Exterior audit quantity greater than doubled in 2024 over 2023-including increased charges of pre-payment audits-and whole at-risk {dollars} elevated fivefold to $11.2 million per MDaudit buyer, impacting healthcare supplier organizations’ money move and exposing them to increased potential denial charges.

Moreover, enhancements in revenues and working margins all through 2024 had been tempered by increased denial charges, together with a rise in coding-related denials of greater than 125% and in medical necessity-related denials of 75% for outpatient claims and 140% for inpatient claims. These traits spotlight the urgent have to overhaul income cycle administration (RCM) methods within the coming 12 months.

These had been among the many key findings of the 2024 MDaudit Annual Benchmark Report launched in the present day by MDaudit, an award-winning cloud-based steady danger monitoring platform for RCM that allows the nation’s premier healthcare organizations to attenuate billing dangers and maximize revenues. Final 12 months’s report forecast sturdy volumes for healthcare organizations, the impression of which was constrained by challenges associated to controlling prices, bettering margins, and seizing alternatives to generate new income streams-predictions that held true as working margins improved by greater than 4% in opposition to a surge in audits and denials.

“Looking forward to 2025, those self same headwinds, together with new dangers round well timed reimbursement and cybersecurity prices, will impede continued progress towards monetary stability,” mentioned Ritesh Ramesh, CEO, MDaudit. “This backdrop of challenges elevates RCM transformation to a strategic crucial for well being techniques in 2025, with an emphasis on steady monitoring of monetary danger to allow proactive mitigation of points earlier than they impression operations.”

Payer Behavioral Shifts Ship Audits Surging

A rise in exterior audit quantity, coupled with a rise within the common denied quantity per declare throughout skilled (~4%), outpatient (~3%) and inpatient (7%) settings, exerted extra monetary pressures on healthcare suppliers. This 12 months additionally noticed a pattern in additional pre-payment audits. Not like conventional post-payment audits that may end up in clawbacks, pre-payment audits improve denial dangers and trigger money move points.

Payers additionally stepped up medical documentation scrutiny, sending audits surging by 100% over 2023 ranges and contributing to a 3-year improve in medical denials of 51%. To counter this pattern, suppliers should concentrate on high-value providers and be sure that medical documentation enchancment (CDI), billing, coding, and RCM applications are tightly coupled to implement a closed suggestions loop from the backend to the mid-cycle to drive efficiencies.

Moreover, the Facilities for Medicare and Medicaid Companies (CMS) has put Medicare Benefit (MA) plans below the microscope because it continues ferreting out fraud and abuse-efforts that led to a 72% rise in hierarchical situation class (HCC) and Threat Adjustment audits and a 51% improve in whole denial quantities for MA plans.

This heightened scrutiny, coupled with extra strident authorization necessities and better denial charges, have many suppliers rethinking participation in MA plans. At minimal, billing compliance and coding groups needs to be centered on eliminating improper practices that may result in heavy fines and penalties. That is notably vital contemplating MDaudit findings that greater than 25% of suppliers on common failed audits throughout each skilled (33%) and hospital (23%) care settings.

AI, Analytics and Billing Compliance

The MDaudit report additionally discovered that utilizing expertise and analytics to proactively handle billing points drives substantial productiveness positive aspects and more healthy margins. In 2024:

• Auditor productiveness elevated 35% with no improve or a slight lower in groups.
• Retrospective audits elevated by 10% and potential audits by 275%.

“The story instructed by this 12 months’s information is that the winners within the healthcare margin race will likely be those who spend money on expertise, information, and analytics to allow real-time monitoring of billing dangers,” mentioned Ramesh. “Additional, deploying a hybrid auditing technique encompassing retrospective and potential audits will catch and proper extra errors and drive cleaner claims and better first cross fee charges, translating into increased money flows and stronger margins.”

He provides: “Leveraging real-time information, AI and analytics, and automation to detect, assess, and repair dangers as they come up and implementing RCM methods that prioritize income optimization and danger mitigation whereas coordinating sources throughout the mid-cycle and back-end features with steady danger monitoring capabilities will assist guarantee a extra resilient and adaptive organizational technique.”

In regards to the Report

The MDaudit Annual Benchmark Report features a complete examination of real-world information representing the primary three quarters of 2024 collected from a community of over 650,000 suppliers and greater than 2,200 amenities that present information to MDaudit for auditing, cost evaluation, and denial evaluation. It encompasses insights from greater than $8 billion in audited skilled and hospital claims and greater than $150 billion in denials by industrial and authorities payers. Over 5 billion claims and remits had been used for benchmarking.

Obtain the 2024 MDaudit Annual Benchmark Report.