In the healthcare industry, regulations and best practices are always changing. Regular compliance audits help organizations provide the most efficient, effective patient care. But they can also be a source of stress and frustration. In addition, failing an audit can lead to fines and other penalties.
The best way to protect your organization is to monitor your compliance risks proactively. This means staying updated with the most recent local, state, and federal regulations. For example, a new Hospital Price Transparency Rule came into effect in 2022. Unfortunately, many hospitals are struggling to implement the new standards promptly.
What is the Price Transparency Rule?
The cost of healthcare in America is high, and the price for services can vary widely by region, a patient’s access to insurance, and even by insurance provider. Formerly, hospitals did not disclose the price of individual services to patients before they received care. Without price transparency, patients could not shop for competitively priced care, and some facilities could get away with charging high prices. Even providers administering care sometimes didn’t know exactly how much a procedure or service would cost.
An executive order passed in 2019 directed the Department of Health and Human Services to create new guidelines to help reduce healthcare costs. As a result, the Centers for Medicare and Medicaid Services (CMS) public rule on price transparency requirements for hospitals came into effect on January 1, 2021. Additional rules took effect in July 2022.
To achieve price transparency compliance, hospitals must publish their billed prices and negotiated rates for all inpatient and outpatient services and prices that they negotiate with insurers. In addition, all items and services must be listed in two formats: a machine-readable file and a display of shoppable services for consumers.
By August 2022, more than a year-and-a-half after the new pricing transparency rules initially went into effect, only 16% of hospitals reviewed by the CMS had complied with the new rules. In June, the agency began issuing warning notices and requests for corrective action and even fined some facilities.
Why are hospitals failing their audits?
The Craneware Group hosted a round table with healthcare leaders from across the United States to understand why so many hospitals had not complied with the new ruling. Though most of those interviewed represented hospitals and systems that had implemented the changes, they offered insight into why others might be hesitating.
Like other sectors of the economy, the healthcare industry has been affected by high inflation. Many hospitals are facing staff shortages and supply chain disruptions. Operating costs are also higher than they used to be. Building and maintaining price transparency systems is an investment for which many hospitals simply do not have the resources.
Many hospitals are also afraid of a loss in revenue. If patients can compare prices across multiple institutions and select the least expensive option, it could lead to a “race to the bottom” as hospitals try to stay competitive by offering the lowest price. Payers may also lower their reimbursement rates if they see that a hospital or system accepts lower rates than their competitors. There is some concern that this may force hospitals to specialize if only certain services remain profitable.
Preparing for a price transparency audit
To identify hospitals and healthcare systems that are failing to comply with transparency rules, CMS is investigating complaints and auditing randomly selected hospitals across the country. If your institution is audited or investigated and fails, you may receive a written warning, a request for a corrective action plan, or a penalty. In addition to a fine, your failure to comply may be publicized on the CMS website.
Don’t wait until you’ve already been audited or fined to make changes. Instead, start preparing for a compliance audit now.
Include all data points in a machine-readable file
Your hospital must list your standard charges for all procedures — any item or service a patient could receive during an inpatient admission or outpatient visit — in a single machine-readable file that is easily accessible on your public website. You must list the gross charges, discounted cash prices, and payer-specific negotiated charges for each service. You must also include the minimum and maximum negotiated charges for each service without identifying the payers.
Provide information about shoppable services
A shoppable service is any service your hospital provides that a patient can schedule in advance, like a vaccination. The CMS has identified 70 required services for which every hospital and health service must provide payer-negotiated rates. Each hospital must also include an additional 230 services, including supplies and procedures, room and board, facility fees, and professional charges. This information must be publicly available on the hospital’s website in a consumer-friendly format.
Disclosing additional information
Even though your organization may have an expected base price for each service, other factors could lead to additional charges. To protect your facility from fines and penalties, you may want to add disclaimers to your website to account for any variations. If applicable, clearly state that prices are estimates or ranges, and any additional services or alterations in care could change the final price.
In addition, billing codes for the final diagnosis may differ from what is on the price estimator. And although a patient’s insurance may cover hospital charges, out-of-network providers may include additional services that can affect the final cost of a patient’s treatment.
When implementing price transparency information, ensure that all the appropriate fields in the machine-readable file are filled out and that there is no missing data. Cross-check the payer information and any information about insurance plan coverage elsewhere on the hospital’s website to confirm that they match. Finally, enlist a communication or UX specialist to evaluate all written materials for clarity and readability.
Other types of healthcare audits
In addition to compliance with new regulations such as price transparency, several other common audit types could present a risk to your healthcare organization. If you were to undergo an audit today, would your facility pass? Consider the following potential audits in the context of your overall risk.
Revenue cycle compliance
Revenue cycle compliance audits have two purposes. First, they ensure that patients have the best experience when interacting with their healthcare provider. Second, they can prevent crucial revenue loss. A revenue cycle audit looks at every step of a patient’s interaction with your facility, from booking their initial appointment to receiving their bill.
Patient access management
An audit of your patient access management looks at your intake process to ensure that the patient’s information is captured correctly and efficiently from the very beginning. Failure to obtain the correct and necessary documentation, demographic information, and signatures could delay payment to your organization. In some cases, it can even impact a patient’s treatment timeline. A patient access management audit may include a review of documentation such as Medicare Secondary Questionnaires and Advanced Beneficiary Notices.
Documentation and charge capture
During or just after a patient’s visit, the physician records any diagnoses, treatments, tests, or procedures assigned during the visit. Coders then convert them into charge codes according to standard regulations. If the codes are incorrect, the payer can deny the claim. During a documentation and charge capture audit, a coding specialist reviews a facility’s medical records to ensure they meet current regulatory standards. The audit may also include reviews of medical necessity, patient status designation, or physician order retention.
Patient financial services
An audit of patient financial services focuses on claims. The goal is to ensure that claims are adjudicated correctly and that reimbursement and charges are properly captured. An audit of patient financial services may include a review of the facility’s Medicare overpayment and refund policy, claim denial processing, and self-pay collection practices.
About our partnership with Revenue Cycle Coding Strategies
Relias partnered with Revenue Cycle Coding Strategies (RCCS) to offer resources to ensure that your coding is compliant and to help optimize your revenue cycle. In addition to quality online courses from Relias to invest in your staff’s coding education, RCCS offers a variety of outsourced solutions including coding audits, documentation reviews, coding professionals, and expert resources.
About Revenue Cycle Coding Strategies
Revenue Cycle Coding Strategies has provided specialty medical coding, revenue cycle, and compliance consulting services, as well as educational and training materials to the healthcare industry for over 20 years. RCCS has an extensive team of specialized coding experts and industry leaders who create and implement customized revenue cycle solutions, including billing auditing and assessments, compliance reviews, in-depth process mapping, and customized outsourced options.
Revenue Cycle Management: Key Resources for Healthcare Organizations
Accurate and efficient revenue cycle management (RCM) is crucial to a healthcare organization’s financial health and success. As the national leader in healthcare workforce activation solutions, Relias has developed resources to ensure your staff is compliant with medical and coding billing requirements to improve patient experience and maximize reimbursements. Access our toolkit for articles, webinars and white papers that will accelerate your optimization efforts.Access the toolkit →