Hospitals across the nation are seeing lower profits, and it’s all because of a sudden, tsunami of Medicare and Medicaid provider audits. Whether it be RAC, MAC, UPIC, or Program Integrity, hospital audits are rampant. Billing errors, especially ‘supposed bundling,’ are causing a high rate of insurance claims denials, hurting the finances of hospitals and providers.

A recent report from American Hospital Association (AHA) found “Under an optimistic scenario, hospitals would lose $53 billion in revenue this year. Under a more pessimistic scenario, hospitals would lose $122 billion thanks to a $64 billion decline in outpatient revenue”*[1]

The “Health Care Auditing and Revenue Integrity—2021 Benchmarking and Trends Report” is an insider’s look at billing and claims issues but reveals insights into health care costs trends and why administrative issues continue to play an outsize role in the nation’s high costs in this area. The data used covers 900+ facilities, 50,000 providers, 1500 coders, and 700 auditors – what could go wrong?

According to the report,

• 40% of COVID-19-related charges were denied and 40% of professional outpatient audits for COVID-19 and 20% of hospital inpatient audits failed.
• Undercoding poses a significant revenue risk, with audits indicating the average value of underpayment is $3,200 for a hospital claim and $64 for a professional claim.
• Overcoding remains problematic, with Medicare Advantage plans and payers under scrutiny for expensive inpatient medical necessity claims, drug charges, and clinical documentation to justify the final reimbursement.
• Missing modifiers resulted in an average denied amount of $900 for hospital outpatient claims, $690 for inpatient claims, and $170 for professional claims.
• 33% of charges submitted with hierarchical condition category (HCC) codes were initially denied by payers, highlighting increased scrutiny of complex inpatient stays and higher financial risk exposure to hospitals.

The top fields being audited were diagnoses, present on admission indicator, diagnosis position, CPT/HCPCS coding, units billed, and date of service. The average outcome from the audits was 70.5% satisfactory. So, as a whole, they got a ‘C’.

While this report did not in it of itself lead to any alleged overpayments and recoupments, guess who else is reading this audit and salivating like Pavlov’s dogs? The RACs, MACs, UPICs, and all other alphabet soup auditors. The 900 facilities and 50,000 health care providers need to be prepared for audits with consequences. Get those legal defenses ready!!!!

[1] * https://www.fiercehealthcare.com/hospitals/kaufman-hall-hospitals-close-between-53-and-122b-year-due-to-pandemic