3-Campus Hospital System
Contract Compliance Error: Observation Services
Background – Observation services are contracted at 49% of total billed charges, not to exceed a $1,425 cap. This hospital generated 1,257 observation bills during a 12 month period.
Errors Identified – Adjudication system edits fire at line level, not claim level.
- 79% of observation claims billed on 2+ lines
- 15% billed total observations exceeding cap threshold
- 13% billed 2+ lines and total charges exceeding threshold
Root Cause – Adjudication system limitations miss the ‘Total Claim’ reimbursement cap.
Savings Recovered – $140,000