IRDA

The Healthcare Insurance Audit Process

Healthcare insurance Audit fraud is a persistent and cost-effective problem for commercial and Gov. payors. The Centers for Medicare and Medicaid Services estimates that a significant fee for service payments is misspent on improper payments yearly. An improper payment includes any payment made;

• In an incorrect amount (including overpayments and underpayments
• To an ineligible provider
• For non-covered services
• For service not received
• For duplicate services
• Without supporting documentation of medical necessity.

A payor conducts audits, and he can be Medicare, Medicaid or a private insurance company. Third-party contractors conduct Medicare and Medicaid audits, and the contractor or an insurance company employee can conduct commercial insurance audits.

Audits are a critical part of working in healthcare and with health insurance. However, audits are guaranteed when transactions occur between an insurance company or government between a hospital and medical care coverage program. The audit timing has relied on Medicare or Medicaid and the insurance company. The hospital must comply with the condition of the payor who wishes to conduct an audit. Usually, the payor sends an official letter of intent to audit and request documentation.

Role of  Healthcare Insurance Auditor

Auditors^[1] seek insurance transactions using established policies and procedures to root out miscalculations, errors, and fraud.

Often health systems believe audits are working against them, with the intent to take back payments. However, audits are designed to verify the work on both sides, internally and externally. The hospital can receive money back for a mistake on behalf of the payor.

How to prepare an audit

Preparing an audit in advance is the best way to respond to a health insurance audit. Firstly

• Analyze the audit process
  Credible sources provide authentic accounts based on their experiences to prepare an audit.
• Consultation
  Consultation with other departments in the industry at conferences and networking events or other departments helps the organisation handle the roadblocks.
• Conduct a mock audit
  Because mock audits are best learned by doing rather than reading, some teams also conduct mock audits, especially during new employee onboarding. The audits help to identify weak spots early on and allow for course correction before the real deal.

Health insurance audit process

The audits follow a similar process, starting with the audit request and progressing to the decision to appeal the results. When responding to a health insurance audit, follow the following basic process.

Immediate response

There are two parts to the audit process. The first part is the immediate response after the payor triggers the audit process. After that, it  includes four  steps, as discussed below:

1. Receive the additional document Request (ADR)

The hospital receives an official ADR from a medicare or Medicaid audit contractor or private health insurance company employee. The ADR  listed the claims to be audited and the process for a response. After submitting all medical records or documentation, the audit begins, and every action is considered.

2. Collect documentation

Collect the relevant required documentation related to the health information management (HIM) department and the group within the hospital that manages medical records. The detailed audit includes medical records that need to be audited for transparency.

3. Review collected documentation

After all the required medical records, conduct a final review of the work to verify that the documents delivered by HIM correspond to the ADR from the payor. The time and human resources enlisted other team members to check on the work.

4. Submit all documentation

Finally, submit all documentation to respond to the audit officially. Usually, the process is driven by the timeline and the most important thing,  it must respond within a specific period, or it may automatically forfeit the audit’s monetary amount.

The Medicare and Medicaid Services (CMS) centres give days to submit needed materials. The private insurance audit responds to an audit depending on the requirements in the payor agreement. The audit management adhered to a strict timeline and ensured all employees participated in the audit response. The audit deadlines increased audit exposure and a lower bottom line.

Monitoring results

After collecting and submitting documentation, the second part focuses on monitoring the response from the healthcare insurance audit result. The result of the audit indicates the process.

1. Receive audit result

Audit results usually come in the form of  ADR, as an official letter. The healthcare audit finds no discrepancies and concludes that the transaction was processed unerringly. However, the audit discovers a discrepancy in the transaction in the form of ADR or underpayment. The due amount is reflected in the next payment by the specific payor.

It is a problem to notice these adjustments, especially in larger health systems that regularly send batches of claims. However, it is critical to track audit exposure. The audit results provide accurate financial audits in the organisation.

2.   Appeal the results

The payor appealed the decision if it was overpaid on an audit and disagreed with the results. The hospital provided care with the correct treatments and filed all the appropriate paperwork. If no accurate reports do not work out in favour, the payer may wish to file an appeal.

3. Repeat the immediate response process in appealing

The appeal involves repeating the response process, from filing the appeal to re-submitting documents and appealing the paperwork as an original audit. The appeal is time-bound and requires its own set of paperwork. The decision to appeal depends entirely on the organisation.

4. Leveraging reporting to improve the audit process

In healthcare insurance audit, the leverage data improve the internal audit response process and in decisions making to appeal in the future.

Conclusion

A healthcare insurance audit is a comprehensive and in-depth evaluation of the practices and processes in a healthcare facility. While numerous healthcare audits exist, the most common internal inspections primarily focus on building a framework to assess your organisation’s coding and billing aspects. Through internal healthcare insurance audit, detect emerging trends, detect risks, and act before more significant issues arise, like a third-party audit. If the hospital has breaches or issues during an audit, one may receive compensation and chances of receiving loans are severely affected.

A hospital’s success revolves around its policies and procedures that encourage accuracy and accountability. Even with these principles, many healthcare providers still find they can have weak spots that have yet to be identified or existing ones that staff needs to learn how to fix. Fortunately, that’s where healthcare auditing steps in to find the gaps causing hospitals the most harm.

Also Read:
How to Prepare an Insurance Audit
Points to check before buying Health Insurance
What is a Third Party Administrator in Health Insurance?