Navigating Compliance Challenges in the Mid-Cycle: Insight for Hospital Systems

Hospitals and health systems continue to struggle with inflation, skyrocketing costs, labor shortages, and paper-thin margins. Daily headlines are filled with news of hospitals conducting layoffs, shuttering service lines, or even closing their doors for good. However, opportunities exist, especially in the mid-cycle, that may help them avoid such drastic measures.

The middle part of the revenue cycle—that period between patient registration and claims submission—is vital to a hospital’s financial viability. However, navigating compliance challenges within the mid-cycle has become increasingly difficult. Listed below are some of the most significant challenges, as well as proven strategies to help ease the burden of compliance and avoid unnecessary revenue loss.

Staying Up to Date on Changing Regulatory Requirements

Healthcare is a highly regulated industry, and for good reason. Patient safety, financial integrity, cost containment, and quality outcomes are all at stake without overarching guidelines across the care continuum. The CMS continually adjusts its regulatory policies, as do private and commercial payers, making it difficult—especially for revenue cycle teams—to keep up.

Noncompliance with timely filing deadlines can result in denials that are extremely difficult to overturn, leading to unnecessary write-offs and lost revenue potential.

One way to mitigate this challenge is to assign specific revenue cycle team members to each payer or a set of payers. This can be particularly helpful for health systems that offer numerous specialty services as these services are typically quite complex to manage within mid-cycle processes. This approach helps health systems develop payer experts while also mitigating noncompliance.

Ensuring Accurate and Compliant Billing Practices

Mistakes made during billing practices can cost more than the bill itself, even if the errors were unintentional. Because incorrect coding falls under the “fraud and abuse” category of the American Medical Association’s Principles of CPT® Coding, penalties can run into hundreds of thousands of dollars and include incarceration.1

A good way to avoid billing compliance issues is through automation. Automation technology can detect and flag potential coding errors so the claim can be corrected before submission. Another step hospitals can take is to require stringent training, as well as proper certification, among their billing teams. Establishing billing KPIs and implementing incentives can also help maintain a high level of billing quality, productivity, and compliance.

Mitigating Risks Associated With Audits and Investigations

To mitigate fraudulent behavior and excessive costs, payers have implemented more sophisticated technology to identify and flag claims with potential issues. The result is an increase in payer audits, takebacks, and penalties.

One of the best ways to reduce the risk associated with payer audits is to implement an internal audit program, including regular evaluation and management (E&M) utilization reviews. E&M services is an area that government and commercial payers pay particular attention to, and rightfully so. Providers often don’t realize they’ve begun pushing more patients toward level five. E&M reviews as part of a comprehensive quality audit program give hospitals a broader view of trends over a larger period of time, enabling issues like these to be corrected before a payer audit occurs.

Maintaining Data Privacy and Security

Maintaining HIPAA compliance during the billing process is critical to avoid intentional or unintentional data breaches and hacking events. According to the HIPAA Journal, healthcare organizations (Covered Entities) and their revenue cycle vendors or anyone with whom they have a Business Associate Agreement (BAA) must be familiar with and abide by the HIPAA Privacy Rule, Security Rule, and Breach Notification Rule.2

The best way to ensure data privacy and security is by fostering a culture of compliance within the mid-cycle.

The best way to ensure data privacy and security is by fostering a culture of compliance within the mid-cycle. Billing staff must undergo stringent privacy and security training on a regular basis, including administrative, physical, and technical security elements. This should include self-testing and a 100% pass requirement.

Billing managers must also conduct regular internal risk assessments to identify potential threats so they can be proactively addressed. Besides staff-related activities, assessments should include contractors, vendors, and other third parties involved in the organization’s billing processes.

Another critical aspect of maintaining data privacy and security in billing processes is to ensure compliance with the organization’s contingency plans. This should include defining appropriate incident response protocols and assigning specific response teams or individuals.

Establishing Robust Compliance Programs

Hospitals and health systems are under extreme revenue pressure and cannot afford to skimp in the area of regulatory compliance. The best way to avoid compliance issues and their impact on revenue is to be proactive. This means creating an effective compliance program leveraging the steps outlined in this blog.


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