National Healthcare Review, Inc

1. National Healthcare Review, Inc Payor Audits How to Protect Your Hospital Greater Florida Buccaneer AAHAM June 03, 2011 Presented By: Shirley Barton Maria Struss Executive Vice President Director of Managed Care

2. Payor Audits are Increasing It’s Profitable !

3. Comparison of Insurer and Hospital Operating Margins Operating Profit Margins United 8.54% Cigna 9.75% Aetna 8.15% Hospital Average 3.1%

4. FHA-May 2011HMOs Profits Rise 21 percent, Enrollment Down Net income totaled $717.1 million for Florida’s licensed Health Maintenance Organizations (HMOs) in 2010, an increase of 21 percent from 2009.  Profit margins increased slightly, growing from 3.6 percent to 3.8 percent in 2010. During this same time, HMO membership fell 1.5 percent with 3.5 million Floridians enrolled in HMOs.  Humana Medical Plan, and its subsidiaries, reported the highest net income ($330 million), followed by Aetna ($75.8 million), United ($73 million) and Health Options ($70 million).  Medical loss ratios averaged 83.5 percent; however, seven plans reported MLRs below 80 percent. 

5. Our Number 1Recommendation to Hospitals

6. Lock all your doors • Throw away the keys • Set the security alarm • Build a moat

7. OR • Develop a Three Prong Strategy that can successfully reduce the number of audits

8. Components of a Proactive Approach to Payor Audits

9. Accurate Charging

10. Accurate Charging • Bill using correct codes and Payor guidelines • Perform charge audit prior to billing • Review routine supply items • Ensure a clean and current CDM

11. Charging Errors • Charge audit of 8 Facilities found a net under to overcharge ratio of 6% • Most charging errors occur in Surgery, ER, Cath Lab and Interventional Radiology

12. DocumentationThe Root of all Evil • If it is not documented, it did not happen • Education, Education, Education • Utilizing clinical information on concurrent audits

13. Contract Language and Laws

14. 5 Laws Every State Should Have • Regulations governing overpayment requests • PPO and Self Insured plans covered under Prompt Payment Legislation • Substantial and enforced penalties on Insurers

15. 5 Laws Every State Should Have Timeframes for Insurer to pay Providers for credit balances Regulations governing the process of how insurers net remittances for overpayments

16. Regulations for Overpayment Requests Request must be accurate Supporting documentation must be included in request Limits on number of overpayment requests in a given time period

17. Prompt Payment Legislation should include PPO’s and Self Funded Insurance Plans

18. Penalties Must be Substantial and Enforceable • Florida 10% paid in 35 days • Georgia 18% paid in 15 days • South Carolina 0% paid in 60 days • North Carolina 18% paid in 30 days

19. Tighter Regulations of Insurer Netting Remittances • Insurers should not unilaterally be allowed to decide that you have been overpaid and take money from your checking account • Unauthorized or inappropriate netting of remittances should carry a penalty

20. Easier Said than Done • Work with your State Hospital Associations • Work with Department of Insurance or appropriate agency that regulates insurance products • Have clear and concise documentation of the problems • Don’t give up, help them help you

21. Contract Language • Define all aspects of Payor audits in either the main body of the Payor contract or as an amendment to the contract • Define charges as your hospital’s charge master in definition section of Payor Contract • Do not agree to comply with every Payors’ policies in your contract

22. Contract Language • Dispute resolution language must be worded to provide a means to resolve Payor overpayment disputes

23. Defense Audits

24. Best Defense = Zero Dollars Recovered • Do not give auditors any financial incentive to audit your facility

25. Defense Audit Best Practice Guidelines • Critical to have trained and experienced auditors review all audit overpayment requests • Participation of Hospital clinical staff is vital to defense • Limit audits to certain hours and days and charge a fee

26. Defense Audit Best Practice Guidelines • Defense auditors must have EOB’s showing what Payor has paid available for all audits • Knowledge of what auditors are allowed to do contractually and legally is imperative to a good defense

27. Current Trends and Activity in Payor Audits • Payors are hiring contract auditors that are paid on a percent of audit findings • Increasing frequency of audits and volume of accounts in each audit

28. How to Decrease Payor Audits Make the auditors work for every dollar Do not give Insurers financial incentives to audit you If audits are not profitable, the Insurers will decrease the volume of audits

29. Summary • Is it worth defending?

30. NHR Insurance Defense Audit Results 30