New year’s resolution: Optimizing audits of your medical practice’s payer contracted rates

The Medical Group Management Association’s most recent MGMA Stat poll asked healthcare leaders, “How often are your payer contracted rates audited?”

• 47% said “annually.”
• 25% said “never.”
• 10% said “quarterly.”
• 9% said “monthly.”
• 9% responded “semiannually.”

The poll was conducted Jan. 5, 2021, with 519 applicable responses.

Auditing to shore up your bottom line and ensure compliance

Medical practices conduct audits to assess the performance of billing functions and to identify problems to be resolved. These audits can help evaluate the effectiveness and reliability of clinical documentation in the practice’s health records and billing data submitted to payers.

These evaluations — sometimes done prospectively before claims are sent to payers, other times retrospectively — help ensure proper coding and billing practices, looking at various steps of the process, from insurance verification through collections, denial management and reporting. (A more in-depth overview of these concepts can be found in the Medical Practice Management Body of Knowledge Review Series, 4th Edition, Financial Management.)

The question of how frequently your organization formally audits payer reimbursements can have a major impact on your bottom line, especially if correctable issues exist. It should be a component of a compliance program: The complexity of coding and documenting services makes it likely that providers may miscode services at a higher or lower level than what is accurate or fail to provide enough documentation to justify the code selected.

It is important to perform regular audits on a consistent schedule, whether monthly, quarterly or semiannually. The repercussions can include payer audits of the practice’s records or, worse, civil or criminal charges against the provider and possible suspension or exclusion from the payer’s program.

The goal in auditing the payer is to determine whether the practice is being paid correctly and the payer is complying with the terms of the contract. The benefits of these audits include:

• Assurance that processes are in place to collect every dollar owed to the practice
• Identification of potential fixes to problematic practices
• Compliance with federal and state regulations, insurance company rules and policies, and internal policies and procedures
• Identification of fraudulent activities
• Fostering a culture of continuous process improvement and accountability.

Additionally, payer contracts should be reviewed consistently to determine collections and assess performance versus targeted revenue. Practices should keep track of payer performance in this regard, as it can be valuable when renegotiating a contract.

As noted in Financial Management, “variables that should be tracked include claims payment accuracy and timeliness, number and type of denials, resolution of appeals and other problems, and contract negotiations” — factors that help evaluate performance fairly.

Steps to structuring the auditing process

There are four steps to consider when structuring the auditing process for the practice:

1. Organize your contract files. Neatly assemble your files, separated by the signed agreements, amendments and correspondence to help an auditor when reviewing hundreds of pages of terms. Ensure they are readily accessible for those responsible for auditing.
2. Identify key indicators to monitor. Create consistency and standardization in the review process by listing key indicators to be monitored for all payers. This might entail using your practice management system to compare the EOB allowable on a large number of paid claims against the expected contract allowable. Any sum for the EOB allowable different from expected contractual reimbursement requires further investigation. In primary care practices, this can be focused on about 20 major CPT codes billed.
3. Track and document discrepancies. To justify your position with data for future contract negotiations, well-documented deviations from contracted reimbursement rates are essential.
4. Prepare to mediate, arbitrate or litigate. Understand the language of your payer contracts to be prepared for a negotiation once your audit findings are available. While a good relationship with the payer is desirable, practice leaders should weigh the costs and benefits of taking options such as arbitration or litigation.

Introducing MGMA’s Medical Practice Evaluation Tool

The journey from the “new normal” of 2020 to the next level your organization should reach this year and beyond begins with awareness of opportunities for improvement and the ability to measure and track your progress.

This week’s MGMA Stat poll is one of many questions that comprise a forthcoming MGMA member resource: the Medical Practice Evaluation Tool.

Available Jan. 20, the Medical Practice Evaluation Tool is a comprehensive, web-based assessment that healthcare leaders can use to gain actionable insights about how their organizations measure against top-performing practices, broken down by both ownership structure (physician-owned or hospital-owned) and specialty scope (e.g., primary care, surgical, nonsurgical).

All six Body of Knowledge domains are represented in the tool, with questions that help administrative leaders determine performance on critical aspects of practice operations. Upon completing the questions, practice leaders are given an evaluation score along with a curated list of practice improvement resources from MGMA, such as tool kits, articles, webinars and other educational offerings that round out your learning and help you put insights into practice.

“Change in healthcare is an inevitable guarantee. You must continually adapt or you run the risk of becoming obsolete,” says Andrew Hajde, CMPE, assistant director of association content, MGMA. “This requires that you keep up with the latest industry trends, best practices and technologies, and to utilize data benchmarks to compare yourself against the competition to stay ahead of the curve.”

MGMA members can access the Medical Practice Evaluation Tool at mgma.com/eval-tool beginning Jan. 20.

Additional resources

• ACMPE Certificate Program: Revenue Cycle Management — This four-part series provides the resources to enhance revenue integrity by examining patient accesses and pre-visit services; claim preparation; payment oversight; and KPIs, quality programs, and reporting.
• “Revenue cycle check-up: Assessing the internal components to get a clear picture of your practice’s financial health” — Learn more about the internal revenue cycle assessments needed to ensure your organization is thriving.
• MGMA Consulting — Leverage decades of experience from practice management experts to assist you in evaluating your reimbursement and payer performance.

MGMA Stat

Would you like to join our polling panel to voice your opinion on important practice management topics? MGMA Stat is a national poll that addresses practice management issues, the impact of new legislation and related topics. Participation is open to all healthcare leaders. Results of other polls and information on how to participate in MGMA Stat are available at: mgma.com/stat.