In a recent article in Health Value Digest, Tiffany Hetland explored two items a hospital should have on its checklist when acquiring a physician practice: a billing and coding audit and a review of documentation practices. The article is below.
Hospital acquisitions of physician practices have been on the rise for some time. At the same time, the compliance landscape for providers has become more complex, making it increasingly important for hospitals to exercise care in choosing the practices they acquire and to identify early on any potential issues that need to be addressed by the hospital pre- and post-acquisition. By undertaking a robust and proactive due diligence process, a hospital ensures it has insight into any potential compliance issues. While the structure of the transaction (e.g. a stock purchase vs. an asset acquisition) will dictate the degree to which each area should be examined, there are two items that should always be on a hospital’s due diligence list: a billing and coding audit and a review of documentation practices.
Billing and Coding Audit
The importance of vetting a practice’s billing and coding compliance cannot be overstated. Even if the hospital will not assume the practice’s existing liabilities, it stands to acquire the people whose habits gave rise to such liabilities. When a hospital employs the practice’s physicians and administrative team, it brings them under its provider number and assumes the risk that their continued billing and coding practices could result in damage to the hospital in the form of claim denials, sanctions for violating payor agreement terms, or False Claims Act liability. A proactive billing and coding audit is a simple way to gauge the practice’s general compliance, and can be performed by the hospital’s own personnel from sample data obtained from the practice under a non-disclosure agreement.
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