Practice Management Alert

Having a staffer perform the audit will cost an office about $2,000

Before your next round of twice-yearly chart audits, consider carefully whether you should use a member of the billing staff or an outside auditor. Knowing the pros and cons for both types of auditors could make a difference in your office's time and money investment.

The dilemma: If you appoint someone in-house who  does not have the proper training or time to devote to the task, the audit process will not achieve maximum effectiveness. Conversely, if you hire a third-party auditor when you have someone on staff who could perform the task, the office will spend money it doesn't have to.

Check All Corners of Office for Auditor

The key to a good auditor is -familiarity with documentation and coding. The auditor could be a staff member from the medical records department, it could be someone from the billing department,- says Ian S. Easton, PhD, head of Applied Technology at Coastal Georgia Community College in Brunswick, Ga.

Pros: In-house auditors are more intimately aware of the practice's billing and coding patterns than a third party is. Also, an in-house auditor -can usually audit the records with more frequency,- says Deborah Grider, CMA, CPC, CPC-H, CPC-P, CCS-P, CCP, EMS, president of Medical Professionals Inc. in Indianapolis and AAPC National Advisory Board president-elect.

Cons: An in-house can be less objective than an external auditor, Grider says. -Sometimes the auditor becomes complacent or allows the practitioner more credit for the E/M levels than what is documented.- 

Audit scenario: A five-physician practice conducts a chart audit with a staff member as lead auditor. To complete the review, compile the audit data and prepare an audit report, -it would probably take about seven business days. A rough cost estimate is about $1,900, and that is including pay for one ancillary staff member to help the auditor,- says Deborah J. Moriarty, RHIT, CPC, compliance manager at the Ethics and Compliance Office of the University of Pittsburgh Medical Center.

No matter who you choose to oversee your audits, make sure they have enough time to devote to the task. For example, Coder C is chosen as the in-house chart auditor. The practice should lessen Coder C's coding responsibilities during audit times, or time constraints may hurt the audit quality.

External Auditors May Have More Expertise

If you-re under-resourced, an external auditor may be the best alternative. 

Pros: -An external auditor may have expertise that your staff does not,- because their specialty is chart auditing, says Cindy Hughes, CPC, coding and compliance specialist for the American Academy of Family Physicians in Leawood, Kan. 

External auditors are also a great help when a practitioner has had questionable results in an in-house audit or payer-initiated audit, she says. Also, billing and coding staff's time is not taken up performing the audit.

Cons: In a word, cost. -Most primary-care physicians can expect to pay $1,000 to $1,500 [per physician] for a third-party chart review,- says Curtis Udell, CPAR, CPC, CMPA, senior advisor with Health Care Advisors Inc. in Annandale, Va. But this could cost from $500 to $2,500 per physician depending on practice specialty and the type of audit, Udell says. However, the up-front cost of hiring a third-party auditor could end up paying for itself if it significantly improves your billing accuracy.

Case study: A 10-physician orthopedic practice hired Udell for an audit. Among other billing missteps he discovered, Udell found that the practice was not consistently billing for supplies of fiberglass (A4590) or plaster casts (A4580). -The chart review of outpatient visits for initial and follow-up care during global periods found 22 percent net revenue loss per visit, due to the lack of coding guidelines and charge capture,- Udell says.

The result was underpayments of more than $250,000 annually for the practice.