By Lief Goodson, Senior Vice President of Analytics, Xerox Workers’ Compensation Solutions
The value of nurse audit is a frequently contested topic in the ongoing conversation comparing commodity bill review to value-based bill review processes. There are those of us who see great value in having nurses perform retrospective review to capture additional savings, while others dismiss the process as not worth the expense or extra time needed to examine these bills. And there are still others who are simply unaware of the opportunity to save more on their medical bill payments.
Recently, we completed a retrospective analysis of all medical bills processed between 1/1/2016 and 5/31/2016 for a subset of clients who utilize our nurse audit program. The findings, while not exactly earth shattering, were enlightening and worth sharing. But first, here’s some quick perspective.
While not all bill review service providers use a nurse to audit their clients’ medical bills, most have some type of review process in place to accomplish one or more the following objectives:
- substantiate the relatedness of billed charges to the compensable body part
- validate billed services were actually performed
- verify billed services were necessary in the treatment of the work-related injury
- confirm services were billed in accordance with best medical practices and prevailing laws
Bill review providers typically use their own distinct – and often proprietary – criteria to select and route medical bills through the retrospective review process. The aggregated data in our recent analysis comes from an array of bill review programs that use some type of retrospective nurse audit process. What follows are some of the more interesting and useful findings.
On programs with a nurse audit process, we discovered that almost 6.5 percent of all bills were reduced by the nurse. These additional markdowns represented at least 12 percent of the total bill charges on these programs.
There was tremendous variation from state to state in the percentage of bills impacted and/or reduced by the nurse audit process. In high-volume states with fee schedules, such as California, Florida, Pennsylvania and Texas, the number of bills benefiting from nurse audit ranged from 1 percent to 7 percent. In states without a workers’ compensation medical fee schedule – Indiana, Missouri and New Jersey for example – at least 10 percent of all bills had some type of reduction from nurse audit.
Cost savings achieved through the audit process also varied considerably by state. For instance, reductions on Colorado bills averaged 4 percent, compared to 19 percent on Missouri bills. Overall, the average reduction rate for all states combined was a healthy 10 percent.
More than 15 percent of inpatient hospital bills, outpatient (non-hospital) bills and physician bills were reduced by nurse auditors. Yet surprisingly, the total dollar value of a bill did not have much impact on whether or not the nurse audit process would yield reductions. Bills with total charges between $250 and $500 were just as likely to have reductions as were bills with charges between $50,000 and $100,000.
It turns out that service type is a better indicator of potential reductions. Office visits, hospital supplies and medical testing topped the list of billed services reduced by nurse audit. The most common reductions included codes for medium to high severity office visits and facility codes for various medical/surgical supplies. Additionally, some surgical codes and numerous non-specific service codes were regularly reduced by nurse audit. Nurses also regularly disallowed codes for procedures that were outside of normally accepted medical practices, such as extracorporeal shockwave therapy or platelet-rich plasma injections.
On the whole, the nurse audit process reduced the actual amount paid by over 5 percent on the programs evaluated—proof that there’s still a lot of savings to be obtained through retrospective bill audits. The key to capturing additional savings is not just looking at hospital bills or bills with a high-dollar threshold, but in having the right resources, review criteria and workflows in place to identify all bills that would benefit from the extra scrutiny of a nurse auditor. After all, these savings are akin to free money.
About Lief G. Goodson
Lief G. Goodson is the senior vice president of analytics for workers’ compensation solutions at Xerox. His key areas of focus are analytics and technology, particularly the development of data systems, reporting capabilities and predictive modeling applications. He is currently responsible for strategic planning, innovation and quality assurance in all service areas.
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