In today’s complex healthcare revenue cycle, accurate coding and timely billing are paramount. Historically, many hospitals have relied on post-bill audits to identify and correct errors. However, while post-bill reviews serve a purpose, they come with significant drawbacks that can hurt a hospital’s financial health, operational efficiency, and compliance standing. Below, we delve into the limitations of post-bill audits and illustrate how pre-bill auditing provides a more proactive and cost-effective solution.
The Limitations of Post-Bill Audits
1. Delayed Error Detection
Because post-bill audits occur after claims have been submitted, hospitals often discover coding errors, missing charges, or compliance issues too late. This delay leads to:
- Disrupted Cash Flow: Late reimbursements increase days in accounts receivable, tying up revenue and straining cash reserves.
- Higher Denial Rates: Errors identified after submission can result in payer denials, leading to lost revenue and the added expense of appeals.
- Compliance Risks: Post-hoc identification of mistakes can expose hospitals to regulatory penalties or sanctions.
2. Limited Scope
With only 10–20% of encounters typically audited in a post-bill scenario due to time and resource constraints, a vast majority of claims remain unreviewed. This narrow focus allows potential errors to go undetected, leading to:
- Revenue Leakage: Undetected undercoding and missed charges lower overall reimbursements.
- Overcoding Risks: Overcoding can trigger payer scrutiny and possible fines, risking both financial and reputational damage.
3. Inefficient Use of Resources
Manual post-bill reviews are time-intensive and labor-heavy, particularly in an era of skilled coder shortages. Staff members must:
- Revisit Submitted Claims: Each correction requires manual edits, resubmissions, and follow-up.
- Rework and Resubmit: Additional costs for staff, technology, and vendor services add up quickly.
- Stay in a Perpetual Cycle: Continuously correcting past errors leaves less time to address upstream coding quality, prolonging inefficient workflows.
4. The Cost of Inaction
Relying solely on post-bill audits can lead to:
- 5–8% Revenue Loss: Studies by HFMA and other industry associations attribute this loss to coding errors, missed charges, and denied claims.
- Increased Administrative Costs: From audits to resubmissions, hospitals spend millions on unproductive processes.
- Extended A/R Days: Late detection of errors prolongs the revenue cycle, harming cash flow and operational budgets.
- Missed Opportunities for Education: Pre-bill feedback loops can train coders in real time, whereas post-bill insights arrive too late to prevent ongoing mistakes.
Why the Post-Bill Approach Falls Short
- External Vendor Review: Hiring an external auditing company for post-bill reviews incurs high costs and often extensive turnaround times.
- Manual Corrections: Errors found must be corrected manually, consuming valuable coder and billing staff time.
- Claim Resubmission: Corrected claims must be refiled, incurring additional administrative fees and potential payer resistance.
- Delayed Payment: Eventually, you may get paid, but the process extends Accounts Receivable (AR) days and puts cash flow at risk.
A Proactive Solution: Pre-Bill Auditing
To mitigate these pitfalls, forward-thinking healthcare organizations are pivoting to pre-bill auditing. By identifying and correcting errors before claims go out the door, hospitals can significantly enhance revenue integrity and reduce compliance risks. Industry leading eValuator ™ uses AI-driven rules engine and automated workflows to:
- Review 100% of Coded Cases: Eliminating the guesswork and narrow scope of random post-bill sampling.
- Proactively Correct Errors: Identifying inaccuracies or missing charges early reduces denials and speeds up reimbursement.
- Ensure Compliance: Staying ahead of coding changes and regulatory guidelines mitigates compliance risks.
- Reduce Rework: Clean claims on the first pass reduce costly re-submissions and improve team efficiency.
Hospitals using eValuator™ have reported an average of $2 million in additional revenue within six months and $900,000 in risk mitigation through cleaner claims and faster billing cycles.
Conclusion
Post-bill audits still serve a valuable role in providing retrospective insights and payer dispute resolution. However, they should not be your frontline defense against revenue leakage and compliance issues. A balanced approach—where pre-bill auditing prevents errors upfront and post-bill reviews handle inevitable exceptions—results in:
- Maximized Revenue Capture
- Reduced Denials and A/R Days
- Enhanced Compliance and Lower Audit-Related Costs
- Ongoing Coder Education and Performance Improvement
By integrating robust pre-bill auditing solutions into your revenue cycle management, you can proactively safeguard revenue, minimize compliance risks, and focus on providing high-quality patient care.
Ready to Launch Your Pre-Bill Audit Program?
Join us on February 12th at 12 PM EST for our webinar—Pre-Bill Blueprint: Your Guide to Launching a Pre-Bill Audit Program for Your Hospital—and learn how to build a proactive, streamlined auditing process that fortifies your financial health and optimizes patient care. Register by clicking on the banner below!
