Check Those Charts

Why and how to perform self-audits of charts

There are many important aspects of running a successful practice -- and your coding and billing operations is one that should not be overlooked. When you get down to it, it makes good business sense to review your charts and have an ongoing self-audit program in place.

An independent coding and practice management consultant went into Melbourne Internal Medicine Associates (MIMA), a 94-physician multispecialty group in Brevard County, Fla., and performed a coding session for the physicians. With the consultant's help, the practice instituted an internal auditing and compliance program that uncovered coding errors that needed to be corrected.

For example, "We were doing an audit of our dermatologists and [found that] they were including a modifier that was not being reimbursed," says Richard Nescio Jr., chief financial administrator for MIMA. Similar mistakes were found in their pulmonary department, he says, so setting up the program has definitely benefitted the practice.

"We have found things that we were doing incorrectly, and the bottom line is that [the auditing and compliance program] has brought in more money," Nescio says. Although he wouldn't divulge specific dollar amounts, Nescio says they were "significant."

A few good reasons

"There are two main reasons for performing self-audits," says Emily Hill, a certified coder and president of Hill & Associates in Wilmington, N.C. "You want to be able to investigate and make any necessary corrective actions in advance of an outside review. Taking action on coding and billing errors can actually prevent an outside review if discovered early."

Also, there may be cases where the physicians have undercoded or failed to bill for services appropriately provided and documented. "Self-auditing can identify both deficiencies and opportunities for appropriate reimbursement," Hill adds.

According to Hill, practices should be certain that each physician or other provider's charts are reviewed at least annually; other experts suggest performing quarterly reviews and summarizing the findings at the end of each quarter. The number of charts per review varies between five and 10 per provider, says Hill. "If frequent or consistent errors are found, the number of records reviewed or the frequency of the review might be increased for either identified providers or the entire practice."

"The auditor should bring coding errors and chart inconsistencies to the attention of the provider as soon as they are discovered and begin corrective action," says Deborah Grider, a certified coder and president of Medical Professionals, Inc., in Indianapolis. The key is making sure that any errors are addressed and that a follow-up review is conducted to ensure that corrective actions were effective.

"We go over the results with the physician," explains Nescio, "and then come back two weeks later and do an audit again to see if they've corrected any coding issues."

MIMA has taken an enthusiastic approach to all of this, expanding from two to three coders on-staff with the possibility of adding a fourth in the near future.

For practices that don't have three to four coders at their disposal, Hill suggests taking someone from the billing department and teaming them up with a physician. "Nothing says you have to do a large volume," she says. "Five to 10 records per provider over the course of a year for a smaller practice is sufficient." But if errors or problems are found, that changes. Then the practice might want to bring in an outside person.

Picking and choosing charts

An effective audit includes an appropriate mix of charts. Grider advises looking at CPT code utilization patterns of each practitioner. "For example, if the physician has billed 20 percent more level 4 [office] visits than level 3 visits, that might want to be the focus of the review," she says. The very first review, however, should be a random mix of all insurance payers and visit levels to determine if the physician is billing and coding correctly, Grider recommends. "If a problematic area is discovered, this might be the focus of the next quarter's review." Grider says if the physician is a surgeon, a mix of hospital visits along with surgical procedures might be appropriate.

Grider also advises reviewing the Work Plan of the Office of Inspector General (OIG) to determine their areas of focus. (The plan is available for review online at Priorities in 2003 that relate to coding include coding of Medicare physician services, specifically to test whether carriers are applying edits required by Medicare's National Correct Coding Initiative; coding of E&M services, namely whether physicians accurately code for these visits; and coding of physician evaluation of dialysis to determine the extent of upcoding, to name a few.

"High risk -- for example, higher levels of service, consultations, issues noted in carrier bulletins -- and/or high volume services based on frequency of billing should be included," adds Hill. "The review should include examples of E&M and procedural services as appropriate and certainly include any previously identified issues or areas."

Proper documentation

Written documentation of internal record reviews and other compliance issues is critical. The documentation should include:

  • Why the audit was performed
  • Process: pre-billing or post-billing
  • Persons involved: names of auditors
  • The findings
  • Corrective actions taken
  • Steps to verify compliance with required corrective actions

"This information can be an important tool for demonstrating a practice's concern and steps toward ensuring compliance in the advent of a payer review," Hill says. "The concept of 'not documented means not done' applies equally to the medical record and internal compliance process."

Additionally, the documentation of the internal audits should never be maintained in the patient's chart. "All audit results, or summary of the results, actions taken, etc., should be filed together as a compliance file," Hill explains.

Getting staff involved

The staff involved in the audit will vary depending on the size and structure of the practice. Usually the audits will be conducted by coding or billing staff who have knowledge of requirements and documentation standards. "The review can also be done by the physicians or a physician in conjunction with coding and billing staff," says Hill. "Reviewing the records of a colleague is often instructional about one's own coding and documentation practices." Including a physician may also strengthen the feedback and education process.

Grider believes that every medical practice should have a compliance plan in place with a compliance officer -- even in a small medical practice. As part of the overall compliance plan, there should be specific policies related to coding. Larger practices typically have a compliance committee with a combination of physicians, a compliance officer, a billing manager and others responsible for the practice or the coding/billing process.

"The compliance officer is responsible for making sure compliance is mandated and followed based on the medical practice's plan," she says. "It can be an office manager, billing manager, a staff person, or a physician." Grider feels strongly that the compliance officer should direct and manage the plan and can be anyone in the organization. Title is not important, but, like Hill, she agrees that the physicians should be in the loop.

The committee might meet once a month, for example, to discuss problem areas, auditing issues, training needs, coding issues, and corrective action.

Let technology help

Indian Creek Family Health Center in Oxford, Ohio, like many other practices, has taken their coding and billing procedures a step further with the aid of a computer program and electronic medical records (EMR) system, according to Jason Hoke, MD, one of the practice's three family physicians. Software packages can be helpful in achieving more accurate coding and helping doctors become more in tune to what's right.

"As doctors we don't want to spend a lot of time choosing the right code and going through a CPT manual. To have the computer just pop up our diagnosis and help us to choose the right one that's billable is just so much easier." Although Indian Creek Family Health Center uses their software with an EMR system, there is separate coding software available for practices that don't want to make the full leap to electronic records.

When planning an in-house auditing process for your practice, keep in mind that "the audit should not be limited to the services of the providers," according to Hill. "The actual claim submission/reimbursement process should also be reviewed. This may require that upper level administrative staff review the billing practices of the staff, or an outside reviewer may need to be brought in." (See our article on auditing your billing process in the April issue, or access it on our Web site, The reimbursement process involves all providers and staff who are involved in coding, claim submission, and appeals. "It is important every aspect of the process be done accurately, effectively, and ethically," Hill concludes.

Nina Silberstein can be reached via

This article originally appeared in the June 2003 issue of Physicians Practice.