Anesthesia Coding Alert

Auditing 101:

Strengthen Your Audit Program To Prevent Potential Billing Slip-Ups

Published on Mon Sep 11, 2023

Remember: Scope helps establish your ‘why’ and ‘how.’

If you are content with your practice’s reimbursements and haven’t seen a spike in denials lately, you may feel like your medical billing operations are coasting along just fine. But know that if you’re not periodically conducting audits of your systems, efforts, and results on the coding and billing front, you risk falling short of performance goals and forfeiting thousands of dollars that your anesthesia practice is rightfully entitled to.

To save you from such a fate, we’ve talked to the experts and put together this handy guide chock-full of advice to help you create a robust audit program.

Understand the Importance of Audits

Without a robust audit program that can identify weaknesses and shore up potential risks, your practice risks leaving revenue on the table and noncompliance.

“Not only will a chart audit uncover documentation and coding errors, but missed revenue is often found — services that should have been reported but were not captured,” says Deborah Grider, CPC, CPC-I, CPC-P, COC, CEMC, CPMA, CCS-P, CDIP, senior healthcare consultant at KarenZupko & Associates in Chicago.

The billing staff at one practice “failed to report any modifiers for office encounters, costing the practice $30,000 in unpaid services that year,” adds Curtis Udell, CPC, CPCO, CPAR, CMPA, director of compliance for the Center for Vein Restoration in Greenbelt, Maryland.

Udell also remembers one audit that uncovered improper modifier assignment, and the practice had no claims correction or appeals processes. “It cost the practice $450,000 in revenue in one year,” he says.

Start With Determining Audit Scope

One of the key aspects of conducting a successful audit is having the wherewithal to determine the scope of the audit, which is defined as the amount of time and documents involved. You can think of audit scope as the foundation of your audit because it sets the agenda and ultimately establishes how deeply the audit is performed.

“Working with management (or the entity requesting the audit) to clearly define the scope of the audit sets realistic expectations of what is being included in the audit and what is excluded,” says Sandy Giangreco Brown, BS, RHIT, CCS, CCS-P, COC, CPC, CPC-I, COBGC, CHC, PCS, senior director of audit & revenue at Integrity at Waud Capital Partners in Loveland, Colorado.

You should decide the scope of an audit prior to signing an engagement letter or agreement to protect both the entity and the person doing the audit, Brown adds. Failing to clearly define the audit can result in “scope creep,” which can then add on not only time but also increase the monetary cost of the audit.

Ascertain Which Audit Type Fits the Bill

Prospectively performing a review is “pre-bill.” These types of audits are done on claims after coding is completed but prior to being submitted to the insurance payer. Conducting audits prospectively results in claims being put on hold or suspended until after the review has been completed.

“We do very few prospective reviews just because we’re holding up the accounts receivable [AR] to do that,” says Kim Huey, MJ, CCS-P, PCS, CPC, CPCO, COC, CHC, a coding and reimbursement specialist in Alabaster, Alabama. But, if you do the review pre-bill, you don’t have to do corrected claims because you are going to correct them going out.

On the other hand, a retrospective audit is “post-bill” — after the claim has been submitted for payment and subsequently paid or denied. If issues are identified with retrospective claims, those claims should be rebilled as corrected claims.

Consider Proactive Compliance Audits

If you do a proactive compliance audit, you need to decide if it’s prospective or retrospective. In this case, you don’t know if there’s a particular problem, but you do know that you should be auditing.

First, decide how many encounters you are going to look at, Huey says. “I personally don’t like to look at less than 10 because I think less than 10 doesn’t give you a good picture.”

Second, you need to know the scope.

When you are making decisions regarding sample selection, you have different ways to think about it. Industry experts suggest a blend of the following:

Office of Inspector General (OIG) work plan issues
Comprehensive Error Rate Testing (CERT) issues
Recovery Audit Contractor (RAC) issues
Top 10 denials for the practice
Top 10 services billed for this practice
Specific issues brought to your attention

Pinpoint the Audit’s Timeframe

The timeframe you choose for the review will depend on the reason for the audit.

If this is a proactive or compliance audit, it may be more helpful to choose recent claims. When the purpose is education, it is better to work with recent visits the provider may remember.

Using a real-time timeframe allows you to give feedback to providers closer to the dates of service. When auditing claims submitted several years ago, you may identify patterns or problems that have already been addressed and corrected.

However, when the audit is for a specific problem, you want to look at the period of time for which that problem is suspected. For example, let’s say you added a physician to your practice two years ago, and you recently found out they have been billing every patient they saw as a new patient, even those who were previously seen by someone else in the practice. You may have a lot of claims that need to be corrected, so you’ll have to go back and review those two years.

Select Audit Sample in These Ways

Your audit sample will depend on the type of audit.

If you are not investigating a specific problem, our experts suggest looking at 10 encounters per provider. This is called a “judgmental sample,” where you are using a small sample to make a judgment. The OIG recommends five judgmental samples per provider per federal payer per year.

Conversely, if you are investigating a specific issue, you may consider a statistically valid random sample, which will give you a really good idea of what you are going to have to refund to the federal government. This type of sample is a probe sample followed by a larger sample with targeted confidence and precision. A probe usually involves 30, 40, or 50 items.

Note: For self-disclosure, the Centers for Medicare & Medicaid Services (CMS) requires that the sampling methodology be reviewed by a statistician or someone with equivalent experience, according to Huey.