How Healthcare Providers Can Protect Legitimate Revenue, Avoid Risks to the Bottom Line

Healthcare providers are facing increased risk to their legitimate revenue due to the growing prevalence and burden of revenue-driven audits. Commercial payors have steadily increased the volume of claims denials, the government has steadily decreased government reimbursements and highly aggressive recovery audit contractor programs pose a significant threat to revenues and the bottom line. Now, more than ever, healthcare providers need sound processes and guidance to better protect their legitimate revenue.

The stakes have gotten so high that late last year a group of providers and the American Hospital Association filed a lawsuit against the U.S. Department of Health and Human Services for illegally denying hospitals Medicare payments for audited outpatient procedures. At stake for the providers is revenue for services provided and billed, and for which they are rightfully owed. While legal action may help bring the issue extra national attention, what is not often taken into account is the additional revenue providers must spend to fight these denials. Even if they win in their appeal, they only receive back the original revenue, minus legal costs. In an industry that is forced to do much more with less, losing any revenue can be extremely harmful.

With RACs, Medicare Integrity Contractors and other government-driven revenue audits growing in prevalence in the industry and increasing the burden on providers, a solution is critically needed. The question is: Where can healthcare providers turn to protect these revenues and manage the growing number of audits, without spending additional funds on legal action? The key to success is for providers to ensure that they are monitoring the entire audit procedure so they are aware of all deadlines and due dates throughout the process. By coordinating the government audit process within the organization, employees can be alerted to areas that require attention, helping to ensure effective management of complex appeals processes and the avoidance of automatic revenue recoupment.

Having the ability to manage pre-payment claims denials is also important in protecting legitimate revenue. With pre-payment claims denials being common from commercial payors, management of these denials is still a significant challenge for many providers. In fact, some industry statistics show that providers write off three to five percent of net revenue due to denials because they lack a comprehensive denials management program. This seemingly small three to five percent can actually equal up to millions of dollars in potentially recoverable revenue for the average-sized hospital.

With most providers, submitting claims to multiple payors, identifying denials, analyzing the claims to determine root causes, collecting information to support a resubmission or appeal and implementing cross-departmental process improvements is impractical without automation. Providers must develop internal processes designed to help manage the claims denial process with the tools needed to quickly identify and analyze denied claims, increase accountability and ultimately improve net revenue capture.

With financial exposure stemming from pre-payment and post-payment claims audits and denied claims growing to overwhelming levels, the time for providers to act is now. Planning is the key to protecting legitimate revenue. If hospitals look to develop effective plans to internally monitor exposure and the audit process, complemented by tools to assist in the process, then they will start to get ahead of the game and take necessary control of their finances.

John Brooke works with healthcare provider customers and prospects throughout the United States. He is directly responsible for healthcare sales operations and interacts daily with Compliance 360 executives, marketing, business development, professional services and product management to ensure a constant focus on the success of the company's healthcare provider customers.

More Articles on RACs:

4 Tips to Fight RAC Denials and Win
AHA Seeks Quicker Review of RAC Lawsuit

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