Date Posted: Thursday, June 27, 2024

 

The convergence of internal and external market dynamics presents a golden opportunity for healthcare finance leaders to reassess their billing and compliance procedures. Externally, both federal and commercial payors are intensifying audits and scrutinizing pre-payment claims, delaying cash flow, increasing the risk of penalties and clawbacks, and jeopardizing the financial bottom line of healthcare organizations nationwide.? 

 

In its? 2023 Semi-Annual Report to Congress , the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) identified $200.1 million in expected audit recoveries and $277.2 million in questioned costs between October 2022 and March 2023. Expect those numbers to increase based on OIG's 2024 budget request, which asks for more funding to combat fraud after resource limitations forced it to turn down “300 to 400 viable criminal and civil healthcare fraud cases” in previous years.? 

 

A strong example is OIG's recent addition of an audit of Part D payments for prescribed diabetes drugs and related Part B service claims to its active work plan items. Just six type 2 diabetes drugs accounted for more than half of all Medicare Part D payments for diabetes drugs in 2022. Spending for one, Ozempic, more than tripled to $4.6 billion between 2020 and 2022.

 

Internally, billing and compliance teams are under increased pressure to optimize the revenue cycle as hospitals and health systems continue their slow climb back from the financial brink of 2022 when about ?half of U.S. hospitals? finished the year with negative margins.?While 2023 margins? improved by more than 15% ?through the end of the year (compared to 2022), progress remains tenuous (Kaufman Hall's National Hospital Flash Report, January 2024).??? 

 

These colliding dynamics have created a hostile environment in which traditional approaches to revenue cycle management (RCM) – billing compliance in particular – are no longer sufficient. Instead, a multi-faceted approach leveraging a hybrid, risk-based audit strategy supported by advanced compliance technology is needed to protect revenue integrity.? 

 

Disrupt the Auditing Status Quo  

 

In today's financially uncertain healthcare landscape, maintaining the status quo in terms of audit strategy can create unexpected risks. Conducting annual retrospective audits on all providers and coders or auditing random sample groups throughout the year may cause key issues to be missed within the billing process, leaving potential problems lurking in overlooked areas.? 

 

Periodic coder audits also fall short as problems left unchecked for an extended period can quickly accumulate to disastrous levels. Nor is it wise to rely solely on information from the OIG regarding its areas of focus to drive audit strategies, as doing so misses the other half of the picture – what other payors are scrutinizing.?? 

 

Ignoring denials or focusing only on coding-related denials – as was typically the case just a few years ago – also overlooks a plethora of other correctable causes for claims to be rejected. Claim reviews are more critical than ever, as? 69 percent of healthcare leaders ?report that denials have increased – while another report reveals claim denials are costing hospitals nearly $20 billion per year (MGMA Stat).? 

 

In a perfect world, billing and compliance departments would be able to prospectively audit every claim for accuracy and appropriateness. But that is infeasible in today's healthcare environment, both because it would bring the revenue cycle to a halt and require significant resources at a time when revenue cycle leaders are struggling with severe labor shortages. In one? recent survey , 41 percent indicated up to 75 percent of their RCM and billing department roles were vacant (Becker's Hospital CFO Report).? 

 

Even those departments that are not short-staffed are likely ill-equipped to manage the influx of audit requests pouring in from all sides. According to the? MDaudit Benchmark Report , more than 25 percent of providers failed audits in both professional and hospital billing. DRG audits increased by 300 percent in 2023, HCC audits increased by 170 percent, and risk-based audits increased by 50 percent.? 

 

While the right denial management technology tools would make managing such a significant uptick feasible, nearly? 40 percent of organizations? continue to rely on spreadsheets to track audits. What's more, fewer than 25 percent track trends related to clinically avoidable denials (Healthcare Financial Management Association).?? 

 

The bright spot is that the increased focus on billing compliance and denials management has demonstrated to revenue cycle leadership the value of adding automation and artificial intelligence (AI) to RCM strategies. Nearly 23 percent of respondents to? one survey ?indicated they are moving to more use of automation/AI, and 20 percent recognized the need to do so (HFMA).? 

 

An Optimal Approach to Billing Compliance  

 

The integration of AI technologies is revolutionizing the insurance industry with payors using AI to lower their costs. This recently added component makes it critical for healthcare providers to adopt a similar approach to technology. Advanced? AI-enabled denial management technology ?plays a critical role in an optimal approach to billing compliance, which employs a hybrid auditing approach and RCM tools for a true risk-based billing and compliance strategy.?? 

 

A hybrid approach employs prospective audits, which target high-risk DRGs, new providers and coders, and other problem areas, and retrospective audits that look at all denials to determine root causes and systemic issues impacting compliance and the overall revenue cycle. These audits are powered by AI and automation-enabled RCM tools, ideally integrated into a single platform that not only streamlines internal audits but also accelerates response to external audits.? 

 

The right RCM platform will democratize data insights and provide robust reporting tools to break down both data and communications siloes to enable collaborative access to the actionable information needed to drive informed decision-making. It will also ensure compliance with timeframes and information demands, close talent gaps created by the staffing crisis, reduce overall costs of a robust audit strategy, and stop denial-related revenue leakage.?? 

 

An additional step in an optimal approach to risk-based billing and compliance is establishing a partnership with payors that promotes both payment integrity and revenue integrity. RCM platforms and data analytics play an integral role by allowing providers to proactively identify and correct billing issues before they occur.? 

 

Finally, wrapped around the audits and technology tools should be comprehensive and tailored provider and coder education that is informed by audit results and analytics.???? 

 

DHR Health Achieves a 99.9% Coding Accuracy Rate  

 

DHR Health , located in Edinburg, Texas, is a rapidly growing physician-owned health system with multiple locations across Texas's southern border. Nationally recognized as a best-practice model minority-serving hospital, DHR has 120 clinics and 600 providers in 70 specialties, with approximately 22,000 annual discharges and more than 1 million outpatient visits annually.? 

 

Despite more than tripling in size, the health system's corporate compliance team continued to struggle with low professional and hospital billing audit volume due to primarily manual processes. On the hospital side, DRG pre-bill validation audits ran around 100 encounters a month.?There were also challenges with establishing a culture of compliance and staying current on guidelines and regulations, and limited resources made effectively upskilling providers an unattainable long-term goal. 

 

DHR Health decided to electronically convert compliance processes with MDaudit , an integrated billing compliance and revenue integrity platform. Doing so would also arm its compliance team with the resources to support a more robust hybrid auditing strategy.

 

Within the first year of the platform's use, the health system increased monthly retrospective audits?by 900 percent and prospective audits by 200 percent. Hospital billing DRG audits were expanded from 100 encounters per month to 800, with a special focus on high-dollar accounts. Additionally: 

 

•  Accuracy rates improved from 78 percent to nearly 100 percent, with physicians being at 95 percent accuracy. 

•  Provider accuracy improved by 22 percent. 

•  A 99.9 percent coding accuracy rate was achieved. 

 

MDaudit has also paved the way for DHR Health's corporate compliance team to begin using different scopes of audits to audit their more than 600 providers every 90 days.?It also allowed leadership to leverage benchmark data and audit reports to see how DHR Health and its providers compared nationally to other facilities and providers in the same specialty and brought greater awareness of the corporate compliance team's efforts – all of which combined to establish a solid foundation for the health system's future growth. 

 

Benefits of Tech-Enabled RCM  

 

With audits on the rise and provider organizations still struggling to shore up their bottom lines, savvy finance leaders are realizing the benefits that come with a technology-enabled approach to audits and billing compliance.

 

The ability to rapidly look forward and backward provides the level of insight needed to correct systemic issues that?impact?the revenue cycle while streamlining and accelerating audit processes and bridging staffing gaps.? 

 

Wesley Walker is the Vice President of Sales, Business Development at MDaudit – a leading healthcare SaaS-based continuous risk monitoring platform for revenue cycle management (RCM). Serving more than 70+ of the top 100 health systems with more than 1B+ in net patient revenue across 43 states. Walker's strong background of working in SaaS sales has helped him achieve award-winning status for his demonstrated history of excellence, exceeding quotas while serving the hospital and healthcare industry. Mdaudit.com