The Audit Crunch: Post-Payment Reviews on the Rise as Staffing Levels Plummet

Medicare post-payment audits are estimated to have risen over 900 percent over the last five years.

Let’s talk about post-payment audits – or, specifically, Recovery Audit Contractor (RAC) audits, additional documentation requests (ADRs), Medicare Administrative Contractor audits, Zone Program Integrity Contractor audits, etc. Of course, regardless of what you call it, a post-payment audit is after the fact. So as a healthcare provider, you have been paid, and now you are under the very real threat of getting that money taken back.

The first step in the process is getting a letter from a payor – something commonly known as an ADR that requires a certain number of days in which to respond, typically 45. Now, we know that if you choose not to respond to that letter, the revenue from the procedure or procedures under question can be taken back. Additionally, by not responding an assumption of guilt is made by the payor, which may result in many requests for documentation for similar procedures. So, it is imperative that the healthcare provider responds.

While there are many different shapes and sizes of healthcare providers, we will need to be generalists today. So who handles these post-payment audits, at any given provider?

Somebody (or a team of people) inside a revenue cycle management department responds. In today’s environment, the numbers of people who handle these are shrinking as budget cuts have been instituted.

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.” In many conversations, we have learned of a reduction in workforce in revenue cycle management (RCM) departments ranging from 15 to 70 percent.

Simply stated, there are fewer people to address these often complex audits.

This is equally troubling when you combine the fact that post-payment audits are on the rise. According to an article in Medicare Audits, they estimate that post-payment audits have risen over 900 percent over the last five years. And there is no wonder for this, as Compliance and Auditing Services has stated that for every $2 a payor invests in post-payment activity, they get a $17 return. That is an 850-percent return on investment, folks.

So, with the increased activity in these audits and fewer people responding, what tools are healthcare providers using to combat these audits? The answer is startling: Excel spreadsheets. Revenue Intelligence estimates that over 31 percent of hospital systems use Excel to manage these audits. Ben Reigle, a 20-year veteran in RCM and the Founder of RCM Leaders Forum, stated in his experience that number was actually “much higher.”

Lastly, and perhaps most importantly, without a real system to handle post-payment audits, there also exists a lack of reporting capabilities. This is troublesome to upper management, for reporting purposes. Additionally, it is much more difficult, if not impossible, to address inefficiencies in a process when you are working in Excel spreadsheets.

In summary, to quote Melissa Powell, the COO of Genesis Healthcare, “While technological enhancements can result in greater clinical outcomes, that is only part of the equation. Their impact can also be felt on the operational side, and given the challenges that lie ahead, that can make all the difference in the world.” Well said, Ms. Powell!

Programming Note: Listen to Kevin Lasser on Talk Ten Tuesdays.