No healthcare provider would willingly give up millions of dollars in revenue. But that’s what they’re doing when they don’t have mechanisms in place to audit closed, or zero-balance, accounts as part of a comprehensive revenue integrity program.
Auditing zero-balance accounts is no longer a luxury. Underpayments are increasing, mainly because of the complexity of payer contracts. Complicated contractual rules result in payers misapplying them during adjudication. Our analysis indicates underpayments account for up to 10% of claims, in part due to such errors.
This puts the onus on providers to continually identify underpayments and inaccurately adjudicated claims. This is a difficult task. The spreadsheets and manual reporting tools used by most revenue cycle professionals are no match for the literally hundreds of payer fee schedules and millions of rules involved with adjudicating claims.
To keep the claims audit task even vaguely manageable, most providers only search for underpayments above a certain dollar amount. That approach identifies just a fraction of underpayments. Further, even these minimal efforts take up time and money for limited return.
Essential audit additions
Providers can supercharge their revenue integrity programs by combining technology-enabled claims auditing capabilities with strategies to identify and recoup underpayments. We’ve seen clients achieve returns of 30:1 to 100:1 by investing in automated auditing technology.
Here are the key components needed to boost revenue integrity with a strong auditing program:
- Replication of the complete adjudication process. An optimal claims auditing program audits claims and remittances using a payer’s own contract parameters to pinpoint any payment errors.
However, many commercial solutions only analyze historical remittance data to report on payment trends. When aggregated historic trends data is used to audit claims adjudicated under current contracts, false positives and negatives can often result. Such errors can tarnish payer relations and mar efforts to recover future underpayments.
Instead, providers must use all current payer-required data elements when auditing a claim, including specific contracts, fee schedules, carve outs, rules, edits and modifiers, such as enhancements and deductions. This level of specificity can’t be met by an aggregated historic trends approach to identifying underpaid claims.
In addition, each payer can have as many as 1.5 million rules, many of which change as contracts are renegotiated. As a result, systems that rely on historic data can simply miss underpayments.
When analyzing accounts for a client, we found it was being paid by a leading regional health plan at a mid-level rate instead of the full rate. Using code-level appeal reports, we enabled the client to submit the entire volume of underpaid claims for redetermination. The provider received $500,000 in recovered funds within 90 days.
- Processes for customizing and automating appeals. Once underpayments are identified, providers need efficient workflows to appeal them. It’s typical today for revenue personnel to manually pull contracts, check diagnostic procedure codes, extract data and build spreadsheets and appeals forms. Because it’s impossible for anyone to be familiar with the literal millions of rules that apply to payer contracts, it’s difficult to create accurate appeals. Payers also have different requirements for how they’ll accept appeals data.
Modern audit and compliance systems streamline appeals by prepopulating payers’ custom forms with fee schedules and rules and submitting the appeals in bulk. Once redetermination documents are provided, payers must reprocess and pay the claims.
- Real-time operations. Payers may take 60 days to pay an appealed claim — or 180 days. With a real-time solution, updates are issued immediately upon receiving a payer’s new explanation of benefits (EOB). The provider always has an accurate snapshot of its cash flow and accounts receivables vs. manually monitoring for incoming payments.
- Constructive relationships with payers. Having a dedicated payer relations contact person can help streamline follow-up communications and establish some accountability on the payer side for resolving issues. It’s also a key step in developing a custom appeals strategy with a payer.
- Future-oriented capabilities. Healthcare payment schema are getting more complex as the industry shifts to consumer-centric and value-based care pricing models. Providers must think ahead about how they’ll generate advance EOBs for patients and how they’ll audit capitated and bundled payments in the future, as well as fee-for-service claims.
No more missed opportunities
One way for providers to evaluate the potential value of auditing zero-balance accounts is to perform a payer missed-opportunity analysis. Doing so would reveal problematic payment trends and identify money contractually owed that is at risk of expiring.
Such an analysis involves identifying patterns of denied or underpaid claims, typically within a large contract, and using automated tools to identify leading codes in those instances. Using retroactive adjudication capabilities, providers can then pinpoint the cause.
When we recently helped a client optimize its accounts using this process, we found the provider had incorrectly applied a telemedicine modifier, an error that led to underpayments of $1 million over two years on a single contract.
Recouping revenue and prepping for the future
By auditing zeroed-out accounts, providers can achieve two goals: They can protect their own revenue integrity by cleaning up any of their processes that contribute to underpayments, and they can present accurate redetermination appeals data to payers. This work will position providers to streamline the payment process for their patients, such as by improving co-pay accuracy and reducing denials.
All of these capabilities will be increasingly important differentiators in a price-transparent, consumer-centric industry.