Medical billing errors are common, but exactly how common isn’t clear. Several studies have attempted to quantify the extent of the problem, but each has arrived at a different conclusion. Among the more startling of these is a 2015 study from Equifax, reported by ABC news:
“A group of auditors hired by insurance companies recently found errors in over 90 percent of the hospital bills they examined. An audit by Equifax found that hospital bills that totaled more than $10,000 contained an average error of $1,300.”
The Cost of Medical Billing Errors Is High
The cost of billing errors to healthcare organizations, even at low-end estimates, is prohibitive. For example, a write-off rate as low as 1% could cost the average 300-bed hospital as much as $3 million in lost annual revenues. At 10%, that cost jumps to $30 million. Those kinds of losses are not sustainable. To remain financially viable, healthcare providers must become proactive in managing billing claims and implementing safeguards against billing errors.
What Are the Most Common Medical Billing Errors?
There are multiple types billing errors, but, according to the 2013 American Medical Association National Health Insurer Report Card, 5 occur much more frequently than the others. Here they are, along with ways to avoid them:
- Missing information: often, demographic information on claims is missing or incomplete. Fields such as birthdate, or a complete address, can delay the processing of a claim. In addition, coding errors or usage of outdated codes can cause claims to be denied or delayed. All billing systems should have robust “scrubbing” software to catch common errors prior to the claim being submitted electronically.
- Submitting 2 claims for the same service: these mistakes are often referred to as “duplicates.” Duplicates occur when a claim is resubmitted for the same service by the same provider on the same date, and for the same beneficiary. Providers need to train staff to ensure that every submission is new and has not already been submitted.
- A service was previously adjudicated: this happens when providers bundle procedure codes and include benefits for a given service in payments for another service. To avoid this error, providers should implement a unified process that aligns the team on the adjudicated process.
- Services are not covered by the patient’s insurance: this is among the most common, and most expensive, of medical billing errors. According to the U.S. Government Office of Accountability, the rate of denials (including those based on medical necessity) nationally because services or procedures were not covered was 19%. What’s striking about this mistake, especially considering its pervasiveness and cost, is how relatively easy it is to avoid. Providers simply need to review the details of each patient’s coverage and contact the insurer if they have questions.
- Filing medical claims too late: providers are aware that payers typically impose time limits for the submission of claims. (This includes a 60-90-day time limit on the initial claim, and, if the claim is denied, an additional 45-day limit to appeal the claim.) If the initial claim is not filed in a timely manner, there is little a practice can do other than write off the amount. As with the other mistakes noted here, this one has a relatively simple fix: providers simply need to create a system in which staff receive automated alerts as medical claims approach their time limit.
Reducing Errors Requires a Team Approach
One thing is certain: playing the blame game is not going to reduce medical billing errors. Every member of the team has a role to play, and every team member is ultimately accountable when errors occur. For example, as a report issued by Health Data Consulting notes, physicians are not without their share of responsibility for billing errors, many of which occur based on inaccurate clinical documentation at the time of care.
It can be challenging for medical providers to bring that degree of introspection to their internal processes. Often, knowledgeable professionals from the outside can be more effective in identifying the causes of billing errors, and to fix them systemically. To learn more about the ways our medical coding, accounts receivable recovery and monitoring, analytics, and coding audit services can bring greater efficiency to your healthcare organization, contact us today.