If your healthcare company has faced an audit by federal agencies or a private insurer, and that audit has uncovered severe or systemic billing errors, the payor will probably demand that you create and implement a Corrective Action Plan to prevent these errors in the future. Not adopting a Plan that satisfies the payor can lead to your healthcare company getting excluded from publicly-funded healthcare programs if the payor is the government, or losing its contract if the payor is a private insurance company. 

Here is a guide to creating a general template that can be used to underpin a satisfactory Corrective Action Plan.

The “IERAIF” Template

Good Corrective Action Plans generally follow the “IERAIF” template. This mnemonic stands for:

• Identify

• Evaluate

• Root cause analysis

• Action plan

• Implementation

• Follow-up

Each step is very basic, but also essential for a functioning Plan. Payors that demand that you implement a Corrective Action Plan to continue billing them for healthcare services will expect that each step is present in your Plan, that the details in each are thorough and all-encompassing, and that the logistics for implementing each portion of the Plan are feasible.

While not all acceptable Corrective Action Plans are built off the IERAIF template, most use it as a starting point.

Identifying the Problem

The first step in any effective Corrective Action Plan is to identify the problem. 

The good news is that the results of the audit or investigation into your company’s billing practices will usually identify and isolate the issues. In many cases, the audit results are thorough and detailed enough for you to use as the basis for your Corrective Action Plan.

However, that is not always the case. Many investigations produce conflicting or confusing results or do not provide enough detail about the alleged billing problems to be useful in identifying the scope of the issue. Sometimes you will have to open a dialogue with the auditor to learn more about the billing problems or even have to conduct an internal audit to learn enough about the issues to start crafting a Corrective Action Plan to fix them.

Evaluate the Scope of the Problem

Once the specific billing issue has been identified, the next step in every effective Corrective Action Plan should be to evaluate the scope and severity of the problem. Is this an isolated anomaly, or is it a systemic problem that was repeated hundreds or potentially even thousands of times?

This evaluation is essential for understanding how pressing your response needs to be. All billing errors are significant, as they can trigger invasive and inconvenient audits that lead to findings of noncompliance and demands of overcharge reimbursements. However, if the issue was systemic, the costs of those overcharges will be exponentially higher and the likelihood that your healthcare company is cut off from a crucial source of funding will increase, as well.

Analyzing the Root Cause 

Finding the billing problem should only be the first diagnostic step in a Corrective Action Plan. Billing errors are often caused by something deeper at your company, and looking through the error to find the root cause is essential for preventing it from happening in the future.

Some common root causes for billing discrepancies include:

• Insufficient or confusing training sessions and materials

• Outdated compliance protocols

• Poor enforcement of those compliance protocols

• Employee negligence

• A lack of ongoing or follow-up training 

If the root cause of a billing issue does not get addressed, the problems will continue. Because this is the primary concern of your payor who is demanding a Corrective Action Plan, you can rest assured that this section of the Plan will occupy much of their attention.

The Action Plan

The other part of your Corrective Action Plan that is sure to be the focus of your payor’s attention is the action plan, itself. This part of the Plan details how your healthcare company aims to rectify the root cause of the billing problems. It details the proposed corrective actions that will be taken and will serve as the protocol for future billing discrepancies of a similar nature.

Payors expect this part of your Plan to fully address the situation and to be severe enough to leave them assured that they will not have to revisit the billing issue in the future.

Some common action plans include:

• Providing additional training to billing personnel

• Terminating the medical coders who were responsible for the discrepancies

• Updating training materials

• Enforcing compliance mechanisms

• Conducting an internal audit

• Adopting verification procedures for invoices before they are sent

• Providing incentives for error-free billing or imposing penalties for noncompliance

As Dr. Nick Oberheiden, founding partner of the national corporate compliance law firm Oberheiden P.C. and corrective action plan attorney, often tells his corporate clients, “The key to the action plan is to satisfy the payor while still maintaining full control over how your healthcare company functions. You want your payor to rest assured that the billing problems that were uncovered in their audit will not happen again. However, you also want to avoid imposing such stringent compliance measures on your company that your bottom line suffers.”

Implementing the Fixes

Corrective Action Plans should also describe how the solutions will be implemented at your company. There are different ways to implement corrective actions.  Many healthcare company executives who try to create their Plans struggle with this stage because it can be difficult to describe the corrective action process. However, your payor often expects details about the logistics so they know whether your Plan is feasible in action.

The Follow-Up

Without an effective follow-up, Corrective Action Plans might only give the appearance of fixing the billing issues. Payors are wary of this possibility and often demand a subsequent audit to ensure that the corrections outlined in the Plan were, in fact, successful and that the billing problems that necessitated the Plan are a thing of the past.

Conclusion

Creating an effective and your own Corrective Action Plan can ensure that you can continue to do business with a private insurer or government-funded healthcare program. The IERAIF template can be a useful starting place to ensure that you cover all of the necessary bases in your Plan in a step-by-step process.