Audits: They’re more than worth the investment
The cost of neglecting compliance can be severe and far-reaching
Perform an audit for a health plan and the perception is often this: Audits are an expense and an imposition, nothing more. They don’t make money for the company and they constitute a net negative.
On the surface, it’s true that compliance is a cost center, not a revenue center. But that doesn’t present the entire picture.
People pay for things all the time that don’t necessarily yield an immediate return on investment, at least not a visible one. Flood insurance, for example. The premiums are an expense, and the unreflective observer may wonder why anyone would throw away good money in such a manner. But not having this coverage proves disastrous when a storm turns the living room into a small lake. At that point, the investment makes perfect sense.
In the same way, audits can stave off serious consequences in the future. They’re well worth the investment and trouble.
Medicare and Medicaid
There are a number of counterarguments to the assertion that audits are essentially a net loss. For example, avoiding noncompliance with the government can prevent a great deal of trouble.
The Centers for Medicare & Medicaid Services (CMS), as directed in the Patient Protection and Affordable Care Act (ACA), has produced final rules in the Federal Register detailing Medicare and Medicaid providers’ and suppliers’ responsibilities. Among them is the requirement to report and return identified overpayments within 60 days. When an overpayment is “identified,” it must be repaid to the government before it becomes subject to federal False Claims Act (FCA) liability. Failure to perform audits of Medicare and Medicaid claims can bring the full force of government down on an offender -- even an unwitting one.
The FCA is a law that, amazingly, came into being during the Lincoln administration. Amended several times since, it can be tough on health plans out of compliance with Medicare and Medicaid. High-profile cases of false claims have led to settlements as high as $500 million dollars.
Ongoing audits catch many of the signs that point to such trouble ahead. Healthcare Benefit Technologies (HBT) performs audits that locate the actual anomalies without extrapolating on the data, as government audits often do. In such a case, the government auditors can sample, say, 30 claims and use those findings to make sweeping assumptions about the next 100,000 without actually examining them. The fines and penalties per script can mount up to a huge sum, reaching into the millions of dollars.
The commercial side
There are also major benefits on the commercial side. A plan can be hemorrhaging hundreds or tens of thousands of dollars without anyone knowing about it. For example, a pharmacy may be overcharging while no one is paying attention to the claims processing. An audit is the only way to effectively uncover this.
There may also be a flaw in the plan itself that has remained undiscovered. Everyone assumes that a plan design is accurate, but such blanket assumptions are unwarranted. We’ve discovered over time that errors can and do exist in the setup process. The plan may be paying out an excessive amount for prescriptions because of a design error. Catching that error saves the plan considerable expense.
Pharmacies can also benefit from this process. If a flaw in the plan design setup means that a pharmacy is being reimbursed $30 for a drug that should be $50, there’s $20 left on the table. Identifying these setup flaws can reverse that situation so the pharmacist is reimbursed fairly. Establishing payment integrity can right a number of wrongs.
Benefits for everyone
Taken in the aggregate, intelligent audits are a benefit to society at large: the taxpayers and healthcare consumers. One of the factors that drives medical costs up to the skies is the prevalence of fraud, waste and abuse. When auditors locate these problems, they’re helping to keep costs from rising further.
As it turns out, audits are more than worth the cost. And not having one can be costly in the extreme.