Data Mine Your Claims
How to Stay Ahead of Payer Audits by Data Mining Your Claims to Identify Risk and Proactively Fix Issues
In today’s healthcare environment, we are being asked to do more with less. There is increasing pressure to cut costs, ultimately resulting in staff reductions that affect all departments, including coding and billing departments. Therefore, it is more important than ever to find ways to quickly and efficiently identify coding and billing issues.
External audits are rapidly returning to full operating force following a lull that took place amid the worst of the COVID-19 pandemic. Amidst a time of shrinking operating margins and heightened scrutiny by federal healthcare contractors, providers are seeking to focus on the benefits of technology-driven internal auditing.
Government and Payer Audits: Types and Trends
During the height of the pandemic, auditing activity slowed and even stopped for a period of time to allow healthcare providers to focus all of their resources on patient care. Since 2022, however, payers have been steadily ramping up their auditing. Now, with the public health emergency behind us, we have seen an exponential growth in auditing.
For healthcare professionals to set themselves up for success when it comes to external audits, it is essential to first understand the different types of audits they may encounter. Click through the tabs to learn about the evolution of the payer audit and the differences between audit programs.
CERT
Comprehensive Error Rate Testing (CERT)
The CERT program is the first step in the government’s audit process.
Established by CMS in 2003, the CERT program ensures a statistically valid random sample of about 50,000 claims. The improper payment rate calculated from this sample is considered to reflect all claims processed by the Medicare FFS program during the report period. It is important to note that the improper payment rate is not a “fraud rate”—rather, it is a measurement of payments that did not meet Medicare requirements.
TPE
Targeted Probe and Educate
The goal of this step, as the name implies, is to perform a targeted review and provide education. This means that CMS has instructed MACs to use data analytics within each of their jurisdictions to identify hospitals, providers and suppliers that have high claim error rates or unusual billing practices and investigate services that have high national error rates and present a financial risk to Medicare.
SMRC
Supplemental Medical Review Contractor
Supplemental Medical Review Contractor reviews focus on issues identified by CMS internal data analysis, the CERT program, professional organizations and other federal agencies, such as the OIG/GAO, as well as the use of comparative billing reports.
UPIC
Unified Program Integrity Contractor
UPIC audits are conducted by contractors that investigate instances of suspected fraud, waste and abuse in Medicare or Medicaid claims. If you have received a UPIC letter, then you have already been identified as having a potential issue. These audits are not random. They are looking for something specific. So, pay close attention to these and be sure you are providing the requested documentation in a timely manner.
RAC
Recovery Audit Contractor
RAC auditors use proprietary software to analyze claim data to identify claims that likely contain improper payments.
These audits can be pre- or post-payment reviews, as they are looking at claims data before payment as well as after payment. They employ data analytics to select claims for review. They are not just looking for blatant fraud; they are also looking for improper payments (commonly referred to as waste and abuse).
The data analytics used by the payers identify potential high error rates, utilization outliers and unusual billing practices. What they don’t identify is instances of under-billing and missed charges.
Traditional Random Audits Are No Longer Sufficient
When the Office of Inspector General (OIG) first introduced the need for providers to implement compliance programs and self-audit, they recommended that providers perform a random audit of 10–25 claims per physician per year, and that hospitals look at around 100–200 claims per year depending on hospital size. The goal is a 95% accuracy rate.
To put this in perspective: One physician typically submits around 4,000 claims per year, and hospitals submit tens of thousands of claims per year. Even if you are meeting the recommended random audit parameters, this still represents a very small sample of the overall picture of the claims you are submitting. It may check a box on your compliance plan, but it does not produce a good sense of your actual risk. The sample size is just too small and random.
In contrast, the targeted, or focused, audit sample is typically selected from a specific subset of claims that have been identified using data mining or data analytics and focuses on claims that are at risk of over-coding, or perhaps were identified as potentially under-billed. The number of claims audited can vary depending on the reason for the focused review. The results of a focused audit allow you to correct the root problem and concentrate your education efforts on topics that are of special concern, in addition to general education.
Technology Holds the Key
Kathy Pride, Panacea’s Executive Vice President of Coding and Documentation Services, is a strong proponent of proactively leveraging technology to identify areas of risk and address issues—before an external auditor catches them.
“The old way of doing audits is outdated, providing very little assurance your facility or practice is 100 percent compliant, and there is little to no return on investment utilizing the outdated random sample method,” Kathy says. “In the end, data mining and performing risk-based audits ensures the highest level of accuracy and efficiency.”
In short, by using technology to perform risk-based audits, healthcare professionals can:
CMS figured this out a little over a decade ago, and that is exactly what they are doing. From the CERT process, which uses a statistically valid random audit to identify the trends, to the Fraud Prevention System (FPS), which utilizes sophisticated AI rules to quickly and efficiently audit 100% of the claims data submitted to the Medicare and Medicaid programs, payers have evolved their auditing methodology.
It is now time for providers to stay a step ahead by using similar technology.
“We need to shift the mindset of the healthcare industry’s compliance audits from random audits to more risk-based/focused audits, and to do this using a software solution, such as CLAIMSauditor®, that allows you to data mine your claims data using AI rules to identify claims that potentially are a compliance risk,” Kathy says. “The added benefit to this methodology is that you will not only identify risk, but you may also identify opportunities of underpayment as well.”
