Hospital System $60 Billion in Improper Payments Crackdown; Fi-Med Spots “Behavioral” Coding Issues

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Federal health officials, who made more than $60 billion in improper payments to private Medicare Advantage health plans and Medicare in 2016, are evaluating how to crack down on billing errors by hospital systems. Overpayments to hospital systems result in large hospital revenue loss from eventual audits.

The $60 billion in improper payments to private Medicare Advantage health plans and Medicare in 2016 was nearly twice the amount spent on medical research by the National Institutes of Health. 3 Incorrect coding is to blame in 42% of improper claims submitted to Medicare in 2016 and 80% of medical bill overpayments to providers. The cost to the nation is a whopping $68 billion annually. It’s not uncommon for hospital systems to track and commit hundreds of hours of staff time to comply with directives from a compliance audit.1 The audits, generated by Medicare to recoup revenue, follow patterns of overpayments to hospital providers. Fi-Med, a leader in predictive analytics and compliance tools for hospitals and large health networks, says technology to locate “behavioral” coding issues can prevent incorrect billing, saving hospital networks millions of dollars.

Changing healthcare industry standards and hospital staff shortages are leading to incorrect coding which is required for accurate government reimbursement for services. Also cited as reasons behind billing errors are duplicate charges for hospital services and procedures, canceled tests, incorrect patient information, upcoding charges, unbundling of charges, and operating room/anesthesia time. 4

Medicare’s watchdog, the Medicare Fee for Service (FFS) Recovery Audit Program, works to identify and correct improper payments through the detection and collection of overpayments made on claims of health care services provided to Medicare beneficiaries, and the identification of underpayments. 2

In an effort to avoid the resulting audits, some hospital physicians deliberately process underpayments. This generates decreased revenues for the hospital in return for a greater chance at avoiding audits – either way the lost revenue impacts the quality of healthcare the hospital can deliver. In 2015 the total of Medicare and Medicaid underpayments was $57.8 billion. 5

According to Fi-Med, even superheroes don't have the time or resources to pull and review thousands of charts manually; those that are doing random spot checks are playing a game of RAC roulette. The Recovery Audit Contractor, or RAC, program was created through the Medicare Modernization Act of 2003 (MMA) to identify and recover improper Medicare payments paid to healthcare providers under fee-for-service (FFS) Medicare plans.

“Healthcare providers who successfully use analytics to improve internal processes and identify red flags dramatically reduce their compliance risk and improve their bottom line,” commented Adrian Velasquez, CEO and Founder of Fi-Med, creator of REVEAL/md.

Fi-Med’s REVEAL/md is a secure subscription service that analyzes a hospital or network's billing data and shows in minutes which providers are at current compliance risk. The technology tracks coding behavior, which typically boils down to three points – A) audit risk B) evaluation/management revenues and C) over/undercharges - resulting in hospital systems being able to focus on intervention and education before an audit.

According to PwC’s State of Compliance 2014 survey, close to one-third of healthcare provider respondents estimate their total annual budget at the corporate compliance function level adds up to $1 million or more. 7

“Neither overpayments nor underpayments are optimal,” continued Velasquez. “The key is targeted analytics that can turn non-protected health information data into an instant, comprehensive report that mitigates risk for compliance violations and lost revenue to hospital systems.”

About Fi-Med:
Since 1993, Fi-Med has been working alongside healthcare providers and networks to maximize revenue and reduce risk—from catching billing errors to providing high-level safeguards against compliance risk. Fi-Med is a healthcare-technology leader helping to disrupt the status-quo of the increasing burden of government compliance for hospitals and hospital systems nationwide, by providing financial management and reporting services. Their strong reputation for maximizing revenue and reducing risk for hundreds of hospitals, labs, private physicians, and healthcare networks is the result of the technology tools that they have created.

REVEAL/md is the keystone product, empowering healthcare providers’ compliance departments proactive management of physician part B audits of documentation and coding. For more information visit    

About Adrian Velasquez:
Armed with extraordinary success in the business of healthcare, Adrian E. Velasquez partnered with Christine Krause to form Fi-Med Management, Inc. in 1993. Their mission: to bring business acumen and compliance expertise to healthcare providers throughout the United States. They’ve become trusted experts in the fields of financial healthcare management, compliance and risk assessment, and chronic care management. Adrian’s extensive experience as a system administrator, executive director of a 54-provider medical group, and national healthcare consultant formed the foundation that he harnesses today for Fi-Med clients.

1.    Bates, Michael D. “Clerk’s Office to Audit Hospital Foundation.” Chronicle Online. 28 July 2017. Web.
2.    Staff. “Medicare Fee for Service Recovery Audit Program.” 2017. Web.
3.    Schulte, Fred. “Fraud, Billing Mistakes Cost Medicare and Taxpayers – Tens of Billions.” The CT Mirror. 23 July 2017. Web.
4.    Tate, Nick. “Four in Five Medical Bills Contain Errors: Here’s What You Can Do.” Newsmax Health. 07 August 2017. Web.
5.    Staff. “Underpayment by Medicare and Medicaid Fact Sheet, 2017 Update.” 2017. Web.
6.    Hufnagle, Bryan. “Reduce Claims Underpayments and Denials Through Integration.” Healthcare IT News. 21 January 2016. Web.
7.    Zaino, Jennifer. “Compliance Costs can be Managed.” Healthcare Finance News. 04 November 2014. Web.

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Karla Jo Helms
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