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Preparing for a coding and billing audit


Most audits concern outpatient visits.

doctor filing bills computer calculator glasses

Coding and billing audits are time-consuming, costly, and common. 

“It is most likely that at some point in time every provider will be audited at some level,” says Terry Fletcher, a healthcare coding and billing consultant, educator, and auditor. 

Many audits are conducted by the Centers for Medicare and Medicaid Services and its contractors. Private payers, such as Anthem and United Healthcare also audit claims, but they also rely on pre-certifying tests and procedures before they occur to manage costs and avoid denials. 

Medicare Audits

CMS implemented a new audit program, Targeted Probe and Educate, in August 2017. 

Conducted by Medicare Administrative Contractors (MACs), these audits typically involve up to three rounds of review, with between 20-40 claims per provider, per item or service, per round. The MACs focus on providers who “have the highest claim error rates or billing practices that vary significantly from their peers,” CMS said when it announced the program. 

CMS says the program is designed to educate physicians on proper coding and documentation, reducing denials and incorrect payments. However, if providers fail three rounds, they are referred to CMS for further action, such as ongoing prepayment or post-payment review of claims. They also may be referred to a Recovery Audit Contractor(RAC), which reviews past claims to determine if CMS overpaid or underpaid them. 

CMS also uses random sampling to select claims-including approved and denied claims-for auditing under its Comprehensive Error Rate Testing Program.  

In some cases, the Department of Justice will step in to investigate the possibility of fraud or false claims. For example, in the fiscal year ending September 2018, the Justice Department collected $2.5 billion in settlements and judgements against the healthcare industry, according to a department news release.

When it comes to physicians’ outpatient practices, a lot of auditing and compliance efforts revolve around Evaluation and Management CPT codes-which cover outpatient office visits. 

While it’s not possible avoid being audited completely because payers flag claims based on many variables, there are steps you can take to be prepared if you are subjected to an audit. These steps also may reduce your risk of being targeted for an audit, experts say. 

Conduct internal audits regularly 

“We recommend that practices do internal audits, and not just when you open your practice or you close, but that you are consistently doing spot checks on billing,” explains Laura Terpsma, a lawyer specializing in compliance at the Chapman Law Group. 

When you find a pattern of irregularities in coding and billing, you should revise your policies and procedures to prevent those issues from reoccurring in the future. “The number one thing would be to be really, really regimented in your billing policy,” Terpsma says. 

Regular auditing not only helps you correct irregularities, but it also shows CMS that you take compliance seriously. “If you have mistakes that have been happening habitually for the last seven years, and no one has ever looked at why, I, as an auditor, am going to say, ‘You know this is happening. You are just turning a blind eye to it.’ There is no excuse for blind-eye behavior,” Terpsma points out.

St. Elizabeth Physicians-a multi-specialty practice with 397 physicians and 199 advanced practice providers-conducts audits quarterly by randomly selecting 10 electronic notes per provider, according to Jean Pryor, administrator of coding and education at St. Elizabeth Physicians, which serves the Greater Cincinnati region in Ohio, Indiana and Kentucky. 

“We go in and look at the documentation. We look at the code and make sure it all matches,” Pryor says. 

If providers score 90% or better on audits for two quarters, they drop off the audit list for one year. Providers scoring 80% or less meet one-on-one with an auditor who teaches them how to document and code properly to avoid the mistakes uncovered during the audit. 

St. Elizabeth Physicians uses software to help automate the process of analyzing providers’ documentation. The software also produces reports for each provider detailing the results of the audit, which Pryor says are useful teaching tools. 

Document. Document. Document.

“Treat your medical record as a legal document, and make sure you are not complacent in your documentation effort,” Fletcher says. 

Terpsma says the documentation should demonstrate medical necessity, showing payers why physicians developed a given treatment plan. 

This happens when physicians accurately document the three components of an office visit-history, exam, and medical decision making-by strictly following the rules CMS has developed. 

Use auto-coding functionality cautiously 

Many electronic health-records systems include functionality that suggests E/M codes. However, if users do not take time to thoroughly understand the rules and programming behind an EHR’s code selections, the auto-coding functionality can lead to inaccurate coding, Fletcher cautions in an article she wrote in the ICD10 Monitor in May 2018. 

Fletcher recommends that medical practices allow physicians to override an EHR’s coding recommendations, with either a higher or lower code. 

Based on her experience auditing documentation and coding for clients, Fletcher wrote that she’s seen situations where an EMR’s suggested codes did not follow Medicare’s E/M rules. She’s also seen instances where the EHR did not pick up on conflicts in the documentation, as well as cases where the EHR added unnecessary information into the documentation. 

These issues help explain why St. Elizabeth Physicians, which has used Epic’s electronic health record since 2011, does not use the vendor’s auto-coding functionality. “We have that turned off. The doctors are responsible for selecting their code-not the software,” Pryor explains. 

Avoid Copy and Paste 

“Train and instruct your physicians that populating a field by click-and-paste method in the EHR, when they truly did not perform the service, is the easiest way to trigger an audit,” Fletcher says.

If providers do copy a note from one location and paste it into another note, they need to then revise the note to reflect the current patient encounter-even if they believe both visits were identical, Pryor explains.  

Don’t Upcode

In E/M codes, upcoding involves billing for a more intensive office visit than what happened. There are two common examples:

  • Coding a visit with an established patient as a new-patient visit, which gets reimbursed a higher rate because new-patient visits are more time consuming.
  • Coding a visit as more intensive or complicated than it was. 

If you are going to assign a code to describe an office visit with a higher level of intensity, the documentation needs to support that choice, Terpsma says. 

Assign correct provider to the bill

It is also important not to bill an office visit at the physician rate when a nurse practitioner or physician assistant saw the patient. 

Terpsma says this usually happens accidentally in fast-paced medical offices, such as when a provider doesn’t sign off on a chart and the coding and billing staffs assume a patient was seen by a physician. 

These situations come to auditors’ attention when a series of claims portray an impossible scenario. For example, Terpsma says she represented a practice that prepared three claims, showing that a single doctor had seen three patients at three separate locations in a half an hour. “That was just a miscode by billing. It wasn’t intentional but again-the red flag,” Terpsma says. 

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