The contracts that TPAs have with their clients almost never require the TPAs to audit hospital bills for the overcharges that auditors look for, so the TPAs have no reason to audit the bills. Auditing hospital bills for overcharges takes a considerable amount of time, and acquiring medical records can be expensive.
Furthermore, the personnel in the typical TPA office do not have the specialized knowledge necessary to audit hospital bills. Claims processing personnel typically are poorly trained, underpaid, overworked and unmotivated. Processing claims is far simpler and easier than auditing hospital bills.
TPAs generally work with the one-page UB-92 form (also known as the HCFA-1450 form), which summarizes hospital charges by revenue code. Revenue codes comprise broad categories such as room and board, pharmacy, laboratory, radiology and respiratory services.
TPAs are concerned with such matters as medical necessity, compliance with contract provisions and subrogation of coverage, all of which can be addressed through examination of the information found on the UB-92 form. TPAs rarely see itemized bills, and they almost never see medical records.
Hospital bill auditors work almost exclusively with itemized bills and medical records. A hospital bill of $19,946 that we audited is typical. The itemized bill was 22 pages long and listed 570 individual charges. There were 270 pages of medical records. After comparing the itemized bill with the medical records, we submitted audit findings disputing the accuracy or validity of 80 charges worth $2,544. The hospital decided to write off the $2,544 rather than try to substantiate the disputed charges.
A TPA may say that it audits hospital bills, but it almost certainly is referring to code audits or to utilization reviews, neither of which activities has anything to do with auditing bills for overcharges. A TPA that is really auditing hospital bills will be able to produce such evidence of the process as itemized bills, medical records, audit findings reports, negotiation notes and signed agreements.
Furthermore, a TPA that is auditing hospital bills will always submit periodic reports to its client setting forth the amounts of money that it has recovered, in order to demonstrate what a terrific job it is doing.
If a TPA says that it does not audit hospital bills because its contract does not call for it to do so, but that it could do so if its contract were properly amended, be very skeptical. If the TPA really were capable of auditing hospital bills, it surely would have mentioned that capability when its claims processing contract was originally being negotiated.
For claims processing, you should hire a competent TPA. For auditing hospital bills, you should hire an independent consultant -- such as Edward R. Waxman & Associates -- that specializes in auditing hospital bills for self-insured organizations. |
