Positioning Your Center For Success With Annual Revenue Cycle Audits

Survival of the Fittest for ASCs

The healthcare industry is experiencing change at a breakneck pace. As payor consolidation continues, ambulatory surgery center (ASC) reimbursement across the country is waning. With the recent transition to the 10th version of the International Classification of Diseases, coders and providers around the world are working with the first update to the coding system in over three decades.

In short, for surgery centers, it’s survival of the fittest.

Tasked with improving their surgery center’s financial health, many administrators are uncertain of how to proceed. The revenue cycle is a complex system, with many moving parts that can quickly put a center in financial peril.

Maximizing an ASC’s revenue requires a comprehensive approach that examines the accuracy of its coding, billing and reimbursement practices—leaving no stone unturned. Optimizing coding, billing and reimbursement practices starts with taking an in-depth look at each of your revenue cycle functions. The best practice approach is to conduct an internal or external audit of each revenue cycle function on a regular basis to ensure compliance and maximum revenue.


Are your coders capturing all procedures to make sure you are being reimbursed properly? Is your facility compliant? These are two of the first questions to consider when performing a revenue cycle audit.

Beginning to answer these questions involves checking to see if your facility’s CPT coding is done correctly. Coding accuracy can be calculated using a CPT chart audit and should be at or above 98 percent.

Facilities that achieve below industry standard should seek immediate help. This could mean getting additional training for existing coders, hiring a new coder or outsourcing your revenue cycle needs.

Optimizing coding practices also involves improving diagnosis coding accuracy. Coding to the highest level of specificity reduces denials and maximizes reimbursements. If you are unsure if a diagnosis code is at the highest level of specificity, it is recommended that you consult your ICD-10 resources.
Certain coding errors may include upcoding, meaning a practice could end up owing money back to the payor—or worse, face serious civil and/or criminal sanctions.

Ultimately, centers need to ensure that their coding practices are compliant. Over and under-coding are not the only common errors. Certain coding errors may not have an impact on reimbursement; however, the CPT code should always match the procedure performed for compliance purposes.

Claims management

A review of the claims management process should identify the average number of days to bill, as well as any delays in billing from the date charges are posted. Strengthening the claims process will result in increased cash flow and greater compliance with laws and regulations.
If the average days for claim submission exceeds one to three business days from the date of service, the following questions should be raised:

  • Was the source documentation received in a timely manner?
  • If documentation is timely, what is the source of the bottleneck?
  • Are EDI rejections worked in a timely manner?
  • Is your demographic error rate greater than five percent?

Payment Posting

Evaluating the payment posting process allows you to determine whether or not claims were paid according to contract and correctly allocated.

Payment posting professionals play the role of an accounting team and also are responsible for the integrity of the statement that goes to the patient. The importance of payment posting should not be downplayed; if done incorrectly, the rest of the revenue cycle will experience issues.

The payment posting department needs to have an understanding of the contracts or have a contract management system in place to highlight whether cases are being paid properly and to flag A/R to follow up on denials.

It is important to note that while a payment may match contracted rates, incorrect posting will compromise the integrity of financial reporting. All payments should be properly allocated to each individual procedure to ensure the data associated with that procedure and payor within the practice management system is accurate.

When auditing payment posting practices, it is important to ask the following questions:

  • Was the payment issued in accordance with the contract?
  • Was payment posted correctly?
  • Were the proper adjustments made?
  • Was the balance transferred correctly?
  • Was the credit balance processed in a timely fashion?


Accounts receivable follow-up

The effectiveness of the A/R team plays a large role in determining the financial success of a surgery center.

An analysis of a facility’s follow-up processes helps with ensuring billing issues are addressed in a timely manner. An in-depth review should determine whether there was follow-up and, if so, whether it was consistent and followed through to resolution.

A well trained A/R manager should also be able to identify trends or payor issues on a global level, rather than working claims individually. The efficiency of the A/R manager is important to ensure all denials are resolved in a timely manner to avoid delayed cash flow or the possibility of lost revenue.


The financial health of an in-network ASC is heavily dependent on its managed care contracts. Thus, it is critical for an ASC to really understand its contracts and how specific language relates to claim adjudication. Therefore, it is important to make sure you have complete copies on file and available to the entire billing staff. Contracts should be analyzed with an understanding of the volume, types and the costs of procedures performed in that particular ASC, which can provide a center with an edge when it comes time to potentially renegotiate its managed care contracts.

One common error that providers make while negotiating is that they often look only at individual CPT codes, rather than factoring in how reimbursement for the overall case will change when adjudicated by the payor. For example, if a single procedure reimburses 200 percent of the Medicare rate but multiple procedure discounting language only allows for 100 percent on the primary with no additional reimbursement for subsequent procedures, then the overall case reimbursement will quickly drop below the Medicare rate.

This is just one way that an ASC’s revenue cycle might not be living up to its potential. Conducting a wide-ranging audit on a consistent basis is an effective way to ensure your center’s revenue cycle is operating at full strength. Incorporating best practices and proactively correcting mistakes will lead to improved profitability and patient satisfaction.

In today’s increasingly competitive and rapidly changing healthcare landscape, every dollar counts.

Written by Jessica Edmiston, National Medical Billing Services, Senior Vice President, Coding, BS, CPC, CASCC, AHIMA-approved ICD-10-CM trainer.

Ref: Becker's Healthcare

This post was first published March 8, 2016 and was updated July 29, 2020.

Jessica Edmiston, Senior Vice President, Coding

Jessica Edmiston BS, CPC, CASCC AHIMA Senior Vice President, Coding Jessica leads National Medical's outstanding coding team that is comprised of the most experienced and skilled surgical coders in the country. She obtained her Bachelor of Science in Education from the University of Missouri in St. Louis and has been credentialed with the highly acclaimed Certified ASC Coder (CASCC™) Credential. Additionally, Jessica is an approved ICD-10-CM trainer through AHIMA. Nationally renowned for her coding expertise, Jessica is requested by name to speak at large conferences and authors numerous articles in medical trade journals and publications. Working closely with National Medical’s Performance Review department, Jessica identifies coding compliance issues and areas of missed revenue while proposing best practice coding solutions. Jessica also ensures the coding team receives continuing education to remain abreast of the medical coding updates while deepening their coding expertise. In her free time, Jessica enjoys traveling to beaches as well as camping and exploring several of the beautiful national parks of Utah.

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