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Selling your practice? Clean up the coding first.


If you don’t identify the coding issues, know that your potential buyer will.

©Andrey Popov/Shutterstock.com

As more and more practices are courted for acquisition, our firm is being engaged by both buyers and sellers to evaluate the accuracy of coding and documentation, and the efficiency of the revenue cycle.

The results of these audits indicate that in many practices, coding and billing has gone unsupervised and unmonitored for quite some time. If your practice is considering a sale, now is a good time to have an independent expert, qualified and experienced in your specialty, review your records and systems. If you don’t identify the coding issues, know that your potential buyer will. 

Here are five issues that our auditors find with striking regularity.

1. Incorrect billing by non-physician providers (NPPs). 

In one practice we reviewed, the solo physician saw patients in the main office while the two physician assistants (PAs) saw patients in outlying offices. Yet, all NPP work was billed under the physician’s name. As a reminder, incident-to rules require that a physician be in the office when the NPP is seeing and billing patients "incident-to." Otherwise, the care is billed under the NPP's name.

In another, the nurse practitioners (NPs) believed that because they spent more time with patients, they could routinely bill a level 4 visit. They thought that time was the determining factor in code selection. Yet, it was hard to believe that the minor clinical issues they treated (as demonstrated by the diagnosis codes chosen) required 40 minutes of "counseling."

These are just two examples of many we have found with regard to NPP services being billed incorrectly. In one practice, three years of mistakes like these added up to hundreds of thousands of dollars in take backs. 

The bottom line: If you have PAs or NPs in your practice, engage an outside, independent entity to review the policies, procedures, and codes around the billing and reporting process. It's hard to catch your own mistakes.

2. Hidden take backs.

Savvy buyers don't want to assume a liability. They will deploy a steely-eyed auditor to review the documentation, supervision, and coding processes. What they are looking for are patterns of incorrect coding that could result in a payer take back. And, if the deal moves ahead, the purchase price will be adjusted to account for the risk. 

Examples of our findings include Mohs surgeons who regularly performed “creative” measurements, then billed the wrong (higher paying) codes for closing. 

We've also uncovered physicians billing visits by time, but documenting incorrectly. Documentation for coding by time requires that both the face-to-face time and the amount of time spent counseling the patient are in the note. Our review revealed that in most cases, only one or the other (total time or counseling time) was documented.

Audits and take backs can go back several years. CMS, for example, will look back six years for incorrect reimbursements. So, just because you were paid last year doesn’t mean that money is yours to keep. 

3. Reliance on one code. 

When you see a pattern of using only 99202 for new patients and only 99214 for returning patients, it’s an indication that something might be amiss. Modern practices review their E/M coding patterns for each provider at least annually, and against the patterns of state and national data. This review identifies whether a provider’s pattern falls outside the “norms,” which could indicate incorrect or non-compliant coding behavior. 

It’s true that being an outlier isn’t necessarily wrong. Some specialists and subspecialties may have patterns that fall outside the norm. But significant variances arouse auditors’ curiosity, prompting them to take a closer look-especially when only two codes are used. 

If you aren’t sure of how your providers’ patterns compare to peers, run a CPT frequency report and compare it to Medicare’s data in your specialty and state. 

4. Unsigned notes.

If an audit uncovers unsigned notes, that’s a problem. We have found provider notes in multiple practices that were never signed. Again, it’s a harbinger of other likely non-compliance issues and a signal for an auditor to dig deeper. Anything that raises the eyebrows of a potential buyer does not bode well for the practice. 

5. Improper use of modifiers.

This runs the gamut and varies by specialty, but the key point here is that in the majority of our audits, modifiers are being used incorrectly. A few examples:

  • Modifier 25: Significant, separately identifiable E/M service by the same physician on the same day of the procedure or other service. Routinely billing an E/M code with a 25 modifier for established patients receiving regular injections for the same diagnosis and anatomic site is just plain wrong. Our reviews have uncovered a high volume of these. 

  • Modifier 59: Distinct, procedural service. We find frequent incidences of appending modifier 59 when it is not required, due to a National Correct Coding Initiative edit. Overapplying modifier 59 attracts payer attention, and that can lead to an audit.

Finally, if your practice engages a billing service and is considering a buyer or equity partner, take a hard and honest look at the coding competence of the vendor's staff. Unfortunately, we regularly uncover a variety of coding (and billing) errors made by billing services. Such errors put your practice, as well as the potential deal, at significant risk. 

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