Central Florida Healthcare providers (HCPs) perform clinical services in exchange for payment by insurance companies (public and private). However, just as taxpayers are subject to audits by the IRS, HCPs are subject to insurance audits for up to 3-years after being paid (and sometimes longer). This means, the money earned by an HCP in the past – is at risk for being pulled back today. This type of audit is categorized as a Post-Payment (RAC) Audit (since audits arrive after payments are received) – and are known by a variety of names, including MAC Audits, insurance audits, etc. Insurance companies utilize independent companies to perform audits on their behalf. These companies only get paid when they recover monies (they receive a percentage of what they recover). Facts: • Statistically 5% to 25% of what a healthcare provider bills are subject to PPAs (1) • In the last five years alone, PPAs have increased over 900% as the result of computerized Insurance Payor algorithms designed to overwhelm the HCP with strict deadlines, complexity, and large volumes of audits (2) • The audit process is extremely profitable for Payors: the return on PPA activity is 750% (3) • The solutions being used today are inefficient and/or expensive. They consist of costly attorneys and consultants; insufficient in-house software solutions; PPAs are often assigned to the billing and collections department which in today’s times may be challenged in keeping up with current billing collections and all the other tasks. Therefore, they may not have as much time to dedicate to PPAs especially in a smaller practice. Note that hospitals have entire departments to manage PPAs, yet over 31% still use Excel as their system to manage PPAs. (4) • Due to the pandemic, recently released new and modified CPT codes were made available to HCPs for reimbursement of services not traditionally offered (e.g., the telehealth geographical restriction was removed from Medicare). As a result, telehealth sessions that substantially increased during the pandemic are now being targeted by auditors performing PPAs (5) The total of PPAs for the state of Florida must be extrapolated to predict 2021 since the only numbers reported are Medicare and Medicaid numbers (government programs). Extrapolating 2016 (as reported to Congress) (6): Public Audits in 2016 = $42.3M, based on a 900% increase (as stated above) 2021 Public Audits in Florida = $423M. It is conservatively estimated that private insurance payors (as a group) at least equal the amount of public PPAs. Therefore, the total amount of PPAs in 2021 in Florida are estimated at $846M. Post-payment (RAC) audits are a big problem and becoming an even bigger problem. They must be addressed economically and efficiently by offices that have limited resources and cannot afford to lose precious revenue.


Author: Kevin Lasser Email: Kevin.Lasser@RevKeepSoftware.com Phone: (248) 709-9053


APPENDIX: (1)Artificial Intelligence in Medicare Audits: Part II, by Edward Roche, PhD, JD, for the RAC Monitor, February 12, 2020 (2)Medicare Audits: DRG Downcoding in Hospitals: Algorithms Substituting for Medical Judgment, Part 1 (3)https://complianceandauditingservices.com/audits/post-payment-audits-2/ (4)https://revcycleintelligence.com/news/31-of-providers-still-use-manual-claims-denial-management (5) https://racmonitor.com/oig-telehealth-audits-ramping-up/ (6) https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFSCompliance-Programs/Recovery-Audit-Program/Downloads/FY-2016-Medicare-FFS-Report-CongressAppendices.pdf