Healthcare audits form the cornerstone of risk management for insurance professionals. Knowing which audits your insurance company should conduct can help inform future pricing adjustments.
This article will help you navigate healthcare audits for legal compliance and stakeholder satisfaction. After you finish reading, consult our records retrieval specialists to discover how RecordGateway can help you submit high-volume record requests during your next audit.
What Is a Healthcare Audit?
Several types of healthcare audits help insurers verify that the services provided by a medical practice are appropriate, accurately billed, compliant, and efficient.
As a risk adjuster, understanding these audits can help prevent significant financial losses that affect your company’s combined ratio (CR) — the score used to determine how sustainable your company’s business growth is relative to its expenses.
Additionally, conducting regular audits keeps your record exchange policies current, so you reduce the risk of experiencing costly HIPAA penalties or other issues that might jeopardize your insurance company’s reputation.
How Healthcare Audits Benefit Insurers:
Here’s how different types of healthcare audits benefit insurers and strengthen the quality of services they provide:
- Improved Accuracy of Claims Processing: Audits help ensure that claims match the services provided, reducing errors and overpayment.
- Fraud Detection and Prevention: Audits help spot discrepancies and unusual billing practices. Your company can engage in clawbacks if you happen to uncover any forms of fraud.
- Enhanced Policyholder Satisfaction: By streamlining the claims process and improving risk assessment, audits contribute to a smoother customer experience. Quality risk assessments can lead to more satisfaction and trust in your services.
- Quality Control: Audits assess the quality of care provided to policyholders, ensuring that standards meet or exceed expectations.
- Data-Driven Insights: Healthcare audits generate valuable data, allowing insurers to assess risks, tailor policies, and create innovative products that better meet the healthcare needs of their policyholders.
6 Types of Healthcare Audits
Discover how each audit refines and maintains healthcare and insurance standards:
1. Compliance Audits
The primary purpose of compliance audits is to verify that healthcare practices, from patient privacy to billing coding assignments, align with standards set by laws and regulations governing the healthcare system. This due diligence facilitates high patient care standards and legal adherence.
Healthcare compliance laws include:
- Healthcare Insurance Portability and Accountability Act (HIPAA)
- Medicare Advantage (MA)
- Affordable Care Act (ACA)
- Health Information Technology for Economic and Clinical Health Act (HITECH)
- False Claims Act (FCA)
If your insurance company enrolls in any government programs, a partner’s compliance violation could result in disqualification from these programs or payment refunds. Removal can lead to the loss of significant revenue streams and the need to reevaluate and adjust business strategies.
Case in point, the Office of Inspector General (OIG) ordered Medigold to refund the $3.7 million overpayment to the Centers for Medicare & Medicaid Services (CMS). OIG cited Medicare Advantage compliance violations as the reason.
2. Financial Audits
Some types of healthcare audits strictly assess the accuracy of a healthcare organization’s transactions — a factor that impacts your insurance company’s financial stability. Financial audits evaluate the accounting practices of partnering healthcare organizations’ finances, from record-keeping to billing and coding accuracy.
Moreover, financial audits offer valuable insights into an organization’s financial health and risk profiles. They help detect potential vulnerabilities that can jeopardize reserves, like fraudulent claims.
As a risk adjuster, you must familiarize yourself with the following types of financial audits:
- Payment Integrity Audits: Verifies billing codes for services provided and claims accuracy.
- Cost Report Audits: Ensures accuracy of payments and reported costs in claims.
- Fraud and Abuse Audits: This program targets fraudulent billing practices such as upcoding, unbundling, providing medically unnecessary procedures, and billing for unrendered services.
- Contract Compliance Audits: Verify that a network provider’s billing practices align with the terms outlined in their contract. They should follow agreed-upon service rates, file claims in a timely manner, and adhere to preauthorization requirements.
3. Clinical Audits
Clinical audits focus on assessing the quality of clinical care provided to policyholders. They ensure that treatments follow established compliance standards by reviewing patient records, treatment protocols, and outcomes to identify areas of improvement.
Ensuring that funded treatments adhere to defined standards is crucial to insurers for several reasons:
- Enhancing Treatment Effectiveness: Clinical audits ensure effective treatments, maximizing health benefits and reducing extra costs.
- Improving Quality of Care: Regular audits ensure healthcare coordination meets modern industry standards, building policyholder trust and satisfaction.
- Supporting Standard Compliance: Audits ensure adherence to clinical guidelines, reducing malpractice risks and costs.
4. Operational Audits
Operational audits focus on the processes and procedures within healthcare facilities to assess the effective and efficient use of resources. These audits examine staffing levels, equipment usage, space utilization, and administrative systems to identify any inefficiencies or areas for improvement.
Unlike other types of healthcare audits on this list, operational audits are widespread. Here are some reasons why you might integrate this review into your audit strategy:
- Cost-Efficiency: Operational audits ensure services are cost-effective, allowing staff to plan premiums and reduce unnecessary costs.
- Enhanced Service Quality: Audits improve service delivery, increasing patient satisfaction and reducing costly complications or readmissions.
- Supported Sustainability: Efficient operations reduce waste and optimize resources, enhancing healthcare system sustainability.
- Ensured Compliance: Similar to clinical audits, these reviews ensure adherence to healthcare standards and regulations.
5. Information Technology Audits
The healthcare industry’s dependence on digital data is rapidly increasing. According to the CDC, by 2019, nearly 88% of office-based physicians had adopted EHR systems.
Information Technology audits ensure technological systems, especially those handling healthcare data, are secure, efficient, and compliant with industry standards. These audits check the security of electronic health records, the integrity of data transfers, and the overall cybersecurity measures in place.
IT audits offer several essential advantages to insurers, including:
- Enhanced Data Protection: These audits protect sensitive patient data against breaches to comply with HIPAA regulations and maintain patient privacy.
- Supported Reliable Data Transfers: These audits ensure that methods for transferring electronic health records are secure and effective, preventing data loss or corruption.
- HITECH Compliance: IT audits help ensure healthcare organizations comply with the Health Information Technology for Economic and Clinical Health (HITECH) Act, which promotes the adoption of health information technology.
A recent Center for Audit Quality Survey reveals that of the 266 respondents, 67% rank cybersecurity risk management as their top priority. The survey demonstrates the growing demand for IT audits across all industries, including healthcare.
6. Risk Management Audits
Risk assessment audits carefully examine the processes and systems used in healthcare and insurance settings to pinpoint all potential risks. These audits assess everything from financial practices and data security to patient safety and treatment protocols. The goal is to identify any areas that might pose a risk to patients, providers, or insurers.
Many insurers view risk assessment audits as more proactive, designed to foresee and mitigate risks before they result in significant damage. In contrast, other audits, such as financial and compliance audits, may be more reactive, addressing issues after they have occurred.
Here are some of the benefits risk assessment audits yield for insurance companies:
- Identified Vulnerabilities: Spot system weaknesses to prevent financial losses or legal issues.
- Refined Risk Mitigation Strategies: Develop targeted strategies to protect the insurer and the insured.
- Ensured Compliance: Check for legal compliance to avoid penalties.
- Enhanced Operational Efficiency: Streamline operations to reduce errors.
- Trust Building: Active risk management builds policyholder trust.
Simplify Healthcare Audit Records Retrieval with ChartRequest
Handling different healthcare audits involves accessing thousands of medical records—a challenging and time-consuming task. ChartRequest’s RecordGateway streamlines this process. Designed specifically for insurers, RecordGateway simplifies the retrieval of medical records, enabling you to efficiently manage bulk requests and fulfillments tailored to the needs of healthcare audits.
Set up a brief consultation to discuss how RecordGateway by ChartRequest can simplify your healthcare audit needs. You can also follow us on social media for more information about various types of healthcare audits or insurance-enhancing workflows.
