Coding Analysis

Conduct an internal billing audit
Certain potential practice risks you uncover may warrant further analysis through an internal billing audit. You might also need to take a closer look at your practice-wide procedure and service reporting as compared to your peers if you receive a retrospective recoupment request from a health insurer. The AMA has developed two educational resources to assist you in these efforts.

• The AMA, with cooperation from the American Academy of Neurology, developed the educational resource “How to perform a physician practice internal billing audit” to help physician practices understand both the need for and how to perform an internal billing audit to yield improved claims management processes, cash flow, and compliance with applicable laws and regulations.
• The AMA, with cooperation from the American Academy of Neurology, created the educational resource “How to prepare for a health insurer retrospective audit” to educate physicians and their practice staff about the recoupment efforts of health insurers through the retrospective audit process. You can use this resource to guide you through the retrospective audit process from the initial notification from the health insurer to contesting the audit’s findings.

If you find any inconsistencies after reviewing your data, carefully consider the possible reasons for these inconsistencies and investigate, document and take corrective measures as appropriate. If your practice does not have a compliance program in place, you are strongly encouraged to establish one.

Adopt a compliance audit and monitoring program for the practice. Obtain a copy of “Compliance Program Guidance for Individual and Small Group Physician Practices,” published in 2000 by the Office of the Inspector General (OIG) of the Department of Health and Human Services (www.hhs.gov/oig). This audit recommendation can be adapted to a physician practice’s internal claims review procedures.

The American Medical Association (AMA) encourages physician practices to implement a compliance plan in the online resource titled, “Physician Compliance Planning.” “The existence of an effective compliance plan provides evidence that any mistakes were inadvertent, and this evidence could be considered by the federal government in determining whether reasonable efforts have been taken to avoid and detect fraud and other misbehavior. A compliance plan also will detect undercoding and improve communications within a practice setting.”

If your practice is not reporting procedures or services correctly, the potential practice and/or physician risk can be two-fold: (1) it can lead to reduced earned revenue and (2) it can increase your practice’s risk of a retrospective audit.

Health insurers may choose to audit physicians’ claims for the following reasons, among others:

High service volume

Health insurers may suspect that high service volumes indicate over-utilization of reimbursable health care services or procedures. Physicians may substantiate high volume or frequency of services by citing the size, specialty, local disease prevalence, patient case-mix and other factors that affect a physician practice’s billing patterns.

Coding issues

Health insurers may view repeated use of the same evaluation and management (E/M) Current Procedural Terminology (CPT^®)[1] code as inaccurate reporting of E/M services. Because patient encounters vary in complexity, health insurers expect that coding for such encounters will also vary. Physicians with high usage patterns of a single level of complexity may be more likely to be audited. It is critical that physicians bill each service case by case rather than employing “generic” billing practices, as well as ensure that internal billing staff or third-party billing companies report services and procedures in accordance with CPT coding, guidelines and conventions.

Certain physician specialties may be more likely to bill for higher level E/M services because of the potential for increased frequency of complicated cases. Physicians who accept more cases with increased complexity may fall outside the normal range of higher level E/M billing volume as compared to physicians who accept less complex cases. Health insurers may suspect that the physician’s elevated frequency of high level E/M billing indicates a pattern of overcoding, leading to a greater likelihood of being selected for a retrospective audit.

Modifiers

The reporting of a high volume of CPT modifiers, such as modifier 25, may prompt a retrospective audit. According to AMA CPT codes, guidelines and conventions, “the CPT modifier 25 is appended to the CPT code to indicate that on the day a procedure or service was performed, the patient’s condition required a significant, separately identifiable E/M service, above and beyond the other service provided or beyond the usual preoperative and postoperative care associated with the procedure that was performed.” A high reporting volume of E/M services with the CPT modifier 25 appended may prompt a retrospective audit so that the health insurer can determine whether the additionally reported services were indeed above and beyond the service performed during the E/M service based on the health insurer’s medical payment policies.

Other reasons

Physicians may be selected for retrospective audits for previous nonconformity with health insurer coding guidelines. Health insurers may also conduct retrospective audits randomly.

Refer to the educational resource “How to prepare for a health insurer retrospective audit” for more information.

[1] CPT is a registered trademark of the American Medical Association.

A prospective or retrospective physician practice billing audit is commonly performed to ensure the physician is submitting appropriately coded claims according to CPT codes, guidelines and conventions, and payer payment policies because the physician is ultimately responsible for claims submission—even if a billing service or clearinghouse is used for claims submission to payers.

• In a prospective billing audit, a designated practice staff person or internal compliance officer reviews the claims before they are submitted to the payer to ensure the appropriateness of the coding, documentation and adherence to health insurer medical payment policies.

• In a retrospective audit, a designated person reviews claims for appropriateness after they are paid. All overpayments and billing errors identified during a retrospective audit should be handled according to the payer’s repayment guidelines.

If the audit reveals a pattern of repeated billing errors, the physician should obtain legal advice from a health law attorney to determine possible responsibilities. Additionally, the physician practice should determine and take the necessary steps to ensure the billing error doesn’t recur. Physician practices should perform a prospective audit annually or when new physicians or billing staff personnel are hired to identify and address potential errors promptly.

Refer to the educational resource “How to perform a physician practice internal billing audit” for more information on this topic.

Hold a meeting with your practice’s claims submission and auditing team, including physicians, to discuss any claims processing issues that can be resolved through staff and physician education or through the adjustment of the practice’s claims submission process. Document your practice’s efforts to improve your claims submission process.

There are many ways to educate one or more physicians in a practice when CPT codes, guidelines and conventions are not routinely followed or procedures are not reported. The best way to begin is to create an easy visual, such as a Microsoft Excel chart, to show the difference that exists between the physician’s reporting and the national benchmark data, between the physician’s reporting and his or her peers in your practice, or between both the national benchmark data and the physician’s peers in your practice.

You may also choose to use Microsoft Word^® or PowerPoint^® or even hand draw a bar chart to help the physicians in your practice more readily identify the variation with visual representations.

Discuss the results of the analysis with your practice’s physician champion to determine the best approach to address areas of risk for your practice. This may require the physician champion in your practice to present results to the physician in your practice and then hold one-on-one meetings. Physicians need to understand the importance of accurately documenting and reporting procedures and services performed.

The following AMA resources will help you in analyzing your practice’s coding patterns, review the efficiency of your current claims management process and identify areas for improvement.

• “Prepare that claim” helps physicians and their practices review the efficiency of their current internal claims management process. This resource contains sample forms and policies that can be adapted to fit the specific needs of a physician practice.

• “Follow that claim” provides physicians and their practices with an understanding of what happens to a claim once it leaves the practice. A claim is followed as it moves along the claims submission and health processing networks. Understanding this flow will enable physicians to better address the delay, denial and reduced payment tactics used by third-party payers.
• “Appeal that claim” helps physicians and their practices simplify their claim audit and appeals processes. This interactive resource can help reduce the administrative burden by delivering a step-by-step course of action to appeal an underpaid, delayed or inappropriately denied claim.