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September 28, 2023Health systems and hospitals leak over $2B* annually – above the average annual hospital expenditure. While some leaked funds will be lost forever, healthcare leaders can partner with third-party consultants to perform a diagnostic recovery audit and get up to 25 percent of the leaked funds back.
Recovery audits are a vital tool for identifying and recovering this lost revenue. By systematically examining financial and operational data, recovery audits can help healthcare organizations identify errors and prevent future financial leakage.
However, not all companies that perform recovery audits are created equal. When choosing a partner, consider several factors, including healthcare industry tenure, expertise in auditing, value-added services, and a track record of success.
What to Look for in a Recovery Audit Partner
Expertise and Experience in Healthcare Recovery Audits
When choosing a company to perform a recovery audit, look for a firm with expertise and experience in healthcare-specific audits. These domain experts understand the complexities of billing practices and compliance regulations unique to the healthcare industry. They possess the necessary skills to identify revenue leakage and optimize reimbursement processes within the healthcare system.
Why does experience matter?
Experience matters in healthcare auditing because the industry is constantly changing. These companies understand the healthcare industry and the unique challenges that healthcare systems face. They also have long-term relationships with most vendors allowing them to understand better how each vendor operates, invoices, and applies credit.
TAG TIP: Beware of organizations performing recovery audits and additional services to health systems AND vendors. Caution should be used to ensure the company is not double-dipping or performing biased services for the health system or vendor.
Use of Technology and Tools in the Recovery Audit
Evaluate the methods companies use to perform their recovery audits. Are they using manual processes and outdated tools such as Excel to perform their audits? Are they using proprietary systems that allow for automation and AI? Companies that recover the most for their healthcare clients often use a combination of manual tasks to review the data output from automated analysis software. This software should manage transactional, pricing, and contract data thoroughly, allowing the company to identify payment errors to be investigated by their team quickly.
Complete automation in the recovery audit process will leave lost funds on the table. Tools such as OCR and payment systems are prone to errors and leaking funds requiring the human eye to catch small errors the computer oversees.
Security to Protect Your Health System's Data
According to Becker's, the average data breach costs over $10 million. While breaches have become almost daily in the healthcare industry, choosing vendors with comprehensive security measures is crucial to protecting your health system's data. Partner with companies that utilize third-party security validation, such as CyberGRX exchange memberships.
Flexibility and Customization of Audits and Reporting
Health systems should look for a partner that modifies its recovery audit to reflect the direct needs of each customer. Look for a firm that remains flexible in different areas, including:
- What areas to audit (include a pricing review?)
- How they take payment (contingency vs. tiered contingency vs. one-time fee)
- Length and Frequency of Recovery Audit (one-year vs continuous)
- Reports and Findings
Time Commitment Throughout the Recovery Audit
Inquire about the time commitment at the launch and throughout the recovery audit before choosing the right company to partner with. Ask about the time commitments of each party involved. A good partner will work as an extension of your team and require minimal time to return revenue to your health system.
TAG TIP: Ask to review a redacted copy of a claim from a previous recovery audit. Does this claim contain an entire packet of information showing all necessary documentation to determine the accuracy of the claim? Does the packet contain a narrative explaining the "why" and "how" the errors occurred and the "what" that shows evidence of the error?
Value Added Services
If you are looking for a trusted partner, review and consider their value-added services outside the recovery audit. Services the compliment recovery audits include:
- Root Cause Analysis
- Procure to Pay Risk Mitigation
- IT Spend Audits and Management
- Pharmacy Pricing Audits
- Item Master Cleanse
- Vendor Master Cleanse
- Class Action Settlement Recoveries
- Process Optimization to Reduce Errors
- AP and Supply Chain Consulting
Positive Referrals
Ask for referrals before choosing a company to perform a recovery audit or any project at your health system. Beyond asking for a letter of reference, ask for 3-5 references to call and inquire with to confirm performance and a positive working relationship.
Things to ask of referrals:
- Did the recovery audit meet your savings/recovery goals?
- Did the project end and begin on the agreed-upon timeframe?
- Was there transparency in progress and communication during the project?
- How much time do the referral and their colleagues spend on the project?
The caliber of companies conducting recovery audits varies. When you pick a partner, you must prioritize factors like their experience in the healthcare sector, auditing proficiency, value-added offerings, and proven track record of accomplishments. Reach out now to better understand whether we are the right partner for your next recovery audit.
