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    6 External Audit Challenges and How to Overcome Them

    Feb 14, 2024 4 minute read

    With payor scrutiny at an all-time high and the need to provide excellent patient care, many organizations identify with the challenge of navigating both. While external audits are increasing, the tools for successfully managing them are available! Helping to bring back a healthy balance between patient care and revenue margins is at the forefront of technological innovations.

    Industry Statistics

    2023 Benchmark Data revealed the following headwinds that healthcare organizations are facing with external audits. Payors are heavily investing in AI and machine learning to drive efficiency and return on investment (ROI) in their payment integrity programs, as a result, external payor audits ramped up exponentially (4x) in 2023 VS 2022.  

    This same data shows that many organizations report struggling to keep up with the volume of audits given their staffing challenges. Not only did the number of audits get bigger, but the additional documentation requests (ADR’s) also ran into 50-100 pages with several hundred cases in them, exposing customers to millions of dollars in revenue risk and potential clawbacks.  

    Many of these audits have tight timelines for initial response and appeals. The audits originated from RAC, MAC, Target Probe and Educate (TPE), Quality Improvement Organizations (QIO), Comprehensive Error Rate Testing (CERT), and commercial payers who were contracted on Medicare Advantage (MA) plans with the federal government. 

    The challenges of increased external audits

    Admittedly, there are multiple layers of challenges associated with the increase in external payor audits. However, these six areas outline the need for an innovative solution.  

    1. Regulatory Overload: Healthcare professionals face a labyrinth of regulatory requirements. From HIPAA to Medicare regulations, the sheer volume can overwhelm even the most seasoned experts. External audits often magnify this burden, necessitating meticulous adherence to multifaceted guidelines under scrutiny. 
    2. Evolving Standards and Guidelines: The landscape of healthcare regulations is in a perpetual state of flux. New laws, amendments, and guidelines emerge, presenting a continuous challenge for healthcare teams to stay abreast of the latest developments. External auditors expect unwavering compliance with these evolving standards, adding a layer of complexity to the audit process. 
    3. Data Management and Documentation: In the age of digital transformation, healthcare organizations generate vast amounts of data daily. Managing and documenting this data in compliance with regulatory requirements is a Herculean task. External audits scrutinize data integrity, necessitating robust systems, and meticulous record-keeping practices to withstand the audit scrutiny. 
    4. Resource Constraints: Healthcare teams often operate under resource constraints, balancing competing priorities with limited manpower, and budgetary allocations. External audits amplify this challenge, requiring extensive time, effort, and expertise to prepare adequately. The strain on resources can hinder the efficiency and effectiveness of the audit response process. 
    5. Navigating Complex Audits: External audits encompass a spectrum of complexities, ranging from routine billing audits to comprehensive compliance investigations. Navigating these intricate audits demands a nuanced understanding of regulatory nuances, diligent data analysis, and strategic communication with auditors. Failure to navigate these complexities can result in adverse audit findings and potential penalties. 
    6. Risk Mitigation and Remediation: Identifying and mitigating compliance risks is a perpetual endeavor for healthcare organizations. External audits serve as litmus tests, uncovering vulnerabilities and deficiencies in compliance practices. Effectively addressing audit findings and implementing remediation measures is critical to safeguarding organizational integrity and mitigating future risks.

    5 Competencies of an External Audit Solution:

    External audit solutions should drive an organization’s maximization of reimbursements and mitigation of refunds, with a “technology plus people” workflow. These are five core competencies that an external audit solution should offer: 

    1. Task Tracking 
      • Automated deadline reminders and assigned ownership. 
      • Monitor tasks and progress (in flight, past due) via dashboards.  
      • Optimize response times – don’t give external auditors the advantage. 
    2. Documentation Storage and Electronic Submission of Medical Documentation (esMD) 
      • Easily store and access records, demand and determination letters, and appeal documentation.  
      • Electronic submission of medical documentation  
      • Centralized repository of “evidence.” 
    3. Optimizing Organizational Processes 
      • Offer configurable workflows. 
      • Enable communication across the organization within one platform. 
      • Integration of internal audits and external audit requests. 
    4. Reporting and Outcomes 
      • Report on financial risk and outcomes. 
      •  Refunded VS retained and percentage won and lost. 
      • Financial outcomes across multiple external audit requests and time periods. 
    5. AI-driven capabilities 
      • A system that scans ADRs immediately into the system replacing all manual manipulation and entry of data.

    The Next Step

    While external audits pose a formidable challenge for healthcare organizations, incorporating a multifaceted approach encompassing the right technology, resource optimization, and strategic planning can transform industry headwinds into tailwinds of opportunity for growth, excellence, and continuous improvement in patient care delivery.

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