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Facing Billing Audits


Chances are you are going to get audited in the next few years. But don’t panic - use our audit guide to get your practice prepared instead.

It begins simply enough, when a piece of mail trickles into your office. What’s inside, however, can lead to a downpour of paperwork and uncertainty in the form of a billing audit. With a renewed focus on healthcare fraud and Recovery Audit Contractors (RACs) now operational in every state in the U.S., you can bet a billing audit is in your future, says Michael J. Schoppmann, an attorney with Bridgewater, N.J.-based Kern Augustine Conroy Schoppmann who represents medical professionals in audit appeals.

“We’ve seen a tidal wave of billing audits in the last five to seven years,” Schoppmann says. “In my opinion, there is a tsunami of billing audits to come in the form of the additional RAC audits.”

Lori S. Baker, a consultant with Horne LLP, in Ridgeland, Miss., also assists physicians’ offices and hospitals in the audit appeal process and concurs with Schoppmann’s assessment on audit frequency. More and more offices are getting letters from Medicare/Medicaid, their insurance partners, and others with a request for records setting off the audit process.

“It is not if they are going to be audited, it is when they are going to be audited,” Baker says. “We are seeing so many more [audits], so when they do get that letter, they need to have [a process] in place.”

But there are ways to avoid the worst of it, according to our experts, who offer the following tips to prepare your practice for the coming storm.

Knowledge is power. Having worked for a company that performed integrity and billing audits, Connie Grosh says that preparation is the key. Grosh, now president and CEO of GroMed Medical Management and Consulting in Columbus, Ohio, advises practices to educate themselves on the integrity programs or claims review audit requirements with all partners, including insurers. Many if not all companies publish this information on their Web sites, she says.

This can include a time period on records to be reviewed, whether or not an auditor is allowed on site, and even if you can be audited in the first place.

Seek a helping hand. “I encourage every medical practice in the country - today - to immediately hire an external, outside consultant to look at billing, coding, and documentation practices,” Schoppmann says. Just like hiring help with your taxes, getting the aid of someone who knows the ins and outs of billing audits is a must.

“[Practices] need to abandon the thought they can do it alone,” Schoppmann says, and enlist some help.

He recommends using a consultant for what he calls a “snapshot audit” - looking at what is being done properly, what could be done better, and what could be changed at your practice. The result, he says, “lowers the risk of an audit exponentially.”

Dig deeper. Grosh also advises practices to “find the etiology” of the overpayments in collections and when they do, refund in a timely manner and make changes for the future.

“Be certain that your front-end process for obtaining and verifying insurance is very thorough and well executed,” she says. “A little more time to verify eligibility and accurately enter the data in your system will save your practice much time, money, and scrutiny from payers.”

Baker also advises being proactive and making moves today to help avoid tomorrow’s audits. “Make the changes and make sure you have educated your providers on those changes,” she says. “Do it now so in the future, you know you are doing it correctly.”

Have a single point of contact. Before an audit letter even appears, both Schoppmann and Baker recommend appointing a person to take charge of the audit processes in your practice. If the letter has already arrived, find someone to lead the charge in your office right away.

“If the left hand doesn’t know what the right hand is doing, that’s where you end up with an audit letter sitting on the desk … and you later discover you have three days to submit records,” Baker says. “It happens and it happens a lot.”

Schoppmann advises that this person not be a part-time employee, but someone “in more of a clinical, administrative, or bureaucratic position,” who can examine the request and ensure the practice is fully involved in the process and will respond accordingly.

“If you give [the auditor] a poorly constructed, disorganized, poorly copied, incomplete record, that is what the judgment will be based upon, so you need to get someone to understand how to properly construct a proactive, pro-physician submission,” he says.

Shed light on the questions. Prior to fulfilling a request for records, take a look at what you are sending and do a little educating.

Schoppmann says while many practices will simply make copies and send them to an auditor per the letter’s request, he advises that before the records go out in the mail, you sit down with the records and conduct a self-review. You should ask questions including: Are there common themes? Are we coding without proper documentation? Are we billing too high for a service?

“By understanding what you are looking at, you can decide and be prepared to fight an audit or change things to limit the damage of the audit,” Schoppmann says.

Baker advises that practices construct a cover letter to accompany records and either in that document or the records themselves, highlight auditing details.

“Spoon feed the auditor so they don’t have to look for things,” she says. “Say ‘here it is.’ You have enough ammunition to say this is what we bill and this is why we billed it. So that … it is black and white.”

Preserve your paperwork. As with your own tax preparer, our experts recommend keeping a record of everything related to the audit. “Much like with the IRS, if you don’t have the receipts, you won’t get the deduction,” Schoppmann says.

Following on the same theme, Baker advises making copies of everything you submit to the RAC, insurer, or other requesting party. “I have seen it way too many times [that] someone will come back and say we didn’t get that,” she says.

Baker is currently working on a case where an insurance provider claims 15 or 16 cases are missing documentation and the physician says they were sent, but lacks copies to prove his case.

She also recommends making copies of any shipping receipts or other proof of delivery to an auditor. Baker notes that with RACs, there is software that tracks sending information and other details, but for smaller offices, she simply recommends keeping a Microsoft Access or Excel database to track deadlines, details, and other information related to the audit.

Keith L. Martin is associate editor at Physicians Practice. He can be reached at keith.martin@ubm.com.

This article originally appeared in the October 2010 issue of Physicians Practice.


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