Audit Your Medical Practice's Third-Party Vendors

July 16, 2016

When using third-party vendors for certain practice functions, it's always wise to take a close look at their performance.

I've recently come across a unique problem that I feel compelled to share with you. I have been very focused and conscientious about submitting Medicare claims, using correct coding, and receiving timely payments. My issue, however, is not with Medicare, but a third-party vendor acting as a clearinghouse for sending out our Medicare claims. Let me explain.

Back in early May, my staff were performing regular audits on payer accounts based upon their payment cycles. We were following up with any unpaid Medicare claims older than 20 days, since they are contractually bound to pay within 14 days. I like to give a few extra days in case there was a holiday mixed in the billing cycle. My team found about $5,000 in claims that looked like they had been billed out through the billing software, but never landed on Medicare's system. I alerted the third-party vendor to this mishap, and received unsatisfactory excuses/reasons why this sort of thing could happen. Unhappy with their response, I reminded the vendor that these patient claims processed out of order, which resulted in red flags going to Medicare. With the new Physician Quality Reporting System (PQRS) and G-Code usage we are required to report, I was upset at the thought of a potential Medicare audit, just because of the vendor's mistake.

The claims were rebilled, the problem (so I was told) was found and fixed, and assurances were made that it wouldn't happen again. Well, 13 days later, my staff performed another audit on Medicare claims older than 20 days, as per our usual process, and low and behold, another huge batch of outstanding claims appeared just like the last time. I jumped on the phone and let the vice president know what was going on. He assured me they would look into it. The same day, it was brought to my attention that we were not receiving any patient payment phone calls, and since we had asked this vendor to mail our billing statements two weeks ago, I inquired about this, as well. They forgot to mail the statements. I talked about this debacle in my last article.

Just today I performed another audit, because at this point bigger discussions on the probability of this recurring are very high. I found yet more claims that were not sent out to Medicare. At this point, it is very clear to me this vendor is having serious software or personnel problems, and won't discuss those specific reasons with us.

While we will manage this vendor very closely, if needed, it could be that they are just no longer a good fit for the practice. My point is, sometimes you outgrow your vendors. It's not personal, it just happens. Performing consistent audits on your vendors is not only a good idea, but a fantastic tool to measure the health of your own practice. If your practice is a race car ready to speed away on the highway of efficient healthcare, but you have an old 1978 Gremlin for a vendor, they could be holding you back significantly. The time has come for your practice to reevaluate its third-party relationships.