Every practice should have a self-auditing program. Here’s what you need to know to create an effective one.

Q. Why should we consider auditing our medical records?

A. At Corcoran Consulting Group, we have noticed a distinct increase in investigations for inaccurate and inappropriate claims over the past 5 years. Federal agencies have received additional funding and staffing to conduct investigations. In 2000, the Office of Inspector General (OIG) published its Compliance Program Guidance for Individual and Small Group Physician Practices. The OIG strongly recommends periodic reviews of your billing practices to monitor your compliance with statutes and regulations associated with claims for reimbursement.

Q. What is the objective of a chart audit?

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

• Verify the provider’s credentials.
• Validate medical necessity of the service.
• Certify correct coding of the service.
• Assess documentation.
• Confirm compliance with statutes and regulations.

In addition, you can assess the efficiency or inefficiency of your billing systems and protocols.

Q. Who should be our auditor?

A. 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.

Q. How large does the audit need to be?

A. It varies. The OIG guidance recommends a random sample of 5 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 patient encounters. 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 randomly select a sample.

You may also base your selection on utilization data and focus on most frequently performed services. This is especially pertinent if you know that you exceed Medicare’s averages for certain services. Intravitreal injections are a prime example, as is the use of modifier 25.

Q. What is the difference between a retrospective audit and a prospective audit?

A. Both types of audits identify improper billings and reimbursement and assist with the initiation of remedies to prevent future errors. A retrospective audit reviews claims after they have been submitted. The results of a retrospective review may require a refund of overpayments. A prospective review is conducted before the claims are submitted. This prevents an improper claim from being billed, since it can be corrected before it is filed. Of course, if you identify a larger problem, you may still have to refund claims already paid.

Q. What resources are required to perform an audit?

A. Current versions of CPT, ICD-10, and HCPCS are needed to assess accurate coding. The National Correct Coding Initiative (NCCI) 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 types of findings should we expect?

A. Findings can be separated into 2 categories: subjective and objective. Subjective findings include legibility, neatness, and chart organization. Objective findings include underbilling, overbilling, modifier errors, diagnosis code errors, and date errors.

An example of underbilling can be selecting a level of service lower than the documentation supports. Also, services that were provided but 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 overbilling. Lastly, misrepresentations of noncovered services as covered services to obtain payment from an insurer is overbilling as well as fraud.

Q. How are the results best recorded and reported?

A. Subjective findings are summarized in a table with the most egregious issues first. Objective findings are organized by frequency and financial impact of the issue. For example, in a sample of 100 records reviewed by Corcoran, 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.

Q. What do we do after the audit is completed?

A. Problems identified in the review need to be addressed. This may include resubmitting claims, making refunds, changing internal policies, and training. Then, a repeat review follows. The repeat review focuses on problems identified in the prior review and searches for new issues. RP