Claims Processing Quality Assurance Programs

Key Points:

• Claims processing is cited by the U.S. Department of Health and Human Services Office of Inspector General (OIG) as a high-risk compliance area.
• Enforcement actions result in billions of dollars annually.
• Compliance officers should take steps to mitigate risk.

Enforcement actions related to healthcare claims, especially those involving hospitals, are not only common but on the rise. Federal and state enforcement agencies continue to prioritize these cases due to the immense volume of healthcare spending, much of which is driven by Medicare and Medicaid programs. Enforcement actions typically arise from issues such as false claims, upcoding, unbundling, medically unnecessary services, kickbacks, and violations of the False Claims Act. These actions can result in civil penalties, criminal charges, exclusion from federal healthcare programs, and the imposition of Corporate Integrity Agreements. 

Each year, enforcement actions lead to approximately $2 billion in settlements. To mitigate this significant risk area, it is critical to have a Claims Processing Quality Assurance Program (QAP), which is a structured system used to ensure that medical or insurance claims are processed accurately, consistently, and in compliance with regulatory, contractual, and internal policy requirements. The QAP’s purpose is to detect and prevent errors, improve process efficiency, maintain compliance, and ensure correct reimbursement or payment of claims. A fully functioning QAP offers several benefits, including reduced financial risk due to errors or fraud, timely and accurate reimbursements, avoidance of costly corrections, improved provider satisfaction, and enhanced accreditation and audit readiness. The importance of such a program is underscored in the OIG’s Compliance Program Guidance for Hospitals, which identifies reductions in error rates as a measurable indicator of compliance program effectiveness.

Compliance officers should assess and confirm the presence of the following key components within their Claims Processing QAP:

1. Standard Operating Procedures (SOPs) that clearly explain the processing and handling of claims.
2. Quality Control Reviews (QCRs), including random claims sampling, to catch and identify errors early.
3. Post-payment audits to detect overpayments, underpayments, or fraud.
4. Targeted audits of high-risk claim types.
5. Root Cause Analysis of identified errors (e.g., coding, eligibility, benefits misinterpretation).
6. Focused improvement in reduction in error rates and denial of payments.
7. Taking corrective action (e.g., educational contacts, staff retraining for recurring errors).
8. System improvements or workflow modifications to prevent future issues.
9. Ongoing Compliance Monitoring to ensure adherence to federal and state regulations.
10. Verifying that contractual terms with payers or providers are met.
11. Maintaining detailed records of quality assurance activities.
12. Reporting results to management, compliance leadership, and relevant regulatory bodies.

For more information on this topic, see https://www.compliance.com/services/claims-reviews/, or contact Dr. Cornelia Dorfschmid at [email protected].

About the Author

Dr. Cornelia M. Dorfschmid has over 30 years of private and government sector experience in health care compliance consulting, the majority of which was in management and executive capacities. She is a recognized expert in the areas of claims auditing, overpayment analysis and risk management and corporate health care compliance.