Payer audits are a major issue for providers these days, as everyone wants to collect and retain every dollar possible. What are some audit-related anxieties you have encountered in recent months?
Prepay audits are probably the biggest concern among providers, because they further delay the claims process. It really slows down cash flow coming in their doors. Providers are recognizing that they must be proactive about prepay audits. It’s a bit more difficult to get all the necessary information to the review contractors in the appropriate time frame because this involves patients who have been discharged very recently. The charts are often incomplete. The contractors often request supporting documentation from physicians outside the hospital or health system. Prepay audits offer challenges that retrospective audits don’t.
Have you seen prepay audits from commercial payers?
Not at the moment. The activity has primarily been from Medicare Administrative Contractors, or MACs. You clearly see the most volume from them on the prepayment side. The RACs also started a three-year demonstration on prepayment audits. It’s pretty limited in scope right now, so I don’t think the providers are too worried about the RACs on prepayment, at least for the moment. To your point about commercial payers, however, I wouldn’t be surprised to see prepayment audits on the commercial side, because whatever Medicare does, the other payers will eventually follow.
How do providers best prepare to respond to prepayment audits?
Be aware of what types of prepayment reviews are going on. Most of the MACs are pretty good about posting the issues they’re reviewing on their websites. In some cases, they will do “percentage reviews,” which means, for instance, that for a certain DRG code the MACs may review 100 percent of all claims including a certain DRG, regardless of provider type. The idea behind the prepayment audit generally is that if claims were reviewed at the time of payment, then there would be no need for retrospective audits. Prepayment audits can put serious money at risk, but in a practical sense, providers – especially smaller facilities – will have to be a lot more proactive because you’re looking at a 60-day time period before you can expect payment on a claim.
What about Medicaid audits?
The biggest concern with Medicaid audits is that so much power is left to the individual states. Each state can set up its own rules around audits, such as how many records can be requested, the time frames for response. Some states have never done Medicaid audits. For providers in these states, it will be as if they’re getting hit with RAC all over again. Medicaid audits are contracted out, on the contingency fee method. The incentive is to go after the high dollar or high volume facilities. That’s what we’re seeing. A few states are using the same contractors that did RAC audits, and those states are producing the highest volume of Medicaid audits.
What tips do you have regarding Medicaid audits?
The Medicaid RACs are supposed to be doing provider education. If you know that your state has assigned a Medicaid RAC and you haven’t heard anything from them, contact the state agency to determine when those reviews are going to start. It starts with an understanding in the C-suite about the impact of the audits.