How Risk Intelligent Auditing Can Help Revenue Integrity
By Ritesh Ramesh, COO, MDaudit.
Maintaining an organization’s revenue integrity should be a constant activity for compliance and auditing staff. Consider that, despite falling claim volumes in Q3 compared to the first two quarters of 2022, the average denial per claim increased by as much as 9.6%, according to the 2022 MDaudit Annual Benchmark Report. Lag days between claims submission and initial payer response also rose by as many as 6.5 days during the same period.
For health information management (HIM) professionals, this should serve as a wakeup call to make every claim count. Increasingly, organizations are using “risk intelligent” auditing to continuously monitor risk, detect anomalies, and automate workflows to bring efficiencies to formerly manual processes. Organizations that make resolving accuracy issues in billing and coding operations a priority can help retain between 15% and 25% of overall revenue. Revenue retention is going to be as critical as revenue growth for healthcare organizations going into 2023.
Read on to learn how to help your organization keep more of its hard-earned dollars.
Leveraging data to drive outcomes
Not long ago, coding, billing, claims, and auditing processes often operated independently of one another and employed tedious and manual workflows. These processes slowed claims submissions, payments, and auditing functions that help organizations maintain compliance and monitor revenues.
These time-consuming and cumbersome processes became more problematic during the pandemic, when the very foundations of the traditional care experience were upended by a novel disease and the rise of the virtual patient visit. While providers continue to recover from these shocks to their organizations, federal payers have ramped up their efforts to ensure the accuracy of claims.
During FY 2023, the federal Health Care Fraud and Abuse Control (HCFAC) Program and the Medicaid Integrity Program will receive nearly $2.5 billion, an increase of $80 million from the previous year. Inclusive of medical review, Medicare program integrity activities had a return on investment (ROI) of $8 for each $1 spent. With such an attractive return, don’t be surprised that the breadth and depth of these activities continues to increase.
Organizations can support risk-based compliance and revenue integrity by utilizing risk intelligent auditing to mine their billing and remit data to identify billing compliance and revenue risks. The same tools can unearth key metrics focused on current risk areas to monitor provider billing patterns and even benchmark them against peers. Risk intelligent auditing helps prioritize efforts to develop corrective action plans, educate stakeholders, mitigate the need for audits, and prevent future revenue losses.
A cross-functional approach is needed
Denials continue to plague providers. MDaudit research shows that 82% of all denials were associated with Medicare claims, while the claims denial rate increased across the board from 2021 to 2022 for professional (+2%), hospital inpatient (+9.6%) and outpatient (+6%) claims.
Top reasons for denied claims include claims submission and billing errors, duplicate claims, bundling issues, and pre-certification or pre-authorization problems.
Among total professional charges submitted to payers, 12% were rejected, with an average charge of $288. For hospital outpatient claims, 26% were rejected, with an average charge of $602. Even more hospital inpatient claims (27%) were rejected, with a $5,810 average charge. Ten percent of telehealth claims also failed to meet initial approval, with an average denial of $280.
Across professional and hospital billing, 28% of COVID-19 charges were rejected by payers in 2022. For a large healthcare system, avoiding COVID-19 denials represents a revenue opportunity of about $50 million.
At the same time, the average lag between claim submission and initial payer response increased by two to six days, depending on the claim type. Longer initial response and increasing claim rejection rates mean that providers are waiting longer to get paid.
Risk intelligent auditing gives staff insight into practices across the enterprise. Taking a cross-functional approach can bring best practices, efficiencies, and more robust revenue integrity to all departments. To drive value, revenue integrity teams must work in conjunction with compliance, HIM/coding, pharmacy, revenue cycle, and clinical document improvement (CDI). Using common data sources, technology platforms, and insight-sharing mechanisms can break down silos among departments and truly transform billing practices while protecting revenue integrity and enhancing the patient experience through accurate bills.
Bringing Intelligence to Revenue Integrity
Revenue integrity encompasses much more than the assurance that claims billed are accurate and that reimbursements arrive in a timely manner. It’s an ongoing process of continuous monitoring, which is where risk intelligent auditing software proves valuable. Continuous monitoring can uncover anomalies and risk areas and using a single platform can enable an audit trigger in a few keystrokes, allowing organizations to stay on top of their revenue integrity and compliance processes.
MDaudit research shows that more billing compliance teams are using data analytics to proactively identify and mitigate compliance issues. In 2022, risk-based audits increased by 28%, while prospective audits were up 31%.
A fall 2022 report prepared for the American Hospital Association projects overall hospital margins 37% lower than pre-pandemic levels, with 53% of all hospitals experiencing negative margins. A robust revenue integrity program that features risk-intelligent auditing can help providers make every revenue dollar count.