With 82% of 2022 claims denials associated with Medicare, and third-party audit volume rapidly climbing, hospitals and health systems are under intense pressure to protect and grow revenues.
These were among the key findings of the 2022 MDaudit Annual Benchmark Report released today by MDaudit, the healthcare technology company that harnesses the power of analytics and its proven track record to allow the nation’s premier healthcare organizations to retain revenue and reduce risk.
“Our analysis suggests that the post-pandemic era has given rise to a new phenomenon for healthcare. Medical spending is more discretionary for consumers impacted by inflation, driving dramatic reductions in revenues generated by physician office and hospital visits for the third quarter of 2022,” said Peter Butler, president and CEO, MDaudit. “Exacerbating this situation is the need to successfully defend against more third-party audits amidst chronic personnel and resource shortages.”
Driving Smarter Audits
Payers are investing in predictive modeling and artificial intelligence (AI) tools to scrutinize claims more closely before adjudication to reduce improper payments. The 2023 Department of Health and Human Services budget requests $2.5 billion in total investments for the Healthcare Fraud and Abuse Control and Medicaid Integrity Programs, $900 million of which is allocated for discretionary spending to advance technologies to scrutinize payment accuracy — up $26 million from 2022.
This should be a concern for healthcare organizations – and the push compliance leaders need to find more efficient ways to retain at-risk revenues. Per the MDaudit analysis:
Billing compliance leaders mustleverage data and analytics as catalysts to proactively detect risks and perform audits for corrective action. Data-driven, risk-based audits (up 28% in 2022) can complement the annual compliance plan to ensure effective audit scope coverage.
By deploying prospective (up 31% in 2022) and retrospective auditing methods, compliance teams can drive cross-functional initiatives that mitigate compliance and revenue risks.
A key element of a successful revenue defense is to help compliance teams become more efficient in managing external payer audit requests to retain at-risk revenues. The role of billing compliance needs to be increasingly data-driven and cross-functional, as well as serving as a business partner to other teams including coding, revenue integrity, finance, pharmacy, and clinical, to meet changing and more complex risks. The MDaudit analysis also found that:
The Centers for Medicare and Medicaid Services (CMS) has made no secret of its intentions to crack down on fraud, abuse, and waste, throwing more budget dollars into audits, heightening program integrity oversight of Marketplace plans, and exploring new methods of using advanced technology to conduct more rapid and thorough documentation reviews.
Historically, as CMS goes, so do commercial payers, putting healthcare organizations in the crosshairs of an unprecedented level of third-party external audits. To emerge relatively unscathed, organizations need to put in place proven processes that guide immediate and effective actions in the wake of adverse findings.
With limited time to correct the internal processes or billing practices that contributed to the problems, many organizations are turning to corrective action plans (CAPs) to streamline and accelerate their response to unfavorable outcomes. Those that do also realize the added benefit of having their chances of future billing compliance risks significantly reduced while their ability to achieve revenue integrity is enhanced.
The Audit Environment
The signs of an aggressive audit environment are everywhere. The Department of Health and Human Services (HHS), in its 2022 budget, allocated a staggering $2.6 billion to halting fraud, abuse, and waste in its Medicare and Medicaid programs – up from $180 million in 2021. A primary target is Medicare medical review of fee-for-service claims – which CMS has likely increased due to a robust rate of return to the Trust Funds (estimated to be more than $9-to-$1, based on a three-year rolling average).
The Office of the Inspector General (OIG) has also ramped up its scrutiny of how well provider organizations complied with requirements tied to the use of nearly $180 billion in Provider Relief Funds and with recently enacted mandates such as the No Surprises Act. One survey found that almost 25% of hospitals respond to as many as 2,000 external audit-related monthly requests from multiple sources. While results of many of those audits are confidential, Medicare Fee-for-Service data show a 6.26% improper payment rate in their 2021 report.
When audits by commercial payers identify problems such as overpayments, they may require the provider organization to generate and implement an actionable CAP for the relationship to continue. And while a CAP is not required when a RAC audit uncovers issues with billing practices, the offending provider organization should act swiftly to not only remedy the immediate problem – generally by refunding the overpayments – but also to identify and address any underlying practices or processes that may put the organization at risk for future issues and liability.
Audit pressure isn’t just external. Many healthcare organizations are also ramping up internal scrutiny – and they’re not always happy with the findings. When looking specifically at internal audits, the Healthcare Auditing and Revenue Integrity: 2021 Benchmarking and Trends Report from MDaudit found that more than 30% of the time, audit outcomes are unsatisfactory and have not met acceptable thresholds.
MDaudit, the healthcare technology company that harnesses the power of analytics and its proven track record to allow the nation’s premier healthcare organizations to retain revenue and reduce risk, announced today the launch of MDaudit Revenue Integrity Suite which brings fully integrated risk capabilities and supporting workflows together on a single platform.
The only end-to-end denials analytics technology designed to pre-emptively protect against revenue leakage by identifying and resolving systemic risks based on historical data and applied insights, MDaudit Revenue Integrity Suite proactively addresses the issues that lead to costly inpatient and outpatient claim denials.
“Up to 80% of denial dollars can be traced back to just 20% of denied claims – denials that are rooted in systemic issues that MDaudit Revenue Integrity Suite eradicates with a unique blend of retrospective diagnostics and predictive analytics,” said Peter Butler, president and CEO, MDaudit. “This is not just another in the industry’s long line of software that does little more than highlight coding inaccuracies without identifying the cause of denials. Rather, MDaudit Revenue Integrity Suite creates a closed-loop feedback process between insights, action, and outcomes to manage high-impact denials, making it a powerful vehicle for driving improved overall revenues.
Powered by sophisticated analytics, augmented intelligence, and expertise in providing proven revenue cycle management services and solutions to the nation’s leading healthcare provider organizations, Revenue Integrity Suite is the latest offering from MDaudit that delivers industry-leading innovation to improve outcomes through actionable analytics and empower healthcare organizations to achieve unparalleled efficiency, reduce compliance risk, and retain more revenue. MDaudit technology delivers powerful workflow automation, risk monitoring, and built-in analytics and benchmarking capabilities – all in a single integrated cloud-based platform.
MDaudit Revenue Integrity Suite gleans insights from historical data and applies them proactively to address potential denials for reasons that are either medical necessity, pricing, or treatment-related, including specialty drug and durable medical equipment (DME) utilization, thereby resolving the issues that cause high-dollar hospital claims to be denied. It features a powerful analytics engine that proactively identifies financial and clinical issues with high-value services as they are seen by payers, reducing the costliest denials and payment delays, and improving revenue and days in A/R.
By identifying, prioritizing, and addressing denial risks that have the greatest financial cost, MDaudit Revenue Integrity Suite optimizes and targets internal resources for maximum impact. It also:
Provides greater visibility of revenue risks across revenue integrity, revenue cycle, billing compliance, coding, clinical documentation, and other teams.
Supports improved financial decisions, forecasting, risk management, and strategic use of internal resources.
Informs retrospective and prospective audits, driving continuous billing compliance, coding improvements, and stakeholder education.
“In today’s macro-economic environment, healthcare organizations are necessarily hyper-focused on achieving sustainable revenue and profitability,” said MDaudit COO Ritesh Ramesh. “Their needs drive MDaudit’s continuous search for technology-enabled approaches to ensure these organizations can keep the revenue they earn with greater predictability and less risk.”
He continues: “MDaudit Revenue Integrity Suite tackles this critical problem with an innovative, data-driven, and cross-functional approach that exceeds the capabilities and ROI of the traditional solutions in this space.”
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.
Bundling errors continue to wreak havoc on hospital bottom lines in 2021, causing 34% of inpatient charge denials with an average value of $5,300 each. That’s according to an auditing and revenue integrity report analyzing more than $100 billion worth of denials and $2.5 billion in audited claims released today by Hayes, makers of MDaudit, the industry’s leading integrated auditing, billing compliance and revenue integrity platform for the nation’s premier healthcare organizations.
Focusing on denial trends, bundling was the top category for both inpatient and outpatient 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, while COVID-19 claims continue to attract higher denial rates from both commercial and federal payers.
“With the pandemic driving projected losses over $100 billion this year, hospitals and healthcare organizations are under intense pressure to optimize revenue flow and reduce compliance risk,” said Peter Butler, CEO, Hayes. “Gaining control over denials by focusing on both auditing and training providers and coders to improve documentation is a logical first step – particularly given that 43% of rendering providers and 27% of hospital coders fail internal audits and auditors have ‘disagree’ findings about 33% of the time. Left unaddressed, this is a huge revenue and compliance risk for organizations.”