Claim Processing in Healthcare: Steps for Effectively Monitoring, Billing, and Auditing to Manage Risk

Richard P. Kusserow | October 2014

Today, healthcare providers face increasing scrutiny of their claims processing system by regulatory agencies and auditors. Incorporation of claim processing monitoring and auditing activities is a key compliance program component to avoid improper billing and receipt of incorrect reimbursement.  Monitoring and auditing activities entails proper healthcare claim data, documentation of medical records, accurate application of diagnosis and billing codes and proper charging of payers for services rendered.

Why Proper Healthcare Claim Processing Matters

The U.S. Department of Health and Human Services, the Office of Inspector General and the Centers for Medicare & Medicaid Services are coming down heavily on inappropriate healthcare claims data. The Medicare Integrity Program also emphasizes the significance of avoiding payment errors. As a result, improper claims are denied, recovery audits are based on surveillance monitoring, financial penalties and refunds are imposed, in-depth investigations are implemented and physicians and medical practitioners have lost revenue and included litigation costs in some cases.

The Challenges of Claim Processing in Healthcare

Proactive and effective internal monitoring of the claims processing system is necessary but can also be challenging. The massive availability of consolidated healthcare claims data to government contractors for mining and surveillance is a real threat to revenue, if not billed correctly. Today, healthcare claim processing systems must:

  • Manage healthcare claims data uses measures
  • Use data to measure risk proactively
  • Keep it simple while still being sophisticated

Auditing and Monitoring Claim Processing in Healthcare

Auditing and monitoring of the claim processing steps has always been a core component of an effective compliance program and a critical success factor to revenue integrity. However, a change of how claims data is used by regulators and contractors can represent a real problem if the claims processing system is not up to date.

Dr. Cornelia Dorfschmid, a leading expert on the subject, states, “If you have not advanced your sophistication in how data can be assessed, measured, and used proactively; you are at increased risk of being targeted and caught and required to refund with potentially huge penalties.”

Dr. Dorfschmid makes the point that if you want to manage risk you need an effective and advanced auditing and monitoring of claim processing steps. She sums up her point by stating, “If you want to retain what has been billed, you must be able to verify revenue integrity through metrics and measure results. Revenue integrity cannot be managed well without being able to measure what you are doing.”

Sophisticated data analysis and contractors empowered with tools and recovery successes can only be met successfully with the same sophistication and vigor of your claims processing system. She points out that “[w]ithout well-defined metrics, routine versus non-routine approaches, and sophisticated risk and data analyses as part of a billing auditing and monitoring programs, an organization is at risk.”

About the Author

Richard P. Kusserow established Strategic Management Services, LLC, after retiring from being the DHHS Inspector General, and has assisted over 3,000 health care organizations and entities in developing, implementing and assessing compliance programs.