5 Payer Audit Errors Every Hospital Must Avoid

Most healthcare providers, from large hospitals to solo practitioners, experience an audit at some point. The scrutiny can unveil errors and violations, which can lead to hefty penalties.

The key to surviving a payer audit, with the least amount of frustration, is to avoid these five common errors.

1. Late Responses

Your deadline to submit relevant documentation begins upon receiving that payer audit request.

Payer audits may be requested by a private health insurance provider, through the Centers for Medicare and Medicaid Services, or both. While the origin of the audit request doesn’t matter, response time is essential.

Take all deadlines seriously, and if an extension is needed, ask for one, immediately. Missing deadlines can result in hefty fines and penalties.

Also, if the payer doesn’t provide a deadline with the request for documentation, it may be wise to ask for a date to submit information.

2. The Wrong Documentation

A common trigger for payer audits is improper documentation. As a healthcare practitioner, you must prove the medical necessity of each test or procedure used to diagnose and treat your patients.

Here’s the tricky part. Sometimes payers and providers disagree on what tests or procedures are medically necessary.

One way to mitigate this problem is to educate your staff on what services the payer considers medically necessary.

Another way is to clearly document the need for a particular procedure to treat or diagnose a patient.

The easiest way, however, is to ensure that authorization is received from the payer before rendering services.

3. Using the Wrong Codes

Incorrect billing and coding practices can raise suspicion of fraud, failed claims, or delayed reimbursement, and — you guessed it — payer audits. Providers and patients overpay a whopping $68 billion annually due to incorrect billing.

Coding systems developed by the American Medical Association and the Centers for Medicare and Medicaid are designed to streamline the billing process. Every medical procedure and service from ambulance rides to chemotherapy drugs to doctor visits are contained within coding systems such as the ICD-10, CPT, and HCPCS.

Studies show 80 percent of medical bills in the U.S. contain errors. This percentage can decrease by investing in annual updates of medical codes procedure handbooks and by steering clear of old and outdated codes.

4. No Self-Audit

One way to prepare for payer audits is to perform regular self-audits within your facility.  Internal audits are great for identifying and eliminating weak spots that can potentially lead to headaches down the road, like rejected claims and costly compliance failures.

One drawback is the strain on precious resources like time and personnel. You can get around this problem by hiring a third-party audit service. But then you have third-parties going through private patient information.

Another option is a software-based solution that provides 24/7 access to survey compliance data. Ideally, this software will provide automatic tracking of all documentation and decisions involved in the process of running your organization.

This ensures that compliance professionals can get immediate reporting on how well their team is doing, conducting audits more efficiently and effectively. It’s a time and cost-effective solution to hiring an outside third-party provider.

5. No Legal Help

Having a healthcare attorney in your corner can mean the difference between a smooth audit experience and an audit nightmare.

Here’s how a healthcare legal team can benefit your health practice:

  • Work intimately with your staff to analyze any risky billing procedures.
  • Challenge any demands from payers for overpayment.
  • Challenge any allegations of fraudulent billing practices.
  • Push back on any denied claims and the overuse of service claims.

Again, software is a useful tool to support your attorney’s work. A system that stores all compliance information, including payment practices, and has search capability will provide your legal team with the information needed to fight payer audit discrepancies when the time arrives.

Payer audits don’t have to be a nightmare. By being adequately prepared and vigilant, your next audit experience can be more streamlined and less stress-inducing.

Let us help you prepare for your next payer audit. Contact us today to learn how we can help your organization stay compliant in a sea of complicated healthcare payment regulations.