Audit Your Practice—Before the Feds Do It


Audit Your Practice—Before the Feds Do It


As you might have noticed, investigations for inaccurate and inappropriate claim filing have increased in recent years. Federal agencies have additional funding and staffing to conduct investigations, and a few cases have garnered national attention. In 2000, the Office of Inspector General (OIG) published Compliance Program Guidance for Individual and Small Group Physician Practices.

OIG strongly recommends periodic reviews of your billing practices to monitor your compliance with statutes and regulations associated with claims for reimbursement. What can you do?

Q. What types of audits should we consider?

A. Audits may be conducted prospectively or retrospectively. A prospective review is conducted before the claims are filed. This prevents an improper claim from being submitted since it can be corrected before it is filed.

Suzanne L. Corcoran, COE, is executive vice president and founder of Corcoran Consulting Group (CCG), San Bernardino, CA, which specializes in coding and reimbursement issues for ophthalmic practices.

A retrospective audit reviews claims after they have been billed. The results of a retrospective review may require a refund of overpayments. In either case, if a systematic problem is identified, it must be addressed.

Audits can be performed by an independent party (eg, attorney, consultant or accountant) or by your staff. Internal auditors may include physicians, billing staff, medical assistants, compliance officer, or a committee of individuals.

Internal audits should follow the same protocol as an external audit and achieve the following objectives:

• Verify the credentials of the provider

• Validate medical necessity of the service

• Certify correct coding of the service

• Assess documentation

• Confirm compliance with statutes and regulations.

In addition, an audit will assess the efficiency (or inefficiency) of your billing systems and protocols. It may also turn up missed opportunities.

Q. How many charts should we audit?

A. It varies. The OIG guidance recommends a random sample of five to 10 charts per physician, with a focus on federally funded programs. A comprehensive baseline audit is recommended as a starting point.

A comprehensive review assesses a small sample of everything, typically about 1% of all claims. Alternately, an audit with a narrow scope or limited objective might focus on a specific physician, service, office location, subspecialty, or payer.

Q. How do we select the sample of charts for review?

A. A sample can be selected by randomly choosing charts. For example, you might choose a day from the appointment schedule and pick every 10th record. The OIG utilizes a random number generator software program to select its sample. You can base your selection on utilization statistics, and you can focus on your most frequently performed services.

This process is especially pertinent if you know that you exceed Medicare’s averages for certain services, as is usually the case in a retina subspecialty practice.

Q. What do we need to perform an audit?

A. Current versions of CPT, ICD-9, ICD-10, and HCPCS are needed to assess accurate coding. The National Correct Coding Initiative edits for the dates of service assist in determining whether services are bundled. Payer policies, bulletins, and notices are essential to evaluate claims.

Q. What should we expect to find?

A. Findings can be separated into two categories: subjective and objective. Subjective findings include legibility, neatness and chart organization. Objective findings include overbilling, underbilling, modifier errors, diagnosis code errors, and date errors.

Underbilling involves selecting a level of service lower than the documentation supports, resulting in an underpayment. Services provided that are not billed are undercharges. Both errors represent lost revenue.

Overbilling occurs when the level of service selected for an office visit is not supported by the documentation, and a lower level is justified. A duplicate payment for the same item or service is considered overbilling. Fragmentation of a single service into several pieces to increase payment is also considered overbilling.

Lastly, misrepresentations of non-covered services as covered services to obtain payment from an insurer is overbilling, as well as fraud.

Q. What should we do with the audit results?

A. Subjective findings can be summarized in a table, often with the most egregious issues first. Objective findings can be organized two manners: frequency of an issue, and the financial impact of the issue. For example, in a sample of 100 records, 35 errors were noted (frequency) which changed the reimbursement in our sample by 4% (financial impact). It is best to address these findings with applicable persons, usually in private.

The problems identified in the audit should be addressed. These problems might include resubmitting claims, issuing refunds, making changes to internal policies, and training. Follow up with a repeat review. This second review should focus on the problems identified in the prior review and should search for new issues. RP