Study finds payment audits expensive and administrative labor intensive

January 28, 2020

Payment integrity audits can cost as much as $1 million annually and lead to hundreds or thousands of record requests a month.

The high administrative cost of payment integrity audits is fraying the relationship between physicians and insurance companies, according to Payment Integrity Programs: A National Study on the Impact of DRG Audits on Provider Sentiment and Abrasion, a study published by Change Healthcare.

The study found that these audits have cost eight percent of physicians as much as $1 million in administrative costs annually, while another 10 percent spend between $500,000 and $1 million. Meanwhile, 37 percent of physicians have no idea how much the audit process costs their organizations, the study says.

An additional 27 percent of respondents reported negative experiences with audit programs, with 92 percent of respondents citing the high number of requests for medical records as fueling their dissatisfaction. Twenty-four percent of respondents said they must respond to more than 500 to over 2,000 requests a month, and 25 percent said the number of audits is unreasonable, the study says.

The study’s authors did find that 43 percent of respondents said they believe pre-submission notification, a process which alerts doctors of potential errors before they submit a claim, can help reduce their organization’s administrative burden and costs.

“The message for payers is clear: Those that adopt innovative, provider-friendly techniques-such as pre-submission notifications-and deliver a positive experience in these areas can improve their relationships with providers, while still meeting their audit requirements,” Dave Cardelle, vice president of Payment Integrity and Coding Advisor Solutions for Change Healthcare, says in a news release on the study. “You won’t find any disagreement among payers or providers that payment audits are tedious and expensive, but necessary. However, the challenge for payers is also the opportunity-to make something inherently objectionable to providers less intrusive and more cost-effective for both parties.”

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