How Code Auditing Affects the Bottom Line in Healthcare

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How Code Auditing Affects the Bottom Line in Healthcare

In many organizations, audits are done simply to check off the box to satisfy Compliance, the board of directors or trustees. However, progressive organizations understand that auditing can be a valuable tool for improving operational performance. The stability of health care revenue cycle management is subject to government policy, market fluctuations, and a number of other outside factors. Controlling these sources of change isn’t something a single organization can do on its own. Measures to protect the revenue cycle must therefore be directed inward, toward managing risk and reducing errors.

Before delving into the nuances of auditing that directly impact the revenue mid-cycle, it’s important to have an understanding of how audits fit into the big picture.

The revenue cycle: A turning wheel
It can help to imagine the revenue cycle as the wheel of a water mill. Water flows under the wheel, turning it steadily in one direction. This drives the machinery forward. If a health care organization is the mill and quality care is the output, then the revenue cycle is the wheel which drives everything forward – without it, there would be a standstill.

“Coding errors necessitate extra work.”

Now imagine a large tree branch swirling in the water headed toward the wheel. When the collision occurs, the wheel won’t stop, but it may lose some of its momentum for a time. This is what coding errors do to the revenue cycle. Coding errors necessitate extra work, cause a loss of time and may even cost the organization money.

Errors can occur during charge capture and coding for a number of reasons. Human error plays a large role. A coder may insert the wrong code, misread the information entered into the system by the physician, or make some other small mistake. Even computer-assisted coding isn’t without its drawbacks. CAC may improve productivity, but it may also have a negative impact on quality of coding. Natural language input may confuse the system, leading to an inaccurate code. If it isn’t caught, the inaccuracy could leave money on the table or open the organization to risk.

Auditing today: Drawbacks
Auditing methods today are extremely helpful to organizations, but they aren’t perfect. Organizations need to have a strategy around what they hope to accomplish with an audit – and they should be ambitious with their goals. Return to the water mill example once more – after the branch is churned through the wheel, causing delay and damage, a worker pulls the branch from the water, tosses it aside and returns to the mill to check on the damage. This is how auditing often works today. Auditors assess the codes of an organization – only checking a randomized sample of the codes – after they have gone to billing.

What does this mean for the organization? Increased instances of denied claims, sub-optimal cash flow, and a delayed feedback loop that could be more helpful in correcting the system. One way to react to such a system would be to take fewer risks by over-cautious and deliberate under-coding. But not documenting and coding the severity of a patient has implications for patient care, and in addition, this could mean leaving money on the table that the organization has earned. It may be safe from the narrow lens of an RAC audit, but it’s not good for the health of the organization, not good for public health, and not good for individual patients. Another way to react would be to change how and when audits are completed.

Auditing improved: Revenue protection
Revenue protection and risk mitigation are a primary focus of revenue cycle management. Each chart and bill should accurately reflect the care provided. If it fails in that regard, the wheel gets jammed.

“Audits before billing can greatly reduce risk.”

Just as the operator of a water mill would like to have a net to catch damaging tree branches before they reach his wheel, organizations also benefit from performing audits before they go to billing. Errors caught at that stage are easily corrected without significant cost to the organization – as long as the organization uses the right tools.

Looking Glass® eValuator™ from Streamline Health can complement  traditional audits by acting as an artificial intelligence (AI) assistant, automatically screening high risk charts before they reach the billing department.HIM professionals and/or auditors can then focus on the cases where their skills are most impactful. Organizations that use this powerful tool can lower their financial and regulatory risk – two factors that can have a substantial impact on the bottom line.

In the health care industry, the revenue cycle is a turning wheel that never stops. At first it might seem impossible to keep up with the errors and risks inherent within the system. But with the right tools and workflow, revenue protection becomes a reality.

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