Armanino Blog

Identifying Areas Susceptible to Error or Negligence

by Bill Brause
September 27, 2012

No physician practice purposely tries to lose money. Yet many practices are allowing revenue to fly out the window at alarming rates simply because their billing and coding processes aren’t up to snuff. Put a stop to it now with a billing and coding audit.

Why Audits are Important
Internal billing and coding audits begin with an analysis of the services offered by your physicians and how often they’ve been performed in the last six months. The auditor wants to know whether your doctors are submitting accurate claims for reimbursement or over- or undercoding certain services.

In other words, are your docs using the appropriate CPT codes for all procedures? Are they following the guidelines and conventions required by payor payment policies? These questions and others like them are important to ask.

It’s a Team Effort
To get the ball going, you’ll need to bring together a team of individuals to oversee the process. The primary responsibility should go to a single staff member who has a good knowledge of CPT codes, the RBRVS, and payor reimbursement policies and practices. The rest of the team will consist of your health care consultant and other relevant staff and physicians.

Next, your audit team must decide whether the audit should be prospective or retrospective, and how often the audits will be performed. A prospective audit looks at a sample of claims before they’re submitted, while a retrospective audit reviews claims after they’ve been processed. In the latter case, any billing errors or overpayments discovered must be resolved through the payor’s repayment procedure.

The team must determine how large a sample of medical records will be taken and how they’ll be selected. (The OIG recommends at least five records for each federal payor, or five to 10 medical records randomly chosen for each physician.) Make sure a true, representative sample is taken and that enough accounts are reviewed — pulling a small sample of records can yield misleading results. Then the team must select audit tools and criteria for determining the appropriateness of claims made for each medical record.

Dig for Answers
The purpose of a billing and coding audit, as mentioned before, is to identify areas of heightened risk for error or negligence that warrant closer monitoring. To that end, the audit team must develop or obtain a checklist for analyzing the appropriateness of all aspects of each claim.

For example, does the claim show the correct physician and practice ID numbers? Should a different CPT code have been used to more accurately reflect the service delivered? Could a modifier have been added to the code to more accurately reflect the service delivered? And does the medical record substantiate the codes used?

It’s also important to be able to confirm that the services provided were “medically reasonable and necessary.” The determination should be made using the definition of that term from each payor’s medical service agreement with the practice.

Next, the audit team must investigate whether language in patients’ medical records matches and supports the services that were billed. To do this accurately, you must know which version of the CMS E/M coding guidelines the practice uses. The medical record must satisfy every required element of each service.

Make it Right
Claims that weren’t properly processed by the payor should be identified and the practice staff instructed how to correct the failure to pay as well as what they should do to prevent future problems. Be sure to document all of the work that went into preparing for and conducting the audit, and the remedial measures taken as a result.
If an audit uncovers a long-running pattern of errors, you may need to take more substantial remediation steps with payors. In such cases, consult your health care attorney.

It’s Your Money, Keep It!
If your practice is seeing profits trickle away, take action now. Your CPA is trained to review your billing and coding processes and find where revenue is draining away.

September 27, 2012

Stay In Touch

Sign up to stay up-to-date with the latest accounting regulations, best practices, industry news and technology insights to run your business.

Related News & Insights
Armaninos 10th Anniversary Reception in Chicago
Live Event
Rooftop reception to celebrate Armanino’s 10th anniversary with the firm’s supporters and friends.

September 29, 2022 | 02:30 PM - 05:30 PM PT
Nonprofit Symposium 2021
Live and Virtual Event
Nonprofits - Get Back to [Focusing on] the Future

September 29, 2022 | 08:00 AM - 12:00 PM PT
Workday Adaptive Planning 2022 R2 Release
Learn about Workday’s newest features and enhancements.

August 30, 2022 | 10:00 AM - 11:00 AM PT