Across healthcare we focus on patient care and outcomes which is primary and foremost. In addition, we also focus on revenue and the revenue cycle. This will mean overpayments, which are compliance and financial risks and underpayments which are also both a compliance and financial risk.

The American Hospital Association (AHA) released in January their annual report and a fact sheet regarding their study and data analytics on “Underpayment” for Medicare and Medicaid for the year 2019.  The AHA definition of an underpayment is: Underpayment = Amount by Which Payment is Less than Costs

In addition, the following summation is provided from the AHA report:

  • Combined underpayments were $75.8 billion in 2019. This includes a shortfall of $56.8 billion for Medicare and $19.0 billion for Medicaid.
    • For Medicare, hospitals received payment of only 87 cents for every dollar spent by hospitals caring for Medicare patients in 2019.
    • For Medicaid, hospitals received payment of only 90 cents for every dollar spent by hospitals caring for Medicaid patients in 2019.
    • In 2019, 63 percent of hospitals received Medicare payments less than cost, while 58 percent of hospitals received Medicaid payments less than cost.

Go to the following link to read over this report: www.aha.org/system/files/media/file/2020/01/2020-Medicare-Medicaid-Underpayment-Fact-Sheet.pdf

These underpayment figures certainly make one think about their own practice or organization. A question to ask yourself and your organization is: What is my/our compliance and financial risk?  To answer this, you’ll need to conduct an assessment and an audit on the revenue cycle; front, middle and back ends.  Begin now to arrange and plan for an evaluation of your compliance and financial risks.

Written by Gloryanne Bryant, RHIA, CDIP, CCS, CCDS, AHIMA ApprovedICD-10-CM/PCS Trainer

Reimbursement Management Consultants (RMC) can provide assistance with medical coding support, auditing, education, compliance, and CDI. RMC is a Woman-owned, US-based, and operated company which specializes in a variety of medical coding compliance services. Contact us here