With the winds of change in full swing for CMS, commercial payers have taken notice of their billions of dollars in recovery through auditing. As a result commercial payers have adopted many of the practices seen through CMS transmittals. The most recent change seen was in a major commercial payers decision to follow transmittal 541. Transmittal 541 essentially states that CMS, MAC, and ZPIC can deny charges, generally physician charges, associated with pre and post visits of a separetely denied claim.


So what’s the facility to do? In the case of CMS we know that our defense is to improve our own practice. The problem is that the CMS version of improving our own practice is a constantly moving target so many are left to guess as to where to start. Many facilities, in fact most facilities, have no audit plan in place. An audit plan should start with the data collection feed or report that incorporates all the losses and/or gains that may come from an audit. The problem is is that many audit practices are segmented and separated from each other within hospitals. As an example while a nurse auditor may defend a commercial formal audit they may never touch a business office related denial. In turn a coding person may review a DRG validation audit that results in a refund but never share that information with their nurse auditor or anyone who may connect the dots. Your audit losses consist of business office denials, commercial audits, RAC, MAC, ZPIC, DRG validation and any other review that affects the bottom line. Starting with the consolidation of this data a facility now knows critical information.

Facilities that know where all their audit losses occur are now equipped to start formulating an audit plan. The audit plan will obviously have goals, and those goals should be first and foremost to reduce the audit losses. The best way to do this of course, is to start with the area of highest risk and the easiest way to correct the errors in that area. This is best and most easily defined by forming an audit committee. At the bottom of this article you can find my email where I’ll be happy to send you an audit committee agenda. As you sit down with your committee you’ll want to parse out the data from each area of loss and define with managers and directors present how that loss occurred. In the case of commercial reviews and RAC audits you’re going to find physician documentation,ordering, and long-standing hospital practices are costing you a lot of losses. In the case of DRG validation you’ll find different interpretations or blatant errors. In the case of commercial auditing you’ll find differences between documentation and the line item bill. These discoveries can be further made part of an audit plan that addresses what to do about the most obvious situations that cause the highest level of loss.

As an example of a CMS related loss the CMS auditor may have deemed an inpatient visit not medically necessary for a variety of reasons. In your ADR requests and other commercial correspondence you’ll notice very similar language coming from commercial payers who have begun denying inpatient visits as not medically necessary. With an audit plan that includes administration, contracting, auditing, and department directors you can begin to formulate responses back to the payers. These responses can range from contractual agreements to enforcing an internal audit policy and to creating an environment of change via education and internal cooperation. This is our practice and it has helped us in some locations in some forms of their audit needs to eliminate denials.

For more information feel free to email me at cbaggott@medlinksinc.com

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