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Payer payment integrity audits are a financial burden to providers

Study finds 8% of providers are spending upward of $1 million dealing with post-payment audits each year.

Susan Morse, Senior Editor

A study commissioned by Change Healthcare reveals that payment integrity audits by payers can cost providers as much as $1 million in administrative costs a year.

The report examines the negative effect these audits have on the relationship between providers and their payers.

It shows that a pre-submission notification process that alerts providers of potential errors before the claim is submitted for payment improves accuracy and reduces the potential for a post-payment audit.

Change offers the technology solution, as do other companies.

Forty-three percent of providers said this practice can help them reduce their organization's administrative burden and associated costs.

The report, "Payment Integrity Programs: A National Study on the Impact of DRG Audits on Provider Sentiment and Abrasion" was conducted by Frost & Sullivan.

WHY THIS MATTERS

The process of ensuring that payments are accurate is costly for providers.

Payers or their third-party vendors routinely audit claims related to a hospital stay to ensure providers applied appropriate care, utilization, and billing codes to claims. But 8% of providers are spending upwards of $1 million dealing with post-payment audits each year, according to the report.

Another 10% spend between $500,000 and $1 million, and 46% spend $500,000 or less annually. More concerning is that four out of 10 providers, about 37%, have no idea what the audit process is costing their organizations.

In addition to high administrative costs, 27% of providers report negative experiences related to audit programs. The high number of requests for medical records, often used to validate accurate payment, was cited by 92% of respondents as a source of dissatisfaction.

One quarter (24%) say they must respond to more than 500 to over 2,000 requests monthly.

THE LARGER TREND

Frost & Sullivan reached out to 1,100 short-term acute care hospitals by email and telephone for interviews. A national sample of senior-level decision makers from these organizations provided their opinions about payment integrity using a web-based interview methodology.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com