008 resulted in almost $1 billion in overpayments being collected from providers. In 2009, talk of the anticipated dire impact of the nationwide rollout of RACs  was all the rage.

 

In March 2010, the American Hospital Association reported the net amount refunded to the CMS trust fund as a result of the demonstration period to be $693.6 million, of which 95 percent came from hospitals. Whether or not you are working at a hospital that has received letters from a RAC, you are not immune to the impact of the program.

This impact has spread auditing duties to other entities, and the size and scope of companies performing these audits is vast. The auditing now extends far beyond the government programs of MIC, MAC, and ZPIC, reaching deep into the commercial payer market.

 

Every payer who can afford to justify the auditing cost is performing checks on documentation, coding and medical necessity. Facilities must have a strategy for managing and resolving these time-consuming audits. There are measures you can institute to lighten your load. Besides assembling the correct team of experts to assist with audit issues, one recommendation is to choose a system carefully to help you manage the process and strategically analyze your audit results.

 

Tracking Audit Request

 

The impact to healthcare organizations responding to audit requests has run into the millions of dollars in actual recoupment and penalties being assessed.  During the demonstration project, it was reported that at least two full-time employees were required to manage a facility's RAC response process. With the audit expansion, however, it is estimated that facilities will be required to utilize even more resources.

 

Resources are required to track audit requests properly and to perform the following:

 

  • Coordinate timely and accurate responses in order to avoid penalties and meet mandated deadlines;

 

  • Document responses so they are accessible to persons who have a need to know and be involved in the process;

 

  • Capture accurate data, creating a comprehensive record for deciding when and how to take the next step.

 

The required response and follow-up analysis pertaining to each request may demand that facilities hire or otherwise solicit experts to undertake the following:

 

  • Provide appeals support or second opinions;

 

  • Evaluate workflow for improvement potential; and/or

 

  • Administer education and training to prevent audit issues in the future.

 

Expanded auditing has resulted in the need for increased communication within organizations. Whether the need area is expertise in managing the process, intimate knowledge of coding, reimbursement, medical necessity, appeals, or change management and communication, the cost of managing such audits increases quickly.  For these reasons and others, an organized and strategic defense is important, as is investing in a system to help you manage the process, communication and growing complexity of analysis.

 

Avoid Managing by Spreadsheet

 

Hospitals that have yet to choose a system for audit tracking should consider doing so now. Managing via spreadsheet application and manually tying to statements on the back end only will add to the resources needed to manage these time-consuming audit processes. This has been done and continues to be done, but it is an inefficient method that is fraught with opportunities for payers to win.

 

Some hospitals have chosen an in-house application solution without evaluating the market. While a smart choice at one time, if the system is starting to show signs of weakness when it comes to audit reporting, tracking, analysis or assistance producing a more strategic view of revenue strategies, it may be time to rethink your choice. Investing in a comprehensive system to help you manage the process is a good idea.

 

Advanced Systems

 

Many systems have been developed to facilitate management of specific audits, such as those performed by RACs. A recent review of more than 40 RAC systems indicates that time saving audit systems include such features as reminder alerts, document-capture capabilities for streamlined communications, and security features like audit trails, secure access and user role definition. While these basic features are critical for streamlining the process, systems offering them without additional strategic solutions for future analysis fall short of offering the best option.

 



 

Some of the more advanced and sophisticated audit tools not only help with tracking what has been audited, but also assist before and after the filing of a claim.  Before filing, alerts can be used to prompt the user based on a specific DRG or code combination on a claim, and another kind of alert can point out what appear to be invalid quantities. After filing, clever extensions on the audit-tracking basics include systems that help identify risk not yet audited and even underpayments that may be owed to you, which can be used to offset takebacks - or for a commercial market defense, a system that offers contract modeling to help manage future risk and retain more revenue. Whatever your system choice, it also should offer robust reporting to close the gap as it relates to the increased need for communication and shared knowledge on the audit issues. Benchmarking and executive-level reporting is a "must-have" feature of any audit system. If there are IT, hardware and/or software obstacles to be overcome, consideration may be given to a SAAS solution that does not require a large investment in hardware, resources, time or money.

 

Building the Right Team

 

There are new reports on coding and audit issues emerging daily. No one system alone will fix the diagnosis, documentation and other errors that occur in the care delivery and claims submission and adjudication processes. So, along with your system, you need a team with the right mix of professionals to help manage the process. In reviewing the current state of audit payment denials, most fall into one of these categories: billing, coding, documentation or patient status. In building an effective audit defense it is important to look for team members who have years of experience in these areas and a deep understanding of the entire revenue cycle process.

 

Payer audits with changing claims submission expectations are having a significant impact on the financial health of healthcare enterprises. Many systems have been developed to facilitate the management of the audit process and report on audit results. Besides the basics of tracking, the more complete audit- systems include features such as reminder alerts and document capture alongside systems with audit trails, security, user access roles and robust reporting. The best applications also offer sophistication in terms of allowing customization for monitoring and assessing risk, identifying underpayments to offset recoupment, and offering help with the management of risk so you can retain your revenue.

 

Whether you have chosen an audit tracking system or not, you should evaluate or re-evaluate your choice in terms of taking your management of payer audits to the next level. Evaluate your tool to determine how it supports reporting, data mining, predictive analysis and modeling capabilities for your unique needs.

 

A carefully chosen system is a good investment that can add great value to your audit management process.

 

About the Author

 

Veronica Hoy, MBA, is vice president of SOURCECORP HealthSERVE Consulting, Inc. Veronica has been an operating executive for 10 years, focusing on providing strategic leadership and direction to healthcare professionals and organizations. She has over 20 years of healthcare experience in business process outsourcing, accounts receivable management, coding, billing, release of information, consulting, and systems implementation.

 

Contact the Author

 

veronicahoy@srcp.com


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