As health plans attempt to measure the acuity of new patients through the Affordable Care Act’s healthcare marketplace exchange, hospital audit teams will see a huge influx of commercial risk adjustment audits and associated medical record requests. And the deluge is expected to continue, from the first quarter of 2015 through the foreseeable future.

These initial audits will be conducted during the same time period as Health Effectiveness Data & Information Set (HEDIS) and other plan audits. Now is the time for hospital audit teams to ready their troops for the impending maelstrom.

Knowledge is Power

It is essential that both parties—payers and providers—understand the types of audits payers are conducting, and the reasons behind them. Often, health plan audits parallel internal and external audits already being conducted by the provider; prior knowledge of this is essential to minimizing redundancies. To that end, providers should educate staff on these six most common health plan audits and their respective timeframes.

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Risk Adjustment and Medical Record Reviews (MRRs): Medicare Advantage, Medicaid and Commercial Audits—1Q 2015 through 4Q 2015

Health plans and payers conduct these audits to ensure medical record documentation validates claims data received, and to determine if other chronic conditions exist that may not have been submitted with the claim. The onus is on plans to prove that their patients have the risks, complications and comorbidities stated in the claims. If proven, Medicare helps subsidize the plans. Risk Adjustment audits are similar to the quality improvement audits conducted by providers and, as such, are important to providers and payers alike.

Medicare Advantage Risk Adjustment Data Validation (RADV)—Annual 2015 (at CMS’s discretion)

CMS may require health plans to perform RADV audits at any time. In an RADV audit, the health plan has just 45 days to send CMS “one best medical record” that substantiates all submitted reporting.

Health Effectiveness Data & Information Set (HEDIS) Reviews—1Q through 2Q 2015

HEDIS audits review a subsection of the health plan group with a focus on specific measures, such as diabetes monitoring.  The information is reported to the National Committee for Quality Assurance (NCQA) where a quality report card by health plan is then generated.  Additionally, CMS uses HEDIS data to rank health plan performance for the Medicare Advantage health plans; CMS can penalize payers for decreasing quality scores. Providers also benefit from HEDIS performance rankings, because they can be used to gauge the quality of health plans during contract negotiations and as part of accountable care organization (ACO) arrangements. Like the risk adjustment audits mentioned above, HEDIS audits can benefit both sides.

Diagnosis Related Group (DRG) Payment Integrity Reviews—Ongoing through Year

DRG audits check to make sure cases are properly coded and sequenced, and that billed information matches the patient record. It is essentially a comprehensive review of hospital claims that have been submitted to health plans for payment. With ICD-10 looming, look for the number of DRG audits to increase, in lockstep with a steepening learning curve for clinical coders.

Care and Quality Improvement Audits—Ongoing through Year

Like providers, health plans have certain diseases and patient populations that are known high-risk targets. The goal of care and quality improvement audits for both health plans and health providers is to use findings from case review to enroll members into preventative care programs before their conditions progress and hospital admission is required. Both provider and payer are often looking at the same cases during these reviews. Collaboration here would lead to better patient care and reduced healthcare costs.

Five-Star Program (Medicare Advantage)—Ongoing through Year

The Five-Star Program provides CMS and NCQA with the means to measure the quality of health plans throughout the year. Those that demonstrate continuous improvement in patient experience, reduction in patient complaints, and sustained achievement of quality measures receive a better performance score. Year-over-year results can be used by providers during managed care contract negotiations.

Four Steps to Consider

This increase in health plan audits underscores the increasingly pressing need for hospitals to centralize all audit management functions. Beyond centralization of audits, streamlining communications with payers, educating audit management teams, and successfully tracking all audit data are important keys to preparing for the year ahead.

• Centralization encourages collaboration among team members, while simultaneously leaning processes to save staff time, dollars, resources and streamline denial processing.

• Focusing on better communication between providers and payers also trims costs while helping to mitigate the adversarial impact and stress related to commercial audits.

• Education between payer and provider audit teams is essential as both sides attempt to understand requests, process records and meet deadlines.

• Data analysis of all records sent to plans during audits is essential; the more data gleaned, the greater the support for business intelligence (BI).

Regardless of which  health plan auditor sends a record request, providers should capture robust demographic data about each case reviewed. Details should be assimilated into audit intelligence and overall trend results used to steer process improvement efforts, mitigate future revenue risk, and inform managed care contracting. The most important data elements to be captured, tracked and monitored during audits are listed in Table 1. Plans are basing your next contracts on audit cases. Know what’s in them!

Table #1:

Six Data Elements to Capture during Audit

1. Auditor or type of review

2. Dates of service

3. Patient/service type

4. DRG or other codes

5. Original payment

6. Review or denial reason

Dawn Crump is vice president of audit management solutions for HealthPort.

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