Just like almost all businesses large enough to have employees pay someone to audit their businesses, hospitals sometimes need to, or should have, someone come in to audit their receivables process. It can involve looking at the charge master or how charges are captured, or a host of other things. This article is specifically going to talk about the billing process because it’s one of the most critical parts of the hospitals financial health.

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In general terms, we start talking about receivables when the billing process begins and it’s time to try to collect payment on the charges submitted by departments within the hospital. A review of receivables usually means looking at the billing process because it can be unwieldy and complicated… or has been made to be so over time. Depending on the depth a hospital is looking for, a review can take a week, or it can take a month or more.

Below is a portion of a paper I wrote for a magazine years ago on what it take in doing a billing review:

“If I were going to go in and do a billing review, I’d ask for some things up front. One would be an age trial balance, which would then allow me to look at both new and old accounts and give me an opportunity to look at why older accounts weren’t being paid. I’d then want to review one of these accounts on their system, or in their billing records, and of course review any notes they had on these outstanding claims. You can learn a lot by reviewing as few as 25 to 50 claims; that’s how insurance companies do it when they come in to review claims specifically for them.

I’d ask for a copy of billing and collection procedures, if they had any. I’m someone who believes that no department can be run properly without having a lot of their processes down on paper.

I’d ask for EOBs (explanation of benefits, also known as vouchers) for a one or two month period. This would allow me to scope out accounts that look problematic so I could determine whether it’s procedural or something out of the control of the facility… which eventually means it’s procedural. I’d be checking to see how long it took to post payments and allowances, if they posted the correct allowances (also known as adjustments), and how long it took to bill either secondary insurance or the patient.

I’d also be looking at denials, and I’d probably take one full month for their top 3 or 4 insurance companies and see what the denials were, and what their frequency was. Denials aren’t always billing’s fault, but sometimes they are if they’re not being worked properly. Sometimes this leads to looking at the medical records for some of these patients because sometimes I’ve seen billers taking it upon themselves to change codes just to get bills paid; that’s a major definition of fraud.

I’d also want to interview some of the billing personnel. If it’s a small group, I’d want to talk to everyone independently, and if it’s large, then I’d like to talk to a random number of them, without the supervisor or manager around. That would give me a chance to ask them specific questions on how they do their work, and each person would be asked the same questions, to find out if everyone handles claims the same way, or if each person does their own thing.”

That’s the basic process in doing a full review of a hospital’s billing department. The one thing I like to make clear is that this isn’t a witch hunt. The idea isn’t to determine if management is deficient or to get anyone into trouble. After all, those people need to be there to handle things when the reviewer leaves. Any report will detail the findings and hopefully make recommendations that can be implemented to get things working properly. I say that because years ago when I was a director and we had a review, every recommendation was “put more people on…”; that wasn’t helpful one bit.

There you go; that’s the entire process. How does your facility handle things like this? If you have any comments or questions, please post them below.
 

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