As payers step up efforts to identify and recoup improper payments, hospitals and health systems require innovative solutions to mitigate the potential threat these reviews pose to the bottom line. To meet this need, Hayes, a leading healthcare technology provider that partners with the nation’s premier healthcare organizations to improve revenue, mitigate risk and reduce operating costs, has launched External Audit Workflow to streamline management of external audit responses.
“The volume of external audits is rising exponentially as the Centers for Medicare and Medicaid Services and other payers search for every dollar they can recover from over-coded or otherwise improperly filed claims,” said Peter Butler, president and CEO, Hayes. “To protect their hard-earned revenues and reputations, healthcare organizations need a strong first line of defense – an external audit management process that is collaborative, efficient, and comprehensive. That is Hayes’ goal with the launch of MDaudit Enterprise External Audit Workflow.”
MDaudit Enterprise External Audit Workflow simplifies and automates time-consuming and inefficient manual processes for tracking third-party audit requests, including commercial payers, Recovery Audit Contractors (RAC), Targeted Probe and Educate (TPE), and Comprehensive Error Rate Testing (CERT). Its flexible process templates and reporting tools deliver operational efficiencies and insights on potential risks and provide a consistent and repeatable audit response process.
With External Audit Workflow, hospitals and health systems gain access to tools that bring together all their external audit management activities into a secure HIPAA-compliant SaaS-based platform.
As we face the third year of the global pandemic, hospitals and health systems are desperate to shore up bottom lines that have been battered by ongoing financial losses projected to exceed $100 billion in 2021. The key to undoing some of the financial damage is optimizing revenue flow and reducing compliance risk, which requires an understanding of the exact driving forces behind the devastating losses.
For many healthcare organizations, the primary problem can be traced to bundling errors, COVID-19 claim denials, and a range of coding issues.
That’s according to Hayes’ inaugural auditing and revenue integrity report, Healthcare Auditing and Revenue Integrity: 2021 Benchmarking and Trends Report, which analyzed more than $100 billion worth of denials and $2.5 billion in audited claims. It found that bundling errors were the top culprit behind the 34% of inpatient hospital charge initially denied in 2021, each with an average value of $5,300. Internal auditors also identified a significant number of concerns centered around disagreements between procedure codes and diagnoses, contributing to 33% of all internal audits containing “disagree” findings.
Understanding the Drivers
The report is based on a review of professional and hospital claims, including current charge and remit data sent to all payer types, audited in the company’s revenue integrity platform, MDaudit Enterprise, during the first 10 months of 2021. It includes more than 900 facilities, 50,000 providers, 1,500 coders and 700 auditors from U.S.-based acute care and children’s hospitals, academic medical centers, healthcare systems, and single and multi-specialty physician groups.
In terms of denial trends, the report identified bundling as the top category for both inpatient and outpatient hospital charge denials – the latter of which had an average value of $585 for each denied claim. The top reason was that the benefit had been included in a previously adjudicated service or procedure. Professional services had a first-time denial rate of 15%, led by claim submission/billing errors and carrying an average value of $283 each.
Under- and over-coding were also identified as problematic. In terms of revenue risk, audits indicate that under-coding created underpayments averaging $3,200 for a hospital claim and $64 for a professional claim. In terms of over-coding, Medicare Advantage plans and payers in particular are under heightened scrutiny for expensive inpatient medical necessity claims, drug charges, and clinical documentation to justify the final reimbursement.