Revenue recovery firms may be helpful.

For two years, HFMA has been involved with examining the process through which revenue recovery firms function. One such firm is apparently advertising in a way that makes it appear that HFMA endorses its services. HFMA does not recommend or endorse the services of any revenue recovery firm. The

In 1990, Sen. William V. Roth, Jr. (R-Del.), initiated hearings on revenue recovery activities through the Senate Permanent Investigations Subcommittee. During the hearings, the subcommittee heard testimony on how employees of certain revenue recovery firms had manufactured changes in billing with no audit trial and had covered up situations where credit was due a third-party payer. The hearings also disclosed similar fraud on the part of some firms performing billing audits for third-party payers.

However, testimony did not reveal the large number of reputable firms conducting revenue recover audits, challenge audits (billing audits that occur simultaneously with the billing audit of a third party who challenges the providers bill), or similar audits for third-party payers.

Audit guidelines

After the hearings, HFMA, and five other payer, provider, and professional associations worked together to establish a set of billing audit guidelines at Roth's request, the "National Health Care Billing Audit Guidelines." These guidelines were approved by all sponsoring organizations this past spring (HFM, July 1992, page 17) and have subsequently been distributed. Many revenue recovery and insurance audit firms have publicly endorsed the guidelines or have indicated that their firm abides by the guidelines.

To address Roth's concern that the contingency fee billing used by many of these firms was a source of the problems identified in the hearings, the guidelines state that: "Individual audit personnel should not be placed in a situation, through their remuneration, benefits, contingency fees, or other instructions, that would call their findings into question. In other words, compensation of audit personnel should be structured so that it does not create any incentives to produce questionable findings."

Several of the guidelines' sponsors also met with subcommittee staff and Roth's personal staff to stress that revenue recovery and insurance audit firms should not be barred from contingency fee operations between themselves and the provider or payer. The rationale for this position was that, without a contingency fee provision, many small providers or insurers could not afford to do the type of audit necessary to reconcile the patient accounting and claims processing systems that in turn would reduce the need to audit.

The process of patient accounting is not perfect. Few, if any, providers have a foolproof system that can capture with 100 percent accuracy all charges and credits generated by healthcare service. Patient financial service managers should work to improve this system and enhance the quality of the patient accounting and healthcare record systems so that all data are captured and all rendered services are documented.

One way to improve patient accounting systems is through an internal audit. Such audits compare the provider's final bill with healthcare records, logs, and other provider documentation. The auditor in these cases should be someone who, according to the "National Health Care Billing Audit Guidelines," has "appropriate knowledge, experience, and/or expertise in a number of areas of health care, including, but not limited, to the following areas:

* Format and content of the health record, as well as other forms of medical/clinical documentation,

* Generally accepted auditing principles and practices, as they may apply to billing audits,

* Coding,

* Billing claims form, including the UB-82, the HCFA 1500, and charging and billing procedures,

* All state and Federal regulations concerning the use, disclosure, and confidentiality of all patient records, and

* Specific critical care units, specialty areas, and/or ancillary units involved in a particular audit."

The expertise required for such auditors limits some providers from forming their own internal audit staffs. Thus, qualified revenue recovery firms fill a need that the provider cannot fill. Many such firms recognize that if there are problems in a provider's billing system, then services that have already been billed may not reflect all of the charges (and credits) that should have been present. A qualified revenue recovery firm's previous experience gives it the ability to identify lost charges and ensure that they are billed to the proper third party. The firm's incentive is a share of the amount recovered for the provider.

Many revenue recovery firms offer a free trial audit of the provider to determine if there is a problem at the provider site significant enough to justify the engagement of an auditor(s) for revenue recovery purposes. The trial audit also allows the provider to gauge the internal costs of such an audit (clerical time, staff support, housing, and so forth).

The professional financial manager has the obligation to ensure that his or her organization's billing, like all other financial reporting, is complete and accurate. Therefore, the results of such billing audits should not only create the means to obtain lost revenue, but should also produce mechanisms that help improve the patient accounting system. A good revenue recovery auditor's goal is, ultimately, to put his or herself out of a job.

Many revenue recovery firms do just that--they not only provide information and services to bill lost charges, but they also provide similar information and service to allow the provider to improve on systems and cut the number of lost and delayed charges. Firms that also perform challenge audit activities help ensure that all appropriate charges are recognized by the payer. Thus, through the improvement of the patient accounting process as well as thorough audits of records, there is less need on the part of the payer to audit the provider.

The ideal system

The ideal system consists of an internal audit staff that coordinates with the provider's staff to maintain the highest quality patient accounting system possible. If the provider does not have an internal audit staff, then a reputable revenue recovery firm can assist the provider.

Revenue recovery firms, and some firms that perform challenge audits for third-party payers, have had a rough few years. Some of the firms may have deserved it, but many are out to do a professional job for those who cannot do it themselves. Someday there may be a means of certifying such agencies, but for now those who want to engage such firms are going to have to review them by assessing their approach, their reputation, and their willingness to be part of the solution, not the problem.

As noted in the "National Health Care Billing Audit Guidelines," hiring such a firm does not absolve the provider or the payer of all responsibility. Any firm engaged to perform revenue recovery activities should be reviewed regularly by the provider or payer. The collective goal is to cut down the cost of health care, through improvement of patient accounting and claims processing systems. But reductions in costs will come about only when audits can be limited to those called for by a quality system, rather than those required by a poor, inefficient system.

Does HFMA recommend use of revenue recovery firms? Yes, when all revenue recovery activities, including feedback to improve the system, cannot be performed efficiently by the provider or payer themselves. Does HFMA endorse any one revenue recovery firm? No, but it does recommend that careful assessment of any such firm be made and that the firm should conform to the "National Health Care Billing Audit Guidelines."

Dan Rode, FHFMA, CMPA, is a director of policy and government relations for HFMA.