Jacksonville, Fla.-based Mayo Clinic uses a software program to catch billing errors as part of its quality improvement program.
Charlotte, N.C.-based Miller Orthopaedic Clinic audits medical charts to ensure documentation supports claims as part of its reimbursement and compliance program.
Mayo and Miller are among many medical groups around the country that have adopted such programs to capture revenues lost by payment denials and to ensure accurate bills are produced. Experts estimate claim denials by payers can range from 5% to 25% of billings.
With nearly $95 billion in annual net medical revenues passing through the nation's 21,000 medical groups, denials range anywhere from $4 to as much as $24 billion.
But experts say there is a secondary benefit for the effort it takes to reduce claim denials: avoiding or minimizing fraud-and-abuse investigations by federal auditors.
This year, HHS' inspector general's office will put private group practices under greater scrutiny than ever for false billing charges, says Alice Gosfield, president of Alice Gosfield Associates, a Philadelphia-based healthcare consulting firm.
The inspector general's 1997 work plan targets improper physician billing and utilization of services in private practices and groups for special review. If the inspector general finds evidence of abusive billings, full-scale investigations may be launched, says Judy Holtz, an IG spokeswoman.
Under the federal False Claims Act, those charged with false billing or related fraud offenses may face criminal prosecution and possible fines or jail terms. In addition, they can be expelled from the Medicare and Medicaid programs.
Past IG investigations have recouped millions of dollars in fines and penalties for false billing at hospitals and university-affiliated medical groups.
Dozens of medical groups have taken steps to reduce claim denials, says Bruce Blehart, an attorney with the American Medical Association. For example, they have introduced physician education programs to improve medical record keeping, begun quality improvement projects for the billing office and implemented voluntary compliance programs to audit themselves.
"The Kassebaum-Kennedy (health insurance portability) law makes investigations easier," Blehart says. "If claims are questionable, carriers will turn it over to the IG for criminal investigations."
Under Kassebaum-Kennedy, Blehart says Medicare beneficiaries have the ability to report any suspicious billing practices by their physicians to the IG.
"Commercials and the (IG) aren't just targeting teaching physicians; they will go after the (private) groups because that's where the big money is," Gosfield says. "A compliance program will help mitigate penalties."
In 1996, 185-physician Mayo Clinic in Jacksonville purchased a software program called "Claims Manager" from Medicode, a Salt Lake City-based company that sells billing and coding support software. Claims Manager helps identify problems in claims before a bill is sent to Medicare or commercial carriers.
"The bottom line is that it gets us our money faster," says Eric Palmer, Mayo's manager of medical revenues. "If we can stop (claim) denials, then we can increase our revenue and reduce our days in accounts receivable."
"The Medicode program also can identify physicians who are more likely to lack documentation or bill improperly," says Patty Haslam, Mayo's manager of accounts receivables.
"We can talk with that doctor," Haslam says. "It helps us target our educational effort."
At Miller Orthopaedic Clinic in Charlotte, N.C., Administrator Michael Allyn says claim denials occur for a multitude of reasons, ranging from changing medical coding regulations to inadequate documentation.
"We are doing this because it is good business," says Allyn, who manages a 27-member group that accounts for more than 80,000 visits a year.
Increased documentation also can help clinics prove their billings were legitimate and medically necessary, says Terry Cameron, Medicode's senior vice president.
"Before, groups would send claims out the door and the carrier or Medicare would deny the claim," Cameron says. "They would either write the charges off or spend time to research the claim and resubmit."
Medicode has sold its software to 20 groups, Cameron says. "Lately, many are concerned about the IG investigations," he says.
The Medicode software costs range from about $35,000 a year for a medical group with 30 to 50 members to $65,000 a year for those with 50 or more members. Contracts generally run three to five years. The company says the software can return $12 for every dollar invested.
The bottom line, says Stephen Hatch, a healthcare consultant with Northbrook, Ill.-based Argus Associates, is that groups are trying to improve billings to capture as much in revenues as possible.