Up to code: A way to ensure your financial health

To keep your finances in shape and your nose clean for the feds, take time to review your coding.

By Larry Stevens, amednews correspondent. Nov. 5, 2001.

It may not be as inevitable as death and taxes, but it's close. Virtually all doctors' offices will need to review their coding. Understanding what an effective review is, when and how to set it up and how to make it most effective can be important to the financial health of the practice.

There are two types of coding reviews. Procedurally, they are very similar. But in their effects, they are miles apart. The first kind, an audit performed by Dept. of Health and Human Services agents, can be emotionally draining and financially ruinous.

The second, performed voluntarily by the physician practice, has the opposite effect. It can uncover underpayments, improving the practice's finances, and it can help ensure compliance with federal E&M coding rules, rendering the HHS audit, should it occur, less frightening and ultimately less expensive.

HHS audits can result in fines up to $10,000 per coding infraction.

A coding review -- which involves comparing patient charts with the codes submitted to HHS or private insurers -- can be an administrative headache. A few subspecialties that perform the same six or seven procedures every day may be able to get away with no or only occasional audits. But for the vast majority of doctors, who have to deal with dozens of codes each day, there is no getting around it.

"There's just too much complexity and confusion in the coding system to assume your practice is doing it right," says Thomas Obade, MD, part of the four-doctor group Orthopedics at Woodbury, in Woodbury, N. J.

The only way to know for sure that all the doctors in the practice, as well as the coding employees, are coding properly is to check the work on a regular basis, says Dr. Obade, who is also chair of the Health Policy and Practice Committee of the New Jersey Orthopaedic Society.

Checking it over

Generally, physician involvement in a coding review is limited to setting it up and paying the bill. The process is basically administration, and certainly doctors have enough to worry about keeping up with clinical issues.

Ideally, though, there is some physician oversight. "I think there should be one doctor who takes responsibility for it. After all, no matter what the administrators do, it is the doctors who are legally responsible and who will have to pay for any mistakes," says David Zehring, MD, a plastic and reconstructive surgeon who also helps practices perform coding reviews though his company, Spanish Peaks Healthcare Consultants in Denver.

The reasons for a review are certainly compelling because even honest mistakes can be very expensive. On the regulatory side, HHS can levy fines of up to $10,000 per occurrence for fraud and abuse. On the other hand, consistent undercoding deprives a practice of revenue it deserves.

Even small errors -- forgetting to document and submit a code for a urinalysis, for example -- can have a serious effect on the group's bottom line if repeated a few times each day.

Worse still, in what may be the ultimate irony, Dr. Zehring points out that undercoding can result in fines. As a matter of law, all Medicaid patients have to be charged the same for the same procedure. If the practice undercodes a procedure for one Medicaid patient but doesn't do the same for all other Medicaid patents, the procedures that were coded at a higher level could be deemed Medicaid fraud. So undercoding as a precaution won't help.

A coding review is basically looking through the patient charts to ensure that interactions are being billed correctly.

To prepare, many practices select a period of time, usually a week, to review. The period should be at least average in the number of patients seen, or even on the high side.

Alternatively, the group can select charts at random -- an equal number from each doctor -- from a longer period of time. The reviewer compares the progress notes with the E&M code for each visit to ensure that it is correct.

A shortcut, which can be used in practices that had a coding review in the last few years, is to look for variations in coding practices among the doctors.

"You want to find the best guy or the worst guy in terms of compensation and see why they are having a different experience from other doctors in the practice," Dr. Zehring says.

The reason may lie in the kinds of patients the doctors are seeing or the kinds of procedures they're performing. But if no explanation can be found, the charts of doctors in those categories should be scrutinized carefully.

The most important consideration in planning the review is deciding who will do it. It has to be performed by someone other than the billing administrator who had submitted the codes in the first place. Sometimes a doctor in the group who has developed expertise in coding can do it.

Some medium-sized and many large groups may have someone on staff other than the billing administrator who has the expertise to conduct a review. Generally, though, the review is performed by a professional consulting company that specializes in such matters.

The review process seeks to locate errors, but ferreting out coding mistakes would be a useless exercise if doing so didn't help the practice learn to improve its coding procedures.

Accordingly, most coding reviewers report that training -- usually a two- or three-hour class -- is part of many audits. While in some cases physicians attend the class, all consultants say most doctors prefer to get coding training at medical association meetings.

Even if doctors are not formally trained or retrained during coding review, if mistakes are found, they may have to be taught to change their behaviors.

While the correction is determined by the type of mistake, it almost always involves improving the quality of clinical documentation.

"Oftentimes, the difference between overbilling and correct billing is one piece of information in the patient chart," says Debra R. Mills, president of clinical coding and reimbursement at Rheinisch Medical Management Inc. in San Ramon, Calif.

The two primary issues related to patient charts are legibility and completeness. Of the two, the legibility problem is the easiest to correct and also the most damaging.

"If staff can't read your handwriting, they can't code correctly no matter how much expertise they have. If your [reviewer] can't read it, they can't help you, and if an HHS agent can't read it, you're in serious trouble," Dr. Zehring says.

The solution, he says, is to move from handwritten notes to other options such as printed checklists, dictated notes or electronic charts. "Given today's environment, there's no reason for anyone to be handwriting notes," he says.

Other problems

More complex documentation problems usually arise from lapses in completing all the items under history and physical. Preprinted sheets or computer systems can help. But Dr. Obade points out that "if doctors at least understand what is required under the rules of evaluation and management, they're more likely to organize the patient encounter and the documentation around those rules."

For example, if a patient has two chronic problems, doctors can usually raise the coding from level 3 to level 4 if they treat both conditions rather than one during the same visit and document that they did so.

Or if a doctor spends 20 minutes with a patient with hypertension, the difference between the visit being a level 2 or level 3 is based on whether the doctor documents what they talked about and how much time the visit took.

Of course, just because doctors or coding personnel are instructed to change their behaviors, that's no guarantee that problems might not creep back into the system. Old habits die slowly. So reviews should be repeated.

But how often? Many consultants suggest regular reviews every 12 to 18 months. While this is certainly prudent, that level of frequency may not be necessary in all cases. There are certain specific times when a review is indicated.

The most compelling reason to have a review is when the practice is given notice of a pending federal audit. "Doing your own [review] before the feds do one can help you prepare, fix problems and be able to justify coding decisions," says John Mott, president of Medical Audit Consultants in Keokuk, Iowa.

Second, if the initial review uncovers mistakes made either by the coding administer or by one or more doctors, a follow-up should be conducted two or three months later to ensure that the corrections are sticking.

Another time to consider a review is a few months after a new billing administrator is hired. The only exception may be practices that have two or more billing administrators. When one leaves, the remaining one can train the new one, providing some continuity.

A slightly less important time to conduct a review is shortly after a new doctor is hired. At the very least, a group should consider a review if the new doctor tends to have higher or lower billings than the rest of the group with no apparent explanation. New doctors may bring with them faulty coding practices from other groups.

The quality of coding is one of the most important factors determining the financial health of a practice. If there are problems, they have to be solved quickly. But before they can be solved, they have to be found. And that's why regular coding reviews are important.