RCM Audit

How frequent should a medical practice conduct an RCM audit? How much does it cost? What does it require to do so?

Ideally a medical practice should be conducting a revenue cycle review / audit at least once a quarter, and more like once a month depending on the size, scope and complexity of the practice. Our expert opinion, and where QueueLogix are focusing some of our software development, is trying to move audits to more of a real-time framework as opposed to the current industry approach which is a yearly audit, or sometimes a quarterly audit. As technologies evolve, and companies create better integrations with EMR and billing systems, the benefits and expectations of healthcare finance stakeholders will demand a more real-time review of each patient encounter for accuracy as it occurs and prior to the actual bill being sent to the insurer or patient.

There are different reasons for a review and the term “audit” can have different meanings depending where in the organization you are having the conversation. For instance, if you ask a compliance professional in the healthcare setting their definition of an audit you may get a completely different answer than if you ask the same question to the Director of Revenue Cycle or the CFO.

The general purpose of an “audit”, in a healthcare and revenue cycle management use-case is two fold.

  1. Ensure the healthcare entity and it’s associated financial function, personnel and policies are aligned to ensure proper adherence to governmental requirements (i.e. Centers for Medicare & Medicaid) in how they are determining appropriate medical codes to be billed.
  2. Utilize the practices information, protocols, procedures, and experience in assignment of codes & billing outcomes to benchmark against other similar groups that are in their area, their state, or nationally. This benchmarking process is designed to allow the organization to understand if their practice is similar to their peers and considered best-in-class or require improvement. This is a critical understanding since medical coding approaches, protocols around medical decision making, and clinical documentation practices can vary significantly from one group to another.

"Audits" in the RCM arena can also be used to capture insight into how well the overall process of revenue capture is working. For any medical practitioner or health care practice there are 3 key levers that drive reimbursement. Sometimes audits are focused just on the process itself, analyzing all the details of the process and identifying any poor work flow practices that may exist.

The cost of the audits can vary significantly but some of the key variables that will drive pricing include:
  1. Sample Size. Are you sampling 5% of 1,000,000 patient encounters for your review or are you sampling 0.5% of 10,000 patients.
  2. Service Line. What are some of the complexities and nuances of the service line that is being reviewed. General rule of thumb, like most things in life, the greater the complexity the greater the cost. For instance, a primary care physician audit may be significantly different than an audit of a pediatric emergency medicine site.
  3. Output. When getting information back are you seeking to just get basic information on level of service and procedural variances or are you seeking to gain deeper insights such as risk adjustment factors or critical care time tracking. Beyond reporting output are you seeking to have an expert come on sight and provide findings as well with physicians and HIM team members. All of these elements certainly will affect price as well.

Organizations that wish to setup an audit process on a yearly or quarterly basis can expect to spend approximately 5X to 20X the unit cost that would be experienced to properly code that same encounter. For example, if it costs $2.50 to code a patient encounter, an organization could expect to reasonably spend $10.00 to $50.00 to properly analyze and audit that full encounter.

EXAMPLE:

A healthcare location that sees 100,000 patients a year wishes to do a random sample of 3% of all billed patient encounters. This organization may be spending $250,000 ($2.50 X 100,000) per year to code the encounters and might spend $30,000 to audit ( (100,000 * 3%) * $10.00).

To perform an audit, most companies in the space that do this type of work, QueueLogix included, require approximately 3 key inputs.

  1. Patient Demographic & Sampling Information. Generally, a company that performs the audit, will request patient encounters in a randomly sampled fashion for the period of review in question.
  2. Clinical Documentation. All related clinical documents that relate to the patient encounters in item 1 are also necessary.
  3. Billing & Coding Outcome Data. Lastly, an audit firm would want to have the way in which the patient encounters were coded and billed so that a meaningful comparison could be made.

Below is an example of a comparison done on a sample of patient encounters reviewed by QueueLogix for a client in the emergency medicine field. In this example, QueueLogix reviewed a small sample of patient encounters and then compared levels of service captured from the client’s process to what it might otherwise be. This was but a small part of our overall audit review but gives some perspective into the mechanics of an audit and the goals.

**In this particular graphic - we identified a variance in the institutions Medical Decision Making approach / matrix and how they categorized complexity versus how our team approached it.

In summary, audits should be a key tool in any health system or practitioner’s tool box. Through regular, comprehensive and well planned audit protocols and methodologies organizations can ensure that they are being paid correctly, ensure their processes are compliant and also gain insight that can help them ensure they are able to continue to deliver top flight care in the communities they serve.