Electronic Health Reporter

External payer audits quadrupled in volume in 2023, making timely responses more challenging than ever for resource-strapped healthcare organizations. Though patient volumes and surgeries have begun to recover from COVID-19 declines – with a 23% and 27% increase over 2022 – inflation, staffing shortages, reimbursement, and regulatory issues continue to jeopardize the financial health of healthcare organizations nationwide.

These were among the key findings of the 2023 MDaudit Annual Benchmark Report released today by MDaudit, an award-winning provider of technologies and analytic tools that enable the nation’s premier healthcare organizations to minimize billing risk and maximize revenues.

“Increased complexity and reduced resources mean healthcare organizations are operating in an environment that demands flawless optimization for billing compliance, coding, and revenue integrity capabilities,” said Ritesh Ramesh, CEO of MDaudit. “Our analysis reveals the urgency for healthcare systems to stay ahead of the curve by harnessing digital initiatives and advanced technologies, including AI, machine learning, and analytics, to proactively manage compliance and revenue risks.”

Beyond technology, healthcare leaders must break down the silos between teams to create cross-functional/departmental synergies and manage change to stay operationally efficient. This will be imperative for growth and profitability going into 2024.

Shrinking Teams Face Growing Compliance and Revenue Integrity Challenges

Amidst nationwide healthcare staffing shortages, technology, automation, and analytics have emerged as critical catalysts for health system executives to drive change. Leaders are leveraging these tools to boost productivity, generate revenue, and control costs while compensating for reduced staffing levels. Managing denials and ensuring timely payments are important, but even more crucial is understanding and addressing the root causes of issues that start upstream with billing and coding practices in provider operations.

• Across the MDaudit customer base, there was an increase in technology-driven productivity. Large auditing teams were able to accomplish 10% more in audit activities compared to 2022 with more or less the same resources.
• Medicare Advantage plans were under constant scrutiny from the Federal government for compliance and overpayments. The data shows that these plans rejected 25% more in reimbursement dollars to providers this year versus 2022.
• Telehealth remains a substantial contributor to compliance and revenue challenges. According to MDaudit data, telehealth volumes were flat relative to last year and an average of 30% of audits failed for services administered in a patient’s home or office. Proficiently coding and documenting these crucial charges is imperative for ensuring the ongoing success of patient care and favorable outcomes.
• In 2023, external payer audits surged fourfold compared to 2022, often involving large audit documentation requests (ADRs). Mounting requests with tight deadlines and appeal timelines posed a significant risk of revenue loss and potential clawbacks, creating challenges for hospitals because of staffing issues.

Mitigating Denials to Protect Revenues

MDaudit’s findings emphasized the crucial role revenue integrity and billing compliance play in supporting the accurate and ethical capture and optimization of revenue for services rendered to patients. These teams are crucial for preserving financial stability, sustainability, and compliance, all while upholding the commitment to delivering high-quality patient care. Billing and coding are not about revenue alone; these cross-functional workflows directly influence patient experience and relationships, as well as a healthcare organization’s ability to grow.

Health systems are burdened by denials and increasing demand, underscoring the vital need for operational efficiency in billing, coding, and clinical documentation to enhance profitability.

The MDaudit analysis also found that:

• Commercial payers are taking longer to respond to claims in 2023 vs 2022. Initial response times were 29 days (about six business weeks) for an outpatient claim and 35 days (about seven business weeks) for an inpatient claim.
• MDaudit data for 2023 shows the value of commercial payers’ initial denials for professional claims has increased by 30% and by 5% for inpatient claims, as compared to 2022.
• Medicare Part A and Part B rejected 16% of the claims initially submitted for outpatient services – the most profitable for healthcare organizations.
• More than 60% of professional billing claim denials in 2023 were driven by documentation requests and eligibility concerns from payers.

“As we move into 2024, proactive actions and precision on billing compliance and revenue integrity outcomes are no longer optional. The healthcare landscape is evolving, affecting every facet of this industry,” said Ramesh. “New payer strategies and the integration of AI have intensified denials, payment delays, and claim scrutiny. How organizations and providers adapt and respond to these challenges will shape their long-term success.”

About the Report

The MDaudit Annual Benchmark Report equips compliance, HIM/coding, revenue integrity, and finance executives with industry insights, emerging trends, and data-driven information to help them take informed action and enhance outcomes for their organizations. The analysis in this report includes a comprehensive examination of data collected from a network of over 650,000 providers and more than 2,200 facilities that provide data to MDaudit for auditing, charge analysis, and denial assessment. This report encompasses insights from more than $5 billion in audited professional and hospital claims and denials by both commercial and government payers exceeding $150 billion.

Download a copy of the MDaudit Annual Benchmark Report.