A key component of any compliance program is an effective audit process. Many outpatient practices consider selling or merging with larger entities. Your compliance program will be reviewed as part of any acquisition process. An audit is typically performed to uncover potential liability and risk. LW Consulting, Inc. (LWCI) strongly emphasizes the importance of conducting an external chart audit before diving into any acquisition preliminary work to enhance the value and smoothness of the negotiation process.
Key reasons why claims are audited before a sale or merger occurs:
- Identify Compliance Issues – Outpatient services are heavily regulated and billing errors or noncompliance with healthcare laws and guidelines can lead to substantial legal penalties. An audit can uncover missed opportunities for billing (Underpayments) and billing and coding that is not supported by documentation (Overpayments). Also, it can uncover compliance issues with federal payers such as Medicare and Medicaid which can affect future reimbursement.
- Analyze Accurate Valuation – Buyers will review claims audits to verify revenue consistency, correct billing, and accurate coding. This ensures the practice’s financial statements reflect a true and accurate picture and support a fair sale price.
- Streamlines the Sale Process – Most buyers will conduct a thorough due diligence review. Claim inaccuracies can slow down the sale and raise red flags. By sharing audited claims from an independent or external source, the potential seller can provide clean, well-organized records, as well as audit reports to make the process smoother and faster.
In recent months, LWCI has seen an uptick in requests for outpatient audits. We have identified minor to major compliance and billing issues and provided education for therapy owners and staff.
Key benefits of an external audit include:
- Reduce Liability – Undetected billing errors can lead to recoupment or fines if discovered post-sale, which can make business less attractive to buyers and can result in a reduced offer. Auditing claims helps identify and resolve these liabilities before they are brought to a buyer’s attention.
- Enhance Negotiating Position – A practice with a record of audited claims and a strong compliance program can command a higher valuation and have more leverage in negotiations. Buyers will view your practice as a lower-risk and a more reliable acquisition.
- Protect Reputation – Any undisclosed or accidental missteps in billing practices could damage the practice’s reputation if they are exposed. Conducting audits helps preserve trust and ensures a smoother transition.
In summary, conducting a claims audit is an investment in your practice. Having an external audit can demonstrate that your claims are accurate. This will help to make a smooth process if and when a sale/merger happens, and overall protect your profitability.
LWCI has a team of licensed therapists, nurses, and coders who are able to audit and analyze any scope of audit. Contact Ashley Popovich at [email protected] or 570-431-0100 or Kay Hashagen at [email protected] or (410) 777-5999.
