Updated: Jun 9
And why it could cost you everything!
Having been in the DME industry for over 10 years and having the privilege of shipping over $1B supplies to over a million patients, I have seen consistent trending from companies that win audits easily and those that struggle or fail to win audits. Over the next few minutes I will share with you the top 5 reasons why companies fail their payor audits.
Reason #1: Process Issues
Many companies either have no process for ensuring orders/services are compliant with LCD’s and payor guidelines or they have significant gaps in their processes. Either way, this is a recipe for disaster. In order to achieve operational excellence, one must ensure that there is a focus on quality and compliance; not just on production. Most companies have a strong focus on production due to the direct correlation to revenue, however, the ONLY correlation that an order or service that is provided and ultimately is either not paid or recouped is a loss of revenue and COGS hit. This is the main reason why companies fail, or at the very least, fail to optimize their profit… they simply don’t focus on profit via quality and compliant workflows. By simply installing the most effective quality control checks in your pre-ship/pre-bill process, you can almost guarantee success when facing an audit.
Reason #2: Knowledge Issues
Knowledge is king! Many companies fail to invest in their employees. Once again, we are focused on productivity and fail to realize that a bad order or a bad invoice is nothing more than producing bad revenue and bad debt. Our teams need to be armed with the knowledge they need to succeed. Frond sales reps, doctors, nurses, etc. need to know what the product/service guidelines are. When, how much, to who, etc. can the order/services be provided to. At what intervals? The documentation teams must know how to qualify or accurately document the order or service. What needs to be in the medical records, what needs to be on the Rx/CMN/WDO, what qualifies as medical justification? These are critical… as is your documentation process. Your billing, coding, and quality control teams must be experts in modifiers, utilization rates, non-covered items, claim notes, supporting documentation.
In addition, business owners need to learn about the appeal and audit process. What types of appeals are there? How does one get selected for an appeal? What is the appeals process? Why do companies fail audits? What happens if I do not win our audit?
Reason #3: Documentation Issues
Documentation is a real problem. Or shall I say missing documentation, lack of documentation knowledge, tribal knowledge, misunderstanding of what constitutes medical need, medical justification, allowables, non-covered items, etc.
Click this link to see what CMS identifies as the main findings of audit reviews: TPE FAIL REASONS
As you can see, most fails are due to:
1. Signature issues
2. Office visit notes do not establish medical need
3. Medical records do not establish medical justification
4. Missing information and timely documents
I have been in this business a long time, and I continue to say (to all that will listen) that you simply can NOT achieve operational or financial excellence without having compliant documentation and an effective document retrieval process in place. Documentation is the FOUNDATION to the healthcare industry.
Are you using the documentation checklists? Are you submitting appeal packages correctly and effectively? Do you have clinical knowledge on your team to argue and fight the appeal? Where can you get clinical knowledge/support in medical records; specifically, around medical need and medical justification?
Reason #4: Mismanagement of Unbilled Revenue
Effectively managing unbilled revenue is an absolute must if you want to win your audits. By keeping the flood gates open, without correcting the issues that generated the audit in the first place, will only result in more pain and audits… and ultimately thousands of dollars.
Managing unbilled revenue takes the correct balance of business experience, clinical experience, product experience, and experience in compliance. Yes, it is a bit of a science, however, this part of the process must be mastered to ensure clean and compliant claims are being submitted that will be paid. Those that have risk or exposure are held and cleaned up to ensure you do not hand deliver the audit contractor a guaranteed denial. This is where there is no substitute for experience. You need the proper balance of risk/reward management to ensure you win, but at the same time do not cripple the cashflow and financial health of the company.
Reason #5: Going at it alone
By now hopefully you see that this is a big undertaking. Many business owners fail to understand the severity of an audit, the consequences of losing an audit, and the level of expertise that is required to successfully navigate through the audit process.
Does this mean you need to pay exorbitant legal fees to an attorney? Absolutely not.
With that being said, if you currently utilized the best processes, possessed the required knowledge, and mastered the medical records and billing requirements, then chances are you would not be in an audit.
As Einstein stated, “The definition of insanity is doing the same things tomorrow that you did today and expecting different results.”
Losing audits can potentially result in dire consequences such as:
1. Recoupment of claims going back three years
2. Loss of Medicare billing privileges
3. Loss of revenue
4. Referral to the OIG for potential fraud/criminal investigation
5. 100% pre-paid audit revenue
If you take anything out of this article, please understand that you cannot afford to take a chance on insanity. Get the expertise that you need to win.
I wish you an abundance of success!
About the Author:
Michael Breslin is an experienced and successful DME executive who is viewed as an expert in Medicare, Medicaid, and payor audits, as well as, revenue optimization and DME consulting. Michael is currently the EVP at Boost Advisory Group, a company that was established to provide expert guidance and world-class support in the areas of payor audits, healthcare consulting, education, and medical records compliance. All while helping our partners achieve operational and financial excellence through improved knowledge, quality and compliance. If you have any questions for Michael, you can email him at Michael.Breslin@boost-llc.com.