The ins and outs of avoiding audits and denials

What is several stories tall, covers a block or more and is looking over its shoulder?

It's not an easy riddle to solve, and the images it conjures are even odder. However, it best describes the nation's hospitals since the Centers for Medicare & Medicaid Services began using recovery audit contractors (RAC) to investigate overpayments. It's only one face of the audit universe, but as the investigations have become more aggressive, providers have become warier, with the fear of auditors coloring the most mundane decisions about care.

"It's a very fine line. It's kind of like you have this little devil on one shoulder and an angel on the other, arguing about sending (patients) to observation care or admitting them," Jeff Butler, senior compliance auditor for Alabama's Baptist Health System, recently told FierceHealthFinance for its new free eBook, Best Practices For Surviving Audits And Denials.

Providers have been using data analytics to try and determine their weaknesses before the auditor drops by, ready to look back at claims that are a year or more older.

"Analytics won't fix documentation issues, but they will give you insight into patterns that need to be addressed," said Day Egusquiza, president of AR Systems.

Providers also are undertaking self-audits. Ministry Health Care in Wisconsin has undergone elaborate simulated audits among its hospitals. As a result, the system has kept recoupments to a minimum.

"We looked at where the hospitals varied in their practices and sought opportunities to simplify approaches," said Larry Hegland, M.D., chief medical officer for Ministry Saint Clare's Hospital.

And when there is a recoupment, providers often fight back. It's a process that can take years and sometimes hundreds of thousands of dollars, but many prevail if they're willing to stick out the multi-tier process.

For example, Premier Medical Group of Clarksville, Tenn., successfully fought a $1.67 million recoupment. It required three separate appeals, a Ph.D.-level mathematician, and $200,000 in legal fees and other expenses. "Our doctors were very angry and did not want to give in," said Bob McCorkle, Premier's chief administrative officer at the time of the audit and appeal.

However, being prepared for an audit and potential recoupments require an enormous amount of preparation and self-discipline. If a recoupment letter sits on someone's desk past the 45-day deadline, any chance of getting the money back is gone forever, and it can lead to even more severe audits.

"Four certified letters to a certain provider [in the Southwest] went into a drawer. That provider was the subject of an OIG audit [and] a huge recoupment and eventually wound up shutting down," said Scott McBride, a Houston-based partner in the law office of Baker & Hostetler.

Having a point person serving to receive all audit correspondence--particularly since more pre-payment audits are on the horizon--is among the tips.

If you want to know more, check out FierceHealthFinance's free eBook, Best Practices for Surviving Audits and Denials. The more you know about the audit environment, the less likely your hospital will wind up with neck strain. - Ron (@FierceHealth)