What a Free RCM Audit Checks and Common Revenue Leaks

How do RCM audits identify revenue leakage?

RCM audits dig into your billing practices to find hidden revenue losses. One major focus is denial rates. If your practice sees a denial rate of 5% to 10%, that could mean you're losing thousands monthly from improperly submitted claims. Take denial code CO-50, which indicates a claim is non-covered or not medically necessary. Identifying and understanding these denial reasons is critical to preventing future occurrences.

Audits also scrutinize accounts receivable (AR) aging reports, particularly claims over 90 days old. Claims lingering in this category are at a higher risk of being written off. For example, if your practice has $50,000 in AR that’s overdue, you need to investigate why these claims are still unpaid. An audit can reveal problems like poor documentation practices or insufficient follow-up on claims, which can prevent proper payment.

What metrics does an RCM audit evaluate?

A free RCM audit assesses key metrics that impact your revenue cycle directly. One crucial metric is the clean claim rate. A clean claim is one that’s error-free and gets paid on the first submission. If your clean claim rate sits at 80% after submitting 1,000 claims a month, you’re potentially losing out on 200 claims that could have been paid immediately. Improving this rate is essential for speeding up your revenue cycle and maintaining cash flow.

Auditors will also review how long it takes to receive payments from payers. Ideally, practices should aim for payment timelines of 30 days or less. If you’re seeing payments consistently take longer, it may signal issues like delayed claim submissions or inadequate payer follow-ups. Fixing these problems can enhance cash flow and decrease the time claims sit in accounts receivable.

How can a free RCM audit improve your processes?

A free RCM audit can pinpoint inefficiencies that drain your revenue. For instance, it may show that your team isn’t verifying eligibility effectively before services are provided. Failing to confirm patient eligibility can spike denial rates, especially if a patient's insurance has changed. A denial for a non-covered patient costs you the revenue and the time spent billing and chasing it.

An audit can also identify issues with prior authorizations. Claims missing necessary prior authorization often get denied. Knowing the payer’s requirements and ensuring compliance is essential. For example, if your practice frequently fails to secure prior authorization for specific procedures, leading to denials marked as CO-197, addressing this issue can significantly cut down future denials and streamline your revenue cycle.

Key takeaways

• Free RCM audits reveal revenue leakage through denial analysis and AR checks.
• Metrics such as clean claim rate and payment timelines are vital for maintaining cash flow.
• Pinpointing problems with eligibility verification and prior authorizations will help reduce future denials.

FAQ

What is an RCM audit?

An RCM audit reviews your revenue cycle processes to identify inefficiencies and denial patterns, providing insights to improve cash flow.

How often should I conduct an RCM audit?

Conduct an RCM audit at least once a year or whenever major changes occur in your practice, like new payer contracts or billing software updates.

What are common findings in an RCM audit?

Common findings include high denial rates, low clean claim rates, and substantial amounts in accounts receivable over 90 days, all of which indicate potential revenue leaks.