Hospitals, private practices, and other healthcare providers must constantly be aware of many regulations, some of which are subject to change. Even still, there can be weaknesses that a provider has not found yet that could cause severe problems down the road. This is especially true for billing practices and medical claims. An internal healthcare audit is how providers can help spot such weaknesses in their billing plans, reimbursements, and medical claims.
As the medical field grows and becomes more automated, it subjects providers to new vulnerabilities regarding finances. Medical audits can provide direct benefits and work as a preventative measure to keep a practice running smoothly and efficiently. At Norman Spencer Law Group, our team is highly experienced in all types of healthcare audits. We also offer a free consultation!
The Direct Benefits of a Medical Audit
Audits are a serious undertaking for a medical practice, and the risks can lead to costly setbacks. Whether a provider does an internal audit or hires a third-party agency for an audit, an in-depth review of finances is intelligent and proactive. One of the significant benefits of medical audits is that they can reveal improper billing practices. The amount of bills a provider is likely to deal with is high, increasing the potential for improper billing. A medical audit can identify these practices, including a lack of correct documentation or even fraudulent bills.
Another benefit of medical audits is that they can bring to light coding errors. No matter how good a medical provider is, there is always a chance for claim denials to pile up. These denials often result from coding errors, which we can detect through an audit. Audits help find out-of-date and incorrect codes, allowing us to deal with them before they become a problem.
Medical audits also allow a practice to run smoother by finding out if staff members or departments are prone to specific errors. An audit can show where the mistakes occur and whether or not there is a pattern. This diligence allows hospital staff to identify a potential workflow, communication, or accountability problem. It even extends to a provider’s competitors since an audit can reveal whether error rates are higher than the national average or within industry standards.
Finally, a medical audit can highlight areas where money is mismanaged or lost. If unchecked, these funds can add up to a lot of lost revenue with resolutions that could also become costly. Audits work to keep your medical practice cost-effective in the long run and allow for better allocation of financial resources. An audit can even help find areas of reimbursement deficiencies and correct them.
Internal Healthcare Audit as a Preventative Measure
Outside of providing immediate improvements in the way a practice runs, an audit can also help prevent damaging regulatory action down the line. Since medical audits identify billing and coding errors and stop recurrence, they decrease the federal government’s chances of initiating its own audit.
Repeated errors can look like fraudulent activity to any third party looking at billing data, and sometimes it can be indistinguishable from fraud. Agencies like the Centers for Medicare & Medicaid (CMS), the U.S. Department of Health and Human Services (HSS), and the Office of Inspector General (OIG) employ several contractors that look into healthcare providers and initiate audits to uncover potential fraud.
While some federal audits are initiated randomly to keep providers honest, high billing and coding error rates can launch a separate investigation. Certain contractors target providers with higher error rates than the national average, and the OIG holds providers liable for prior knowledge of misuse. Potential penalties of a federal audit include:
- Payback demands on claims
- Creating a Corporate Integrity Agreement (CIA) with the OIG
- Requiring the employment of an Independent Review Organization (IRO)
- Exclusion from Medicare, Medicaid, and other federal reimbursement programs
- Potential prosecution under the False Claims Act
- Possible prosecution under state and local laws
- Civil fines
- Criminal penalties
Even if most audits do not lead to severe penalties, the worst-case scenario can damage a medical practice for years to come. A regular schedule for medical audits can help keep the federal agencies and their contracted auditors from launching a targeted investigation into your healthcare business.
How to Prepare for an Internal Healthcare Audit
A yearly audit is considered appropriate to spot any errors and remove harmful patterns before they take root. Experts recommend that a third party does the audit so that a fresh set of eyes can go over familiar documentation and spot the issues.
Another avenue to consider is hiring a healthcare audit attorney. In a planned or random audit, legal counsel can make every aspect of the process easier. An expert can go through the steps to ensure that you don’t expose yourself more than necessary. When faced with an unexpected audit, especially by the government, a lawyer can help defend against any complications.
Lawyers can even keep internal or third-party audits within the attorney-client privilege or represent a practice during denials or appeals. Since external audits can happen anytime, it is vital to have a prior relationship with a trusted healthcare attorney at the start.
If you are a healthcare provider considering a third-party audit or trying to prepare for an external audit, call the Norman Spencer Law Group. Our healthcare law attorneys are intimately familiar with the medical industry’s demands, including audits, and we can help defend your practice. Call us to schedule a free consultation via phone, ZOOM, email, or in person.