Hospital bill audit programs can make a difference

• Published in: Risk management 1989-01, Vol.36 (1), p.34-38
• Main Authors: Dennen, T, Zell, M, Arnis, M
• Format: Magazinearticle
• Language: English
• Subjects: Accounting; Accounting and auditing; Audits; Bills; Case studies; Control; Cost control; Cost Control - methods; Cost reduction; Finance; Health administration; Health Benefit Plans, Employee - economics; Health insurance; Hospital costs; Hospitals; Industry; Insurance Claim Review; Insurance industry; Insurance, Health - economics; Insurers; Medical care, Cost of; Patient Credit and Collection; Washington; Workers compensation; Workers' Compensation - economics
• ISSN: 0035-5593

Many health and workers compensation insurers are now using hospital bill audit services. The Washington State Fund, which provides workers compensation insurance to 120,000 employers and 1.3 million workers in the state, implemented a statewide hospital bill audit program after conducting a 6-month pilot program. August International was chosen to operate the expanded program. During its first 10 months, this audit program recovered $2,167,547 on billed charges of $24,146,563, a return of 9%. Billing errors and lack of documentation accounted for less than 2% of recovery. By type of denial, the major reasons for recovery were: 1. bed rest stays for back injuries, 2. treatment unrelated to industrial injury, and 3. services not medically necessary. Backed by rules on allowed services and appropriate appeal procedures, a hospital bill audit program can be an effective component of a strategy to control health care costs. Certain areas are more productive for audit activities; the audit should be targeted to where the payoff is the highest.