Balancing Compliance Costs and Benefits
Gene Good, JD, CPA | CEO, DoctorsManagement, LLC
August 9, 2024
Some points to consider when setting your payor Compliance budget and how to show the return on your compliance investment. Whether you are a physician’s office or health system, there is ongoing pressure on margins and increasing recoupment activity by payors. The question becomes how much can we afford to spend on compliance and what you can’t afford to slip through the cracks and become a potential significant repayment or worse yet false claim.
Here are a few tips for setting and justifying to leadership your payor compliance budget:
- Identify your insurance recoupments as a percentage of your total payor revenue;
- Identify your current coding and documentation accuracy rating;
- Understand the volume of items inside your practice or health system that are a part of the current OIG Audit work plan;
- Identify the cost to the organization of under-coding or over-coding of claims (based on those accuracy scores above);
- Understand from your finance team their desired budget for compliance; and
- Based on the answers of #1 through #4 above, we see a range for the compliance payor budget between 0.25% and 1.0% of annual revenue being spent on payor compliance. Note that this includes items like internal or external claim auditing, payor insurance coverages, and education for team members. It does not include items like internal billing staff or internal coders if providers don’t code their claims.
At a minimum, we hope this helps start the discussion if your group does not have one as it would be difficult to convince payors that you have a culture of compliance if there are no financial resources budgeted for it.
About Mr. Good:
Gene Good is the CEO of DoctorsManagement where he oversees the strategic direction of DoctorsManagement and tries to foster a high-performance culture with a strong emphasis on sustainability. He started at the bottom of the company ladder with his first role being “the driver” for a very successful consultant. Having risen through the ranks of DM, Gene developed a deep understanding of the complexities in managing and growing sustainable healthcare companies. His hands-on training combined with a JD and CPA foundation led to a track record of success for the company and our clients.
NAMAS provides audits of all types along with compliance support. We provide Compliance Officer support, Complaint Gap Analysis, and Annual Compliance Training.
Contact NAMAS@NAMAS.co for more information.
