Like the Common Cold, Post-Payment ADR Audits Aren’t Going Away Anytime Soon

Healthcare entrepreneur Kevin Lasser understands the nuances of the post-payment audit problem – and hopes for a solution.

EDITOR’S NOTE: RACmonitor, in association with RevKeep, is producing a three-part series on additional documentation requests (ADRs) that arise post-payment. In this, the first article in the series, Chuck Buck interviewed Kevin Lasser, who has become an industry expert on post-payment audits. He is also a renowned start-up specialist who invests in and builds technology companies that make it easier for stakeholders to perform their jobs at greater efficiencies, therefore making their organizations more profitable and efficient.

After experiencing success in the financial services industry, Kevin Lasser’s first foray into healthcare technology was as co-founder of JEMS Telehealth in 2005.

JEMS was arguably the first prominent mobile telehealth solution, and ultimately had hundreds of clients, ranging from large hospitals to large physician practices. After a successful exit, he invested in and ultimately became the CEO of RevKeep, a healthcare software solution that addresses healthcare denials.

Lasser has talked to hundreds of revenue cycle management (RCM) leaders as it pertains to post-payment Recovery Audit Contractor (RAC) audits.

Below are real-life examples of some of the challenges he says they face:

• It can be difficult to handle staffing, as the audits do not arise consistently or predictably. “It is imperative that experienced people are available to respond to audits, as they are often complex, and knowledge is required to respond not only properly, but within an allotted timeframe,” Lasser said.
• Some providers will receive one letter requesting files on several patients (it could be 100 or more) for a particular procedure. The amount of time it takes to pull and organize many files from the electronic health record (EHR) is often significant. This can disturb an entire RCM department as they “borrow” people from a staff that has likely already experienced shrinkage (as most have).
• Most providers operate in separate silos – departments, campuses, and people. “It is cumbersome to engage and manage various people (doctors, nurses, etc.) with the lack of a ‘true system’ available,” Lasser said, “as most providers either use Excel spreadsheets or house files in their EHR ‘holding tank.’”
• Reports are vital for many reasons. First, management requires reports (number of post-payment audits, types of post-payment audits, amount of retained money, amount of lost money, etc.). Second, reports may be used strategically with auditors to combat further post-payment audits.
• Due to staff shortages, some providers are forced to pick and choose which audits they reply to (fight). “Typically, they will reply to the larger-dollar post-payment audits,” Lasser said. “But the smaller dollar audits add up quickly.” One provider did not even respond to $30 million in post-payment audits.
  • Some providers have been forced to hire nurses to respond to post-payment audits. This is not only very expensive, but very difficult to staff (most nurses are not interested in working on the post-payment audits; it’s not the reason they went into the field).
• The first response to an auditor is arguably the most important stage. Unfortunately, due to staff shortages and lack of training, employees will respond with “too much information.” Remember, auditors are paid a commission on what they retrieve. By giving them additional information regarding an encounter, Pandora’s Box may be unknowingly opened, which could lead to lost revenue.
  • Due to lack of people and resources, some providers are using expensive outside consultants. “While certain situations absolutely benefit from outside help,” Lasser said, “going to external resources rather than employees can be very costly.”
  • Not responding to post-payment audits may be a problem of its own. Providers have experienced an increase in post-payment audits when they do not reply (this is viewed as “easy money” for auditors).

“The problem of post-payment audits is real,” Lasser wrote in an email to RACmonitor. “They are not going away, either. As a matter of fact, with most healthcare organizations having now released their third-quarter earnings, the gap between provider and payor profits continues to widen.”

According to Lasser, it is startling that over half of all U.S. hospitals will have negative margins through 2022. A recent American Hospital Association (AHA) report shows that hospitals are facing the most difficult year financially since the start of the COVID-19 pandemic, as expenses and margins fail to hit pre-pandemic levels.

“The cat is out of the bag,” Lasser said. “Payors are looking at record profits, while providers are looking at record losses.”

How can this be? Well, other experts who have spoken on Monitor Mondays (Edward M. Roche, Knicole Emanuel) have stated that over the last five years, post-payment audits have risen by over 900 percent. The Biden Administration has provided funding for the Centers for Medicare & Medicaid Services (CMS) to conduct more Recovery Audit Contractor (RAC) audits, so this trend, while shutting down momentarily during the height of the pandemic, is back with a vengeance.

Unfortunately, dealing with post-payment audits has become more difficult as providers have experienced major decreases in staffing. The I-Med Claims blog recently stated that “efforts to reduce hospital workforces during the pandemic have forced revenue cycle teams to redeploy existing staff to new areas. One consequence of this shift is that there is no suitable expertise to master complex and ever-changing payment standards.” More than half of revenue cycle management (RCM) department leaders stated that their departments are down by 20 or more people.

“Smart solutions and processes are needed,” Lasser said. “Telehealth grew due to need (the pandemic). Let’s not wait for the next pandemic to address this issue.”